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Facts
The assessee, engaged in mechanical engineering services, incurred expenses for casual labour and crane hiring. The Assessing Officer disallowed these expenses for non-deduction of TDS. The assessee argued that TDS provisions were not applicable due to lack of accounting knowledge and interpretation issues.
Held
The Tribunal, following its own previous order in the assessee's own case for a similar assessment year, held that the revenue authorities had wrongly invoked the TDS provisions. The peculiar facts of the case did not warrant the disallowance of TDS on crane hiring charges.
Key Issues
Whether the disallowance of expenses for non-deduction of TDS on casual labour and crane hiring charges was justified, considering the assessee's arguments regarding lack of knowledge and interpretation issues.
Sections Cited
143(3), 254, 194C, 194-I
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
Date of hearing 24.11.2025 Date of pronouncement 24.11.2025 ORDER This assessee’s appeal for assessment year 2011-12, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1080455997(1), dated 09.09.2025 involving proceedings under section 143(3) r.w.s. 254 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
Coming to the assessee’s sole substantive ground challenging both the lower authorities’ action disallowing its casual labour expenses of Rs.18,98,750/- for not having deducted TDS etc. and other allied heads; involving varying sums, learned counsel has invited the tribunal’s attention to the order dated 14.09.2023 passed in assessee’s own case for assessment year 2010-11 deciding the same against the department reading as under: “3. Facts of the case are that the assessee is a partnership firm engaged in providing mechanical engineering services like fabrication, erection and laying of piping equipment, steel structural work, civil work painting etc. to its clients on sub-contract basis in remote areas.
During the year under consideration, the assessee received a sub-contract and to execute such sub-contract the assessee incurred casual labour expenses like site machine shifting expenses for shifting of machinery from one place to another and road construction expenses for preparing structural foundation involving labour and material expenses. The assessee made payments for labour charges and for accounting purposes the same was entered in the name of a single person. It was submitted that this was done because of lack of accounting knowledge and ease of accounting entries, wherein a number of entries were reduced to a single accounting entry. Hence, the provisions of section 194C are not applicable to these transactions. We have gone through the issue and find that the expenses pertaining to labour was of Rs.19,50,000/- and hence, we hold that no deduction u/s 194C are invited to the transactions. The assessee gets relief of Rs.19,50,000/-.
The assessee during appeal hearing submitted that the expenses of site road construction of Rs.17,00,000/- are labour expenses incurred by it by payment to local labour at the sites which are usually remote areas in Nimrana, Rajasthan. The payments were made to for man power and machinery expenses. Hence, we hold that no deduction u/s 194C are invited to these payments.
To execute such sub-contract, the assessee paid crane hiring charges of Rs.36,60,000/- which is a subject matter of TDS provisions. It was argued that the assessee has neither deducted nor deposited TDS on the said payments because of lack of knowledge especially interpretation issues whether TDS is to be deducted or not and nonavailability of professionals to guides on the same. We have gone through the entire record before us, the Assessment Order para 2 | P a g e no. 3 dealing with the issue of TDS and para no. 6.13 of the order of the ld. CIT(A) and provisions of the Section 194C and Section 194-I along with the explanation of the assessee.
On going through the entire record, we are of the considered view that the provisions invoked by the revenue authorities are not applicable to the peculiar facts specific to the instant case. Hence, the appeal of the assessee on the ground of non-deduction of TDS on hiring of crane is hereby allowed.”
That being the case, I hereby adopt the learned coordinate bench’s above extracted decision mutatis mutandis to delete the impugned addition in very terms.