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TMI Blog2012 (4) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... Promoters Pvt. Ltd. were awarded contracts by PGF Ltd. 4. During the course of assessement proceedings in the case of the assessee, it was noticed by the Assessing Officer that the assessee had claimed that it had carried out work worth Rs. 4.92 crores for PGF Ltd. but the TDS certificate issued by PGF Ltd. was only in respect of Rs. 4.55 crores. 5. In response to the queries, the assessee vide letter dated 5.12.2008 stated as under : "1. Please refer to point 1 of your letter dated 25.11.2008 stating deduction on TDS payment of Rs.4,55,00,000/- where as the actual total of payment made for TDS would come to Rs.6,42,00,000/-. Due to some oversight the figure was mentioned as Rs.4,55,00,000/- which is regretted. However, if the payments made are totaled it would be Rs.(sic.) 6,42,00,000/-. It is apparent from the records and could be rectified. So out of the total TDS on Rs.6,42,00,000/- a contract work for Rs.4,92,00,000/- was carried out by self and a work of Rs.1,50,00,000/- was handed over to Rishikesh Properties Pvt. Ltd. As the case of this company is also in scrutiny and with your good self the same may please be accounted for in Rishikesh Buildcon Pvt. Ltd. and rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we may mention that the aforesaid reasoning is not convincing and has to be rejected. The assessee had submitted that it had paid Rs. 1.5 crores to Rishikesh Properties Pvt. Ltd., the sub-contractor. It was claimed as an expense. The reasoning given by the CIT(Appeals) is that this amount was not treated as an expense by the assessee in the profit and loss account and therefore, there cannot be any disallowance under Section 40(a)(ia). If this is correct, then the entire amount, as stated by the assessee in the letter dated 5.12.2008, of Rs.6.42 crores was to be treated as income and Rs.1.5 crores could not be treated as an expense. The result would have been the same, whether any disallowance was made under Section 40(a)(ia) of the Act or not. 9. The Revenue preferred further appeal before the Tribunal, which has been dismissed by the impugned order dated 18.12.2009. The relevant reasoning given by the Tribunal reads as under: "5.4 We have perused the orders of authorities below and arguments of Ld. DR. From the table referred in para 4.4 above it is noticed that the total receipts by the assessee is amounting to Rs.6,42,00,000/- out of which payment of Rs.1,50,00,000/- pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e perusal of the facts stated in other two cases namely Rishikesh Properties (P) Ltd. and Rupa promoter (P) Ltd. it is found that all these companies made contract with M/s PGF Ltd for development work at Chennai. All the working directors were common. The promoter directors were also same or relatives. The total contract made by the M/s PGF Limited with the respondent assessee amounted to Rs.4,92,00,000/- while a separate contract was made with M/s. Rishikesh Properties by M/s. PGF Limited amounting to Rs.4,25,00,000/-. Rs.1,50,00,000/- paid by the respondent assessee was forming part of Rs.4,25,00,000/- and not linked with Rs.4,92,00,000/- declared by the respondent assessee. Since it is neither forming part of the receipts in the profit and loss account nor forming part of an expenditure claimed by it, provisions of section 40(a)(ia) and section 194C are not attracted. The same would be applicable when there is a relation of a contractor a sub-contractor for making payments for carrying out any work for them but not otherwise. The assessing officer has not looked into this aspect which was examined by the CIT (A). We, therefore, do not find any reason to interfere with the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the three assessee herein are direct contractors and have incurred then respective expenses for work executed by them. As stated earlier, the confusion or difference arose due to difference in payment made by client or tax deducted thereon rather than value of total work executed and as accounted by all the three assessee put together." 11. We may mention here that the observations made in para 4.4 were on a different context and in respect of the addition of Rs. 1,46,96,698/- made by the Assessing Officer on account of the bills raised by the assessee before its incorporation for work done for PGF Ltd. In para 4.4, the Tribunal has held that whether or not the assessee had done any work was to be judged and ascertained with reference to the work actually performed and the bills raised and not with reference to the TDS certificates, which has been issued by PGF Ltd. to the assessee. The Tribunal, therefore, distinguished between the amount mentioned in TDS certificates and the quantum of bills raised and the work actually done on the basis of which income of the assessee was to be assessed. We may record here that in the table mentioned above, PGF Ltd. had stated that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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