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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Sanjay Arora
आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 20/08/2010, of the ld. First Appellate Authority, Mumbai, on Bhavarlal C.Suthar the ground that the ld. Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs.64,16,212/- without appreciating the provisions of section 40(a)(ia) of the Act and further erred in allowing deduction of Rs.25,500/-, accepting additional evidence without seeking remand report from the Assessing Officer.
During hearing of this appeal, Shri Prakash L. Pathade, ld. DR, advanced arguments which is identical to the ground raised. On the other hand, nobody was present for the assessee in spite of issuance of registered notices on various dates. Even on 20/09/2012, the hearing was adjourned at the request of the assessee. It seems that the assessee is not interested to respond, therefore, we have no option but to proceed ex-parte, qua the assessee, and tend to dispose of this appeal on the basis of material available on record.
2.1. We have considered the submissions of the ld. DR and perused the material available on record. The facts, in brief, are that the assessee, an individual, engaged in carpentry contract work, declared income of Rs.10,22,327/- in his return filed on 03/10/2007, accepting the same u/s 143(1) of the Act. Case of the assessee, subsequently, was selected for scrutiny, and the assessment was completed u/s 143(3) of the Act determining the total income at Rs.1,09,02,510/-. The ld. Assessing Officer noted that the assessee did not deduct tax at source in respect of payments made to labour contractors to the extent of Rs.97,92,917/- as required u/s 194C(2) of the Act. Before the ld. Assessing Bhavarlal C.Suthar Officer as well as before the ld. Commissioner of Income Tax (Appeals), the explanation of the assessee is that the assessee duly deducted the tax at source and deposited in the government account in subsequent year. It was also asserted that the respective parties paid their taxes, therefore, there was no liability to deduct tax by the assessee. Reliance was placed upon the decision in Hindustan Coca Cola Beverages (P.) Ltd. 293 ITR 226 (SC) by contending that section 40(a)(ia) of the Act is not applicable. Without going into much deliberation, it is noted that the requirement of the Act is that the taxes has to be paid and deduction of tax is one of the mode of payment. Undisputedly, tax has already been recovered/paid either by the assessee or by the recipient, therefore, there is no loss of the Revenue. The assessee debited labour charges of Rs.97,92,917/- to the profit & loss account out of the which the amount of Rs.64,16,212/- was debited before the end of February 2007 and Rs.33,76,705/- was debited in the month of March 2007. The assessee paid the amount of Rs.64,16,212/- before the end of the previous year and the assessee deducted TDS in respect of all the amount towards labour charges and remitted into the government account on 07/08/2007 i.e. before due date of filing of return. In view of this factual matrix, we find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals), consequently, there was no question of disallowing Rs.33,76,705/- ignoring the retrospective amendment made by the Finance Act, 2008.
Bhavarlal C.Suthar 2.2. So far as, the balance amount of Rs.64,16,212/- is concerned, before the ld. Commissioner of Income Tax (Appeals), it was the plea of the assessee that the assessee has not awarded any sub-contract, therefore, section 194C(2) is not applicable as the assessee was solely responsible for execution of work to the principal as no part of the work was sub-contracted. Even if it is presumed that the assessee entered into a oral contract for supply of labour still it cannot be brought within ambit of section 194C(1) as the provision is applicable only from 01/06/2007, thus, the assessee was not liable to deduct tax, therefore, there is no question of disallowance of the impugned amount. It is also noted that the ld. Commissioner of Income Tax (Appeals) has already relied upon the decision of the Tribunal in the case of Teja Construction vs ACIT (36 DTR 220)(Hyd. ITAT) and another decision of the Jaipur Bench of the Tribunal in Jaipur Vidyut Vitran Nigam Ltd. vs DCIT (26 DTR 79), in which the decision from Hon’ble Apex Court in CIT vs Mother India Refrigeration Pvt. Ltd. 48 CTR (SC) 176; 155 ITR 711 (SC) and CBDT Circular No.5 of 2005 dated 15/07/2005 (2005) 197 CTR (St.) 1 has been discussed. Totality of facts clearly indicates that since the amount had already been paid during the year, therefore, section 40(a)(ia) of the Act is not attracted. In view of these facts, we affirm the stand of the ld. Commissioner of Income Tax (Appeals).
2.3. So far as, the claimed deduction of Rs.25,500/- u/s 80G of the Act is concerned, the assessee paid Rs.51,000 to a Bhavarlal C.Suthar charitable trust namely Shree Vishwakarma Charitable Trust. The deduction was disallowed on the plea that the exemption was valid upto 31/03/2006, however, before the ld. Commissioner of Income Tax (Appeals), it was explained that the approval u/s 80G was extended by the ld. DIT(E) till 31/03/2009. In view of this factual matrix, we affirm the stand of the ld. Commissioner of Income Tax (Appeals). Finally, the appeal of the Revenue is having no merit, consequently, dismissed. This order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 15/02/2016.