9911796707
TMI Blog2013 (5) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... for the payments made to the labourers through the Sardars/Munshis of each group of daily labourers whose total payments for each of them are below Rs.50000/- on considering the Munshis/Sardars as the sub- Contractors for supply of labourers in terms of the Income Tax Act 1961." 2. The brief facts of the case are that the assessee is a Civil Contractor and filed return of income declaring income of Rs.98,632/- claiming deduction u/s 80P of the Act being a cooperative society. The AO during the course of assessment u/s 143(3) observed that the assessee had made payments to labour contractors. The AO had disallowed the total amount claimed as expenditure amounting to Rs.20,82,203/- being the amount to be disallowed u/s 40(a)(ia) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identifying the portion which exceeded Rs.50,000/- as per the individual payment was noted by the AO. Further more, the ld. Counsel submitted that the sardars or Munshis are not the contractors in the strict sense of the word "contract" in so far as they are labourers or Munshis who identify the labourers who are to be paid or reimbursed for the purpose of executing the work of the assessee on the basis of which the assessee, as a contractor is to be reimbursed on the contractees. For this proposition he relied on various judgements as enunciated by the Hon'ble High Courts and the Supreme Court that mere reimbursement of payment for executing the work cannot be identified for the purpose of deduction of tax at source u/s 194C of the Act whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. We have heard the rival submissions and carefully perused the materials available on record. We are inclined to find the submission of the ld. Counsel for the assessee are justified in so far as the ld. CIT(A) has not identified the amount pertaining to the disallowance u/s 40(a)(ia) of the IT Act for the purpose of invoking the provision of section 194C of the Act, the same purported "contractors" were indicating the opening balance which the assessee owed to them continued to receive the payments in the impugned assessment year when the actual amount paid was enumerated by the AO during the impugned assessment year amounting to Rs.11,63,339/- was considered allowable u/s 40(a)(ia) of the IT Act without deducting tax at source u/s 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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