2017 (12) TMI 1419 - HC - Income Tax

TDS u/s 194C - non deduction of tds - Addition made u/s 201(1) and interest u/s 201(1)(a) - existence of payer and payee - Held that - The record of the case reveals that both the Commissioner of Income Tax (Appeals) as well as the Tribunal have recorded concurrent findings of fact to the effect that there was nothing on record to indicate that there were any labour contractors with whom any contract had been entered by the assessee. The Tribunal was of the view that section 194C of the Act pre-supposes the existence of payer and payee and that in the facts of the present case the identity of the payee was not established at all. Section 194C envisages deduction of tax at source in pursuance of a contract between the contractor and a specified person. In the facts of the present case, there is a concurrent finding of fact recorded by both, the Commissioner (Appeals) as well as the Tribunal, that no such contract between the assessee and any specified person has been identified - Decided against revenue

Summary

Issues:
Challenge to order under section 260A of the Income Tax Act regarding deletion of addition under section 201(1) and interest under section 201(1)(a).

Analysis:
The appellant challenged the order of the Income Tax Appellate Tribunal, Rajkot Bench, regarding the addition made under section 201(1) of ?36,25,103 and interest under section 201(1)(a) of ?13,05,037. The assessing officer found that the assessee had made payment towards labour charges without deduction of tax at source, treating the assessee as in default under section 194C of the Act. The Tribunal and the Commissioner of Income Tax (Appeals) both found that there was no evidence of any contract between the assessee and a specified person for the payment of labour charges. Section 194C of the Act requires deduction of tax at source in pursuance of a contract between the contractor and a specified person, which was not established in this case. The Tribunal concluded that the identity of the payee was not established, leading to the dismissal of the appeal due to lack of any substantial question of law.

In conclusion, the Tribunal's decision was based on a concurrent finding of fact that no contract existed between the assessee and a specified person for the payment of labour charges, as required by section 194C of the Income Tax Act. Since the appeal did not raise any substantial question of law, it was summarily dismissed.