2011 (6) TMI 940 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against deletion of disallowance u/s 40(a)(ia) of IT Act for A.Y. 2006-07.

Summary:
The Revenue filed an appeal against the deletion of disallowance u/s 40(a)(ia) of the IT Act for the assessment year 2006-07. The AO disallowed an expenditure of Rs. 76,94,935 debited under contract job work as the appellant failed to deduct tax on the amount. However, the CIT(A) deleted the disallowance after considering submissions. The CIT(A) noted that the provisions of section 194C(1) were not applicable to the appellant during the relevant year as per the amendment by the Finance Act, 2007. It was highlighted that the payment was made to a contractor, not a sub-contractor, and therefore, the provisions of section 40(a)(ia) were not applicable. The Revenue appealed against this decision.

During the appeal, the DR could not contradict the CIT(A)'s findings, while the AR strongly supported the CIT(A)'s decision with additional evidence. After hearing both sides and examining the records, it was noted that the appellant was an individual and the provisions of section 194C(1) were not applicable for the relevant assessment year. Therefore, the CIT(A)'s decision was upheld as it aligned with the IT Act. Consequently, the Revenue's appeal was dismissed.

In conclusion, the appeal by the Revenue against the deletion of disallowance u/s 40(a)(ia) for the assessment year 2006-07 was dismissed by the Appellate Tribunal ITAT Kolkata, confirming the CIT(A)'s decision based on the provisions of the IT Act.