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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 ..... f the assessee direction to AO to restrict the trading addition to the extent of Rs. 1.00 lac Addition in respect of payments made without deduction of tax - CIT(A) deleted the addition - Held that:- No justification in CIT(A)'s Order in deleting the disallowance in so far as the goods transported by the transporter and payment made by the assessee for the same itself amounts to a contract. It is not necessary that such contract should also be in writing. The work of transporter in carrying the goods and act of the assessee in making payment for such transportation of goods itself amounts to a contract on which the assessee was liable to deduct tax u/s 194C(2) - restore the matter back to the file of AO with a direction to recompute the amount of disallowance with reference to the amount which remained payable at the end of the year - partly in favour of revenue. - I.T.A.No. 358/Ind/2011 - - - Dated:- 19-6-2012 - SHRI JOGINDER SINGH, AND SHRI R.C.SHARMA, JJ. Appellant by : Shri Arun Dewan, Sr. DR Respondent by : Shri Anil Kamal Garg, CA O R D E R PER R. C. SHARMA, A.M. This is an appeal filed by the Revenue against the order of CIT(A) dated 15.09.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO has relied upon. The assessment proceedings for A.Y. 2006-07 were completed u/s. 143(3) of the Act in which G.P. rate of 5.43% shown by the appellant on cotton business was duly accepted. Further, the appellant has also shown better yield of ginned cotton and cotton seeds in comparison to previous year relevant to A.Y. 2006-07. It had claimed shortage of only 0.73% as against shortage of 1.38% allowed in the earlier year. 4.3.2 Since, the appellant has shown better results in comparison to earlier year than unless and until any specific finding as regard to the suppression of sales or over statement of expenditure or under valuation of the stock or non maintenance of quantitative details are given, there would be apparently no justification for any further addition in the G.P. disclosed by the appellant. The judicial ruling of Hon'ble High Court of Rajasthan in case of CIT vs. Gotan Lime Khanij Udyog (2002) 256 ITR (Raj) 243 and rulings of the jurisdictional Tribunal, as relied upon by the appellant, squarely apply to facts of the present case. Therefore further G.P. addition at Rs. 10,38,790/- over and over additional income disclosed in return in pursuance to BCTT enquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant has prima-facie substance that the AD invoked the provisions of section 40(a)(ia) without recording definite findings as to how the appellant was liable for making T.D.S. u/s. 194C. The appellant has filed the copies of account in respect of the payments disallowed and from such accounts it has been noticed that payment in small sum have been made on different dates. The explanation of the appellant that it had made payment to group leader of the labourers and such group leader made the disbursement to other labours, sufficient has also force. In such business, where all the labourers are not literate and therefore the payment is made to their leader who is having some literacy awareness, in itself would not create any relationship of principal and contractor , between the payer and payee. The decision of the Hon' ble ITA T Ahemdabad 'A' Bench in case of DCIT vs. Laxmi Protein Products Pvt. Ltd. (2010) 3 ITR (Trib) 768 also support the contention of the appellant. 4.4.1 The AO has not brought on record any material to even prima-facie establish that any contact, whether oral or written, was subsisting between the appellant and the payees and therefore, the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract should also be in writing. The work of transporter in carrying the goods and act of the assessee in making payment for such transportation of goods itself amounts to a contract on which the assessee was liable to deduct tax u/s 194C(2) whenever the payment exceeds the limits prescribed in the Act. The case laws relied on by the ld. CIT(A) and cited by the ld. Authorized Representative during the course of hearing before us, are misconceived, in so far as in the case of United Rice Land Limited, 217 CTR 332, the Punjab Haryana High Court have merely affirmed the finding of the Tribunal to the effect that in no case single payment to one truck owner/operator was exceeding Rs. 20,000/-. The provisions of Section 194C is applicable only where payment to one truck owner/operator exceeds Rs. 20,000/-. Once it is found by Tribunal that individual payment was below Rs. 20,000/-, there is no question of application of provisions of Section 194C. However, in the instant case before us, it was found by the Assessing Officer that the payment was made to individual Transporters exceeded the prescribed limit prevailing during the year under consideration, which was Rs. 50,000/- and in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent year unless specifically provided in the statute. Proviso to s. 40(a)(ia) lays down that earlier year s provision can be allowed in subsequent years only if TDS is deducted and deposited. Hence, Revenue s fear is unfounded and the provision of s. 40(a)(ia) covers the situation. The Income-tax Act, 1961, already has a precedent in s. 43B which allows expenses only on payment basis and therefore, the argument of the Revenue that s. 40(a)(ia) would become otiose in cash system of accounting, was without any basis. (Para 7) The legislature by consciously replacing the words from "credited" or "paid" to "payable': the intent has been made clear that only the outstanding amount or the provision for expenses which are liable for TOS are to be disallowed in the event there is default in not following the TOS provisions under Chapter XVII-B. No doubt the object of s. 40(a)(ia) is to ensure that the TOS provision as provided in Chapter XVII-B is implemented without any default. The sub-section speaks of the amount "payable" on which the tax is not deducted and therefore it should apply only if any amount is "payable': but if the amount is already paid the provisions of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision, the word of a statute must be understood in its natural, ordinary or popular sense and construed according to its grammatical meaning. Such construction would not lead to absurdity because there is nothing in this context or in the object of this statute to suggest to the contrary. It is a cardinal principle of interpretation that the words of a statute must be prima facie given their ordinary meaning; when the words of the statute are clear, plain and unambiguous then the Courts are bound to give effect to that meaning. The literal rule of interpretation really means that there should be no interpretation of the statute, rather in other words, one should read the statute as it is without doing any violence to the language. The word "payable" used in s. 40(a)(ia) is to be assigned strict interpretation, in view of the object of legislation, which is intended from the replacement of the words in the proposed and enacted provisions from the words "amount credited or paid" to "payable". Hence, the provisions of s. 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on 31st March of every year and it cannot be invoked to disallow the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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