2018 (3) TMI 80 - AT - Income Tax

Disallowance of expenditure u/s 40A(3) - Held that - As per the copy of ledger of Boulders & Murram, the daily cash payment is more than ₹ 20,000/- but single payment towards individual suppliers or parties has not been exceeded the specified limit of ₹ 20,000/-. The original vouchers have been produced by the assessee which were verified. - Decided against revenue TDS u/s 194C - Addition u/s 40a(ia) - tds liability on Earth Digging Charges, stone cutting charges and cartage/carriage heads - Held that - This expenditure was incurred by the appellant by hiring individual labour at its remote sites or villages and daily payments though its site supervisor or employees. These labours were not regular labour. Also temporary labours were deployed at multiple remote sites, therefore, the assessee or his supervisors have withdrawn money from bank accounts for payment to the labour. Therefore, there is no liability for TDS u/s 40(a)(ia). There is no any agreement with any agency or subcontractor for cartage or supply of goods. Also there is no single payment to individual party more than ₹ 50,000/- during the year under consideration. Therefore, the provision of section 194C is not applicable. The original vouchers have been produced by the assessee for verification. - Decided against revenue

Summary

Issues:
Appeal against order u/s 143(3) r.w.s. 147 of the Act for AY 2008-09 - Disallowance of expenditure u/s 40A(3) and u/s 40a(ia) of the IT Act, 1961.

Analysis:
The appeal pertains to the assessment year 2008-09 against the order of the Commissioner of Income Tax (Appeals) and the DCIT 1(1) Bhopal. The revenue challenged the deletion of additions made under sections 40A(3) and 40a(ia) of the IT Act, 1961. The assessment was originally completed u/s 143(3) on 28.10.2010, with income determined at ?2,44,16,267. Subsequently, the AO, after reopening the assessment proceedings, made additions for contraventions of sections 40A(3) and 40a(ia) amounting to ?13,10,807 and ?6,46,62,207 respectively, leading to a total assessed income of ?9,07,69,370. The CIT(A) partly allowed the assessee's appeal, deleting the additions under both sections. The revenue then appealed to the Tribunal.

The Tribunal considered the contentions of both parties and reviewed the remand report on the issues of disallowance u/s 40A(3) and u/s 40a(ia). The AO's remand report acknowledged the appellant's submissions and verified original vouchers. Regarding disallowance u/s 40A(3), it was noted that individual payments did not exceed the specified limit of ?20,000. Concerning u/s 40a(ia), the AO found that the expenses were incurred for hiring individual labor at remote sites, and there was no liability for TDS as the labor was not regular. The original vouchers were verified for these expenses as well. The Tribunal, after considering the remand report and the findings of the CIT(A), upheld the deletion of both disallowances, as no infirmity was found. Consequently, the Tribunal dismissed the revenue's appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the additions under sections 40A(3) and 40a(ia) of the IT Act, 1961, for the assessment year 2008-09. The appeal by the revenue was dismissed, affirming the findings based on the remand report and verification of vouchers, which supported the assessee's contentions.