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TMI Blog2012 (9) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... is also required to be verified whether the payments were made to this party or they are still payable because the Special Bench of the Tribunal, in case of Merilyn Shipping & Transport (2012 (4) TMI 290) has already taken a view of Sec. 40(a)(ia) would be applicable only if the amount remains payable. Therefore case remand back to AO. Delay in deposit of Employees Provident Fund – AO disallows the amount on account of delay in deposit of EPF on due date as per Sec. 36(1)(va) - Held that:- Payment were made with in grace period of 5 days after due date. Therefore, the same would be allowable on the basis of decision given by Punjab & Haryana HC in case of V. Lakhani Rubber Works (2010 (3) TMI 471). Decision in favour of assessee Disallowance u/s 40(a)(ia) – Held that:- Following the decision of Tribunal in case of Merilyn Shipping & Transport(2012 (4) TMI 290) held that disallowance u/s 40(a)(ia) can be made only in respect of payments which remain payable at the end of the year. However, it is not clear from the record which payments have been made and which are payable, therefore, Case remand back to AO. - ITA No.130/Chd/2010 Cross-objections No. 07/Chd/2010 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arriage of materials and therefore, they should be considered as sub-contract. 5. The ld. CIT(A) agreed with the submissions and deleted the addition by para 40 and 41 which is as under: 40 I have considered rival submissions and relevant material on record and I am of the view that there is force in assessee s contention. Since the assessee is in the business of civil construction for construction of roads and various projects, it is but reasonable to believe that he will have to depend on someone for supplying labour and doing other odd job work. Since the assessee himself gets work contract, any further work given by him is a subcontract on which 1% of tax is deductible u/s 194C. I don t find any infirmity to the statement of the counsel that appellant company had taken contract for construction of roads and various projects. It is not correct for the Assessing Officer to conclude that the assessee failed to prove that he was working in pursuance of a contract. In my view, the very fact that we are assessing a civil contractor is proof enough that household expenses is working for someone on contract basis. Whole lot of correspondences between the Assessing Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd find some force in the contentions of the assessee. Section 194C which is as under: 194C Payments to contractors and sub-contractors (1) Any person responsible for paying any sum to any resident (hereinafter in this section referred to as the contractor) for carrying out any work (including supply of lab our for carrying out any work) in pursuance of a contract between the contractor and (a) the Central Government or any State Government; or (b)any local authority; or (c) any corporation established by or under a Central, State or Provincial Act; or (d) any company; or (e) any co-operative society; or (f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any university established or incorporated by or under a Central, State or Provincial Act and an institution decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son who enters into a contract with the Contractor for carrying out or for supply of labour for carrying out whole or part of work undertaken by the contractor. On the basis of this understanding, it is clear that when Shri Abdul Sattar was given some work regarding laying of concrete in a bridge and also supply of labour, same amount to subcontract and therefore, tax was rightly deducted at 1.2%. However, as far as the payment to M/s V.R. Enterprises is concerned, they have simply carried out the Bitumen from Panipat to hot mix plant of the assessee, therefore, they are not involved in execution of any part of the contract which was taken by the assessee and accordingly the assessee should have deducted full tax @ 2% from this party. However, at the same time it is also required to be verified whether the payments were made to this party or they are still payable because the Special Bench of the Tribunal, Visakhapatnam in case of Merilyn Shipping Transport, Visakhapatnam V. Addl CIT, Range-1, Visakhapatnam has already taken a view that the provisions of section 40(a)(ia) of the Act would be applicable only if the amount remains payable. Therefore, we confirm the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Punjab Haryana High Court in case of CIT V. Lakhani Rubber Works, 326 ITR 415 (P H). 15. On the other hand, the ld. DR for the revenue relied on the order of the ld. CIT(A). 16. After considering the rival submissions we find that payments have been made within grace period and therefore, the same are allowable in line of the decision of Hon'ble Punjab Haryana High Court in CIT V. Lakhani Rubber Works (supra). 17. In cross-objections No. 4, various payments which have been disallowed have been challenged. It was pointed out by the ld. counsel of the assessee that in the list of freight payments disallowed for non-deduction of tax includes payment of Rs. 64,650/- to Shri Cement Ltd and Rs. 88,830/- to Birla Corp Ltd. was in fact on account of payment for purchase of cement which has been wrongly included in the freight. It was further submitted that rest of the payments cannot be disallowed in view of the decision of Special Bench of the Tribunal, Visakhapatnam in case of Merilyn Shipping Transport, Visakhapatnam V. Addl CIT, Range-1, Visakhapatnam wherein it was held that the disallowance u/s 40(a)(ia) can be made only in respect of payments which remain pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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