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TMI Blog2012 (7) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... ting a sum of Rs. 64,52,061/-by invoking provisions of Section 40(a)(ia) of the Income Tax Act, 1961, subsequently in appeal to CIT(A) the expense was partly allowed up to the extent of Rs. 1,35,494/-. 2. On the facts and in the circumstances of the appellant's case and in law, the learned Assessing Officer erred in disallowing expenses aggregating a sum of Rs. 1,88,152/-by invoking provisions of Section 40A(2)(b) of the Income Tax Act, 1961, subsequently in appeal to CIT(A) the expense was partly allowed upto the extent of Rs. 68,152/-. 3. On the facts and in the circumstances of the appellant's case and in law, the learned Assessing Officer erred in disallowing expenses aggregating a sum of Rs. 3,60,000/-by invoking provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that amount of payment of Rs. 57,82,726/-, paid to M/s Santogen Silk Mills Limited, the TDS was not deducted because it was a sick unit. Similarly, on amount of Rs. 1,96,736/- paid to Hiren Textiles Private Limited, no TDS was deducted as there was no contract. The Assessing Officer thus invoked the provisions of Section 40(a)(ia) and disallowed the following expenses :- (i) Processing Charges Rs. 1,19,282/- (ii) Packing Charges Rs. 1,35,494/- (iii) Weaving Charges Rs. 60,14,842/- (iv) Service Charges Rs. 1,82,443/- Total Rs. 64,52,061/- 3. Before the CIT(A), it was submitted that TDS was not deducted as there was no contract or agreement be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company is under BIFR, provision of other laws are not applicable as it has to be governed by the provisions contained in BIFR. Hence, TDS provision under Income Tax Act will not apply in payment made to such companies under BIFR. Further, it was submitted by him that there was no contract between the assessee and the recipient party for the work performed by them. He also relied upon a decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd. v. CIT [2007] 163 Taxman 355/293 ITR 226, for the proposition that if the tax has already been paid by the recipient of income, the recovery of tax cannot be made once again from the tax deductor. Since in the present case, the recipient was in huge loss, there was no n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n manner and also there has to be some kind of understanding for the quality and design. All these things can be oral also and comes within the purview of "work" done in pursuance of a contract. The basic postulate of a contract is that there should be some kind of risk and responsibility for carrying out any work. Once the assessee is making a payment for weaving and processing charges to any person, such a person has to undertake some kind of risk and responsibility for carrying out the work as per the specification and the order placed by the payee. Once the payment has been made for such kind of a work like processing and weaving, the liability to deduct TDS definitely arises under Section 194C(1), which provides that any person, who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000/- on each occasion and did not exceed to Rs. 50,000/- in the year, the same needs verification from the Assessing Officer. Accordingly, the matter relating to processing charges and service charges are sent back to the Assessing Officer to verify as to whether the payment on each occasion was less than Rs. 20,000/- and it did not exceed Rs. 50,000/- in that year. In the result, disallowance on account of weaving charges is confirmed in toto and disallowance with regard to processing charges and service charges is remitted back to the Assessing Officer as per the observations given above. 8. In ground No.2, the assessee has challenged the disallowance of Rs. 1,20,000/- under Section 40(a)(ia) with regard to payment made on car hirin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that sum of Rs. 13,44,001/- was deposited in the bank account of the assessee by way of cash. It was explained before the Assessing Officer that all the deposits have been made out of cash withdrawn from the cash book. However, the Assessing Officer found that the following cash entries are not reflected in the cash book : 8/06/04 Rs. 3,30,000 14/03/05 Rs. 30,000 Total Rs. 3,60,000 and accordingly, he added the same as unexplained cash credit under Section 68. Learned CIT(A) too has confirmed the said addition. 12. Learned AR submitted that this amount of cash has been shown as withdrawn on 29-5-2004 from the cash book and was deposited on 8-6-2004. The ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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