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TMI Blog2012 (8) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ading addition was made. 4. By the impugned order, the ld. CIT(A) confirmed the action of the Assessing Officer for rejection of books of account u/s 145(3). However, he deleted the addition after having the following observations :- " 4.3 In Ground No. 3(a) & 3(b), the appellant has agitated the addition of Rs. 10,38,790/- made by the AO on account of G.P. The contention of the appellant that after considering the additional income of Rs. 22,02,339/-, the trading results for the year under consideration would be found better than that assessed by the AO, has prima-facie merit. Although, the appellant had not maintained proper books of account and therefore the same were rightly rejected by the AO, as held in preceding para but after rejecting the books of account, it would have to be seen that whether or not the income shown by the appellant is justified in the facts and circumstances of the case. 4.3.1 In the instant case, the appellant had already included additional income of Rs. 22,02,339/- in its audited profit & loss account and after inclusion of such income, the appellant had filed the return of income at total income of Rs. 26,63,750/-. It has to be necessarily held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te shown by the assessee, however, there is no impact on the trading results or gross profit so earned by the assessee by inclusion of such additional income. We also found that during the year under consideration, there is a substantial increase in sales and during the year under consideration, the assessee has booked a sale of Rs. 9.71 crores as against sale of earlier year which was Rs. 2.79 crores. Thus, there was increase in sale of 3.48 times as compared to the preceding year. There is no dispute to the well settled legal proposition that with increase in sale volume, the assessee has to make some sacrifice on the part of gross profit rate, meaning thereby with increase in overall turnover, even though over all gross profit will increase, but the gross profit rate will fall to certain extent. We also find that shortage of 0.73 % has been claimed during the year as compared to shortage of 1.38 % in earlier year. Therefore, keeping into view the totality of facts and circumstances of the case vis-à-vis additional income of Rs. 22.02 crores surrendered by the assessee, which has resulted into increase net profit of the assessee, we direct the Assessing Officer to restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act and the same is directed to be deleted. Accordingly, Ground No. 4(a) & 4(b) of the appellant are allowed. " 9. We have considered the rival submissions and found from record that the ld. CIT(A) has deleted the disallowance by observing that payment was made to group leader of the labourers and such group leader made the disbursement to other labourers. However, there is no material on record to suggest that payment was directly made by assessee to individual labourers and that payment to each of them were below the prescribed limit warranting no deduction of tax at source. The CIT(A) has also taken the view that since there was no contract whether oral or written, therefore, the assessee cannot be held liable for deduction of tax at source u/s 194C of the Income-tax Act, 1961. In the case of Durgesh Shukla, I.T.A.No. 488/Ind/2010, order dated 10.10.2011, we had already taken a view that even if it is an oral contract, the assessee is liable to deduct tax and in case of such type of work, a contract always exists and the same need not be in writing. Precise observation of Bench was as under : "However, the ld. CIT(A) has deleted the disallowance of Rs. 36,84,384/- by observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recise observation of the Bench was as under :- "The provision of s. 40(a)(ia) was introduced in order to ensure compliance of TDS but assigned the term "payable" in the provision of s. 40(a)(ia). On a comparison between the proposed and enacted provisions, the only conclusion which can be reached is that legislature consciously replaced the words "amount credited" or "paid" with the word "payable" in the final enactment and such change was not done without any purpose. It is a basic presumption that an enactment brought in by the legislature 'is well-thought of and properly worded in order to give meaning to its intent by changing the words from "credited" or "paid" to "payable". The legislative intent has been made clear that only the outstanding amount or the provision for expense liable for TDS is sought to be disallowed in the event there is a default of TDS. Where the language is clear, the intention of the legislature is to be gathered from the language used. What is to be borne in mind is as to what has been said in the statute as also what has not been said. A construction which requires, for its support, addition or substitution of words or which results in rejection o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section has its own meaning and while drafting s. 40(a)(ia) the legislature was conscious of the fact that there may be a case Where the amount is paid and there may be a case where the amount is payable and has used appropriate words so that the language may be clear and clear meaning may be given. One may look into the language contained in Finance Bill, 2004 wherein this provision was introduced. In the Finance Bill both the words paid and payable were used. However the word paid was subsequently dropped which shows that s. 40(a)(ia) was meant to be applicable only if the amount covered therein was "payable" at the end of the year. Reference may be made for the scope and effect of s. 40(a)(ia) as clarified by CBDT in Circular No. 5 of 2005, dt. 15th July, 2005 to show that the intention to introduce this provision was brought to curb bogus payments by creating bogus liability.-CIT vs Upnishad Investment (P) Ltd. & Ors. (2002) 177 CTR (Guj) 176 : (2003) 260 ITR 532 (Guj) applied. (Para 8) Sec. 40(a)(ia) creates a legal fiction for the amount outstanding or remains payable at the end of every year as on 31st March and it cannot be extended for taxing the amounts already paid. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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