2018 (5) TMI 51 - AT - Income Tax

TDS u/s 194C - Non deduction of TDS - Additions under the heads labour charges , installation charges & hire charges - contention of the ld.AR is that if another opportunity is given to assessee to submit all the details relating to payments made to said firms and companies and to find out as to whether the payees (firms/companies) considered respective amounts in their accounts and also offered to tax thereon in their respective returns of income in terms of 2nd proviso to section 40(a)(ia) - Held that - We find force in the submissions of the ld.AR and we find support from the decision of the Hon ble High Court of Delhi in the case of CIT Vs. Ansal Landmark Township (P) Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT) in remanding the matter to the AO for the said purpose. The insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance.Respectfully following the above, we deem it fit and proper to remand the matter to the file of the AO. Addition on account of contractual receipts shown in the P & L account of assessee - Held that - According to assessee, there were discrepancies between the amount payable and amount receivable from Mechanical Division, Govt. of W.B & TDS certificates issued. The AO & CIT-A did not consider the submissions of assessee in their right perspective. We find that there was difference of turnover as per TDS Statement and Profit & Loss A/c, which requires verification by the AO. Therefore, taking into consideration the facts of the case and the submissions of ld.AR and issue involved in the appeal, we deem it fit and proper to remand the matter to the file of the AO for verification. The assessee has to clarify the difference found by the AO by proper explanation along with evidence in respect of TDS, turnover and total receipts of assessee.

Issues Involved:
1. Delay in filing the appeal.
2. Confirmation of additions under the heads ‘labour charges’, ‘installation charges’, and ‘hire charges’ due to non-deduction of TDS.
3. Confirmation of addition made on account of contractual receipts shown in the Profit & Loss account.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of 369 days. The assessee filed a condonation petition citing reasons for the delay. After considering the reasons and hearing both parties, the Tribunal found the reasons to be bona fide and reasonable, thus condoning the delay in filing the appeal.

2. Confirmation of Additions Under the Heads ‘Labour Charges’, ‘Installation Charges’, and ‘Hire Charges’ Due to Non-Deduction of TDS:
The assessee, a government contractor, had not deducted TDS on payments totaling ?53,51,098/- under the heads ‘labour charges’, ‘installation charges’, and ‘hire charges’. The Assessing Officer (AO) added this amount to the total income of the assessee under section 40(a)(ia) of the Income Tax Act.

Before the Commissioner of Income Tax (Appeals) [CIT-A], the assessee submitted that the payments were made towards labour, installation, and hire charges for maintaining pump houses during a public event. The CIT-A dismissed the appeal, noting that the assessee had admitted to the mistake of not deducting TDS during the assessment stage and had deposited the tax in the subsequent year. The CIT-A found that the payments were made to various firms and companies, and the assessee’s argument that payments were made to individual laborers was not supported by records.

Before the Tribunal, the assessee reiterated the submissions and requested a remand to the AO for verification of whether the payees had included the amounts in their income and paid taxes. The Tribunal found merit in the assessee’s request, citing the decision of the Hon’ble High Court of Delhi in CIT Vs. Ansal Landmark Township (P) Ltd., which supports remanding the matter for verification if the payees have filed returns and paid taxes on the amounts received. The Tribunal remanded the matter to the AO for verification, allowing the grounds for statistical purposes.

3. Confirmation of Addition Made on Account of Contractual Receipts Shown in the Profit & Loss Account:
The AO found that the assessee had not considered contractual receipts of ?77,26,433/- in the Profit & Loss account, which included amounts debited for Cess, TDS, and W.C.T. The assessee explained that the amount was received as an ad-interim advance and adjusted in a subsequent year. However, the AO added the amount to the total income, as it was not reflected in the Profit & Loss account.

The CIT-A upheld the AO’s decision, stating that the assessee admitted to not considering the contractual receipts in the Profit & Loss account and had paid self-assessment tax on the amount. The CIT-A found no merit in the assessee’s appeal.

Before the Tribunal, the assessee argued that the issue was misrepresented and requested a remand to file all necessary documents. The Tribunal found that the AO and CIT-A did not consider the assessee’s submissions correctly and noted discrepancies between the TDS statement and the Profit & Loss account. The Tribunal remanded the matter to the AO for verification, allowing the grounds for statistical purposes.

4. Consequential and General Grounds:
Ground no. 11 was consequential in nature and required no adjudication. Ground no. 12 was general in nature and also required no adjudication.

Conclusion:
The appeal was allowed for statistical purposes, with the Tribunal remanding the matters related to non-deduction of TDS and contractual receipts to the AO for verification and fresh consideration.

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