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2018 (6) TMI 271 - AT - Income TaxTDS u/s 194C - Addition against the individual labour charges during the statutory limit of execution for individual one - no TDS was deductible because the amount disbursed to nine labourers included cost of material, travel reimbursement and wages to individual labourers which cannot attract sec. 194C - Held that - The onus is on the assessee to discharge the facts which has been given in the break-up because these facts are exclusively in his knowledge and he is only privy to it and how the AO will be knowing these things and therefore the assessee has to bring material to substantiate what he claims. It has to be kept in mind by the AO that merely because nomenclature of expense is given as Labour Charges Paid does not conclusively determine the character and nature of the expense claimed. The AO has to decide the issue based on evidence/materials brought before him in accordance to law. So, with these observations, we are inclined to set aside the order of CIT(A) and remand this issue back to AO for de novo examination in the light of facts and law in accordance to law, after giving opportunity to assessee. - Appeal of assessee is allowed for statistical purposes.
Issues Involved:
Disallowance of labor charges for non-deduction of taxes under section 194C of the Income-tax Act, 1961. Detailed Analysis: The appeal was filed against the order of the Ld. CIT(A) confirming the disallowance of labor charges amounting to ?4,53,100 made by the AO due to non-deduction of taxes under section 194C of the Income-tax Act, 1961. The AO disallowed the sum as the assessee failed to deduct tax at source on payments exceeding ?50,000 to certain laborers engaged in "Jori Works." The Ld. CIT(A) upheld the AO's decision, leading to the appeal before the ITAT Kolkata. The ITAT noted the breakdown of the disputed amount and additional expenses incurred by the assessee, including cloth charges, cloth sample charges, traveling, and conveyance charges, and further labor charges. The assessee contended that no TDS was deductible as the payments to laborers included material costs, travel reimbursements, and wages, which, according to the assessee, did not fall under section 194C of the Act. The ITAT observed that the AO disallowed the entire expenditure without considering the nature of the expenses and without providing the assessee with a proper opportunity to present relevant facts. The ITAT agreed with the assessee that wages paid to laborers without a contract and money disbursed for material and travel do not necessarily attract section 194C. However, the ITAT emphasized that the onus is on the assessee to substantiate the expenses with supporting material, as the facts are within the assessee's knowledge. The ITAT concluded that the AO should re-examine the issue based on evidence and materials presented by the assessee, setting aside the Ld. CIT(A)'s order and remanding the matter back to the AO for a fresh assessment in accordance with the law. In conclusion, the ITAT allowed the appeal for statistical purposes, emphasizing the importance of a thorough examination of facts and evidence before disallowing expenses for non-deduction of taxes under section 194C of the Income-tax Act, 1961. The decision highlighted the need for the AO to consider all relevant aspects and provide the assessee with a fair opportunity to substantiate their claims before making any disallowances.
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