2016 (4) TMI 1012 - AT - Income Tax

Agricultural income as defined u/s 2(1A ) - CIT(A) denied agricultural income - Held that - We are of the considered view that since the assessee has failed to furnish any details in respect of expenses incurred, agricultural produce taken, labour employed etc., and in this respect no evidence was furnished by the assessee before the assessing officer. Not only, this the assessee has also not been able to produce any document in order to show that there was any agricultural produce taken from such agricultural land and therefore the assessee could not establish that there was any generation of income there from. The only explanation put forth by the assesee is that the income was generated by harvesting yield like natural grass or allowing seasonal farmer cum workmen to cultivate lands in shares. The said explanation itself is not sufficient enough, therefore the ld. CIT(A) after considering the plea taken by the assessee has rightly held that the income so disclosed by the assessee in the return of income cannot be treated as agricultural income as defined u/s 2(1A ) of the Act. Even before us no details have been furnished by the ld. AR, therefore we see no reasons to deviate from or interfere in the findings recorded by the CIT(A). - Decided against assessee. Interest on delayed payment of TDS - allowance u/s 37 - Held that - Amount was paid as interest on payment of TDS which was beyond due date and hence, the said payment was penal in nature and therefore the same is not allowable as per the provision of section 37(1) of the Act Disallowance of wages to labourers, miscellaneous expenses etc. - Held that - Keeping in mind the nature of the business i.e. Civil Contractor, we are of the opinion that it would be just and fair to disallowed an amount of ₹ 50,000/- in place of 1,00,000/- as disallowed by the AO for want of verification and therefore, the AO is directed to re-compute the income after making disallowance of ₹ 50,000/- only.

Summary

Issues:
1. Disallowance of claim for agricultural income.
2. Disallowance of interest on delayed TDS payment.
3. Disallowance of an adhoc amount for labor charges.

Issue 1 - Disallowance of claim for agricultural income:
The appellant claimed &8377; 2,50,450 as agricultural income, but failed to provide evidence of expenses, agricultural produce, or labor details. The Commissioner of Income Tax (Appeals) dismissed the claim as the appellant could not substantiate the income source. The Appellate Tribunal agreed, stating that without proper documentation, the income cannot be treated as agricultural income under section 2(1A) of the Act. The tribunal upheld the decision, as no evidence was presented to support the claim, leading to the dismissal of this ground.

Issue 2 - Disallowance of interest on delayed TDS payment:
The appellant argued that the &8377; 3,268 paid for interest on delayed TDS payment should be allowed under section 37(1) of the Income Tax Act. However, the tribunal deemed the payment penal in nature and not allowable under the Act. Citing a Supreme Court decision, the tribunal concluded that interest for late payment of direct taxes is not deductible. Following consistency in decisions, the tribunal dismissed this ground of appeal.

Issue 3 - Disallowance of an adhoc amount for labor charges:
The appellant, a civil contractor, incurred &8377; 53,34,958 on wages and miscellaneous expenses. The assessing officer disallowed an adhoc &8377; 1,00,000, estimating the expenses. The tribunal noted the nature of the business where payments are often made in cash to laborers without permanent addresses. Considering the business type, the tribunal reduced the disallowance to &8377; 50,000, directing the assessing officer to re-compute the income accordingly. Thus, this ground of appeal was partly allowed.

In conclusion, the tribunal partially allowed the appellant's appeal, dismissing the claim for agricultural income, disallowing interest on delayed TDS payment, and reducing the adhoc disallowance for labor charges. The decision was pronounced on 16th March 2016.