AMTECH ENGINEERS,DELHI vs. ITO WARD 62(1), NEW DELHI

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ITA 5918/DEL/2019Status: DisposedITAT Delhi14 September 2023AY 2010-11Bench: SHRI C.M. GARG, JUDICIAL MEMBER DR B.R.R. KUMAR (Accountant Member)3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the casual labour expenses of Rs. 19,50,000/- and site road construction expenses of Rs. 17,00,000/- were not subject to TDS under Section 194C. The appeal regarding non-deduction of TDS on crane hiring charges was also allowed.

What were the facts?

The assessee incurred casual labour expenses and crane hire charges. The Assessing Officer made an addition of Rs. 73,10,000/- under Section 40(a)(ia) for non-deduction of TDS on these expenses. The assessee argued that a portion was petty labour and the rest was due to interpretation issues regarding TDS applicability.

What were the issues?

Whether TDS was required to be deducted on casual labour expenses and crane hire charges, and if non-deduction warranted disallowance under Section 40(a)(ia).

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C,Section 194-I

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “A”, NEW DELHI

Before: SHRI C.M. GARGDR B.R.R. KUMAR

For Appellant: Shri Sanjay Sharma, Adv. &, Shri M. A. Ansari, AR
For Respondent: Shri Kanav Bali, Sr. DR
Hearing: 10.08.2023Pronounced: 14.09.2023

Heard together (2 matters)

ITA No.5918/Del/2019
SA No. 744/Del/2019

Read from the judgment's own cause title. This page is filed under one of them.

ORDER

PER Dr. B. R. R. KUMAR, AM:

1.

The present appeal and the Stay Application has been filed by the assessee against the order of ld. CIT(A)-20, New Delhi dated 16.04.2019.

2.

Following grounds have been raised by the assessee in this appeal:

1. The Ld. A.O. has made an addition of Rs. 73,10,000/- u/s 40(a) (ia) of Income Tax Act, 1961 on expenses which was dully communicated to him that out of expenses, expenses of Rs. 36,50,000/- is in the nature of petty labour expenses hence such sum is not liable for TDS Compliance & expenses of Rs. 36,60,000/- is in the nature of crane hire charges which may be subject matter of TDS but TDS was not deducted due to interpretation issues & in bonafide belief that whether TDS to be deducted or not.”

SA No. 744/Del/2019 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.

4.

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/-.

5.

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.

6.

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 non- availability of professionals to guides on the same. We have gone through the entire record before us, the Assessment Order para 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.

SA No. 744/Del/2019 7. 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.

8.

Owing to the decision of the Tribunal on the above grounds, the Stay Application of the assessee becomes infructuous and hence dismissed.

9.

In the result, the appeal of the assessee is allowed and the SA of the assessee is dismissed. Order pronounced in the open court on 14.09.2023.

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