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TMI Blog2014 (7) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there are no sub-contractors for the labour, and books are maintained to monitor the man hours put in by the labour, it is neither fair nor proper for the Revenue authorities to arrive at a contrary conclusion by imputing the involvement of sub-contractors and thereby invoking the provisions of S.201(1) and S.201(1A), so as to raise demands on account of non-compliance with the TDS provisions in relation to payments – thus, the orders of the CIT(A) is set aside and the AO is directed to delete the demands raised u/s 201(1) and S.201(1A) in relation to payments made by the assessee towards labour/earth works – Decided in favour of Assessee. CIT(A) observed that there is nothing on record to suggest that the transactions are genuine hir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the books of account and other relevant details relating to TDS for the financial years 2006-07 and 2007-08. On examining the information filed and the books of account, instances of violation of TDS provisions and non-deduction of tax at source were observed in relation to payments made by the assessee by way of transportation charges, rent, professional charges, financial charges, earth works/labour payments made. Accordingly proceedings were initiated in terms of S.201(1)/S.201(1A) of the Act, treating the assessee as an assessee-in-default, in relation to the various payments made during the years under consideration. Not convinced with the explanation of the assessee in response, the Assessing Officer ultimately, vide orders dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no short deduction. 3. The Appellate Commissioner ought not to have confirmed the above action of the A.O. determining that there was short deduction of TDS with respect to earth work and labour payments. 4. The A.O. ought not to have determined the interest u/s. 201(1A) on the above short deduction and the Appellate Commissioner ought not to have confirmed the interest. 5. . 6. In addition to the grounds of general nature being 1, 4 and 5 above, on issue of short deduction of tax with respect to earth work/labour charges, identical corresponding grounds have been raised in ITA No.531/Hyd/2014 for the assessment year 2008-09 as well, which appear as grounds No.4, 5 and 6. Through grounds No.2 and 3 of the appeal for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a copy thereof before us, he submitted that where assessee made direct payments to the labour, the provisions of S.194C are not applicable. He pointed out that there was survey in the earlier years and the details, as to the manner of payment to labour for earth work was given in the form of sworn statement. Consequent thereto, it was submitted that an amount of ₹ 1.7 crores each for assessment year 2007-08 and 2008-09 was offered towards discrepancies in earth work payments, and the Assessing Officer accepting the said offer, based on the fact that the payments were made by the assessee to the labour directly and not through sub-contractors, passed orders under S.143(3) for those years. Having done so, he submitted that the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the assessee and there are no sub-contractors for the labour, and books are maintained to monitor the man hours put in by the labour, it is neither fair nor proper for the Revenue authorities to arrive at a contrary conclusion by imputing the involvement of sub-contractors and thereby invoking the provisions of S.201(1) and S.201(1A), so as to raise demands on account of non-compliance with the TDS provisions in relation to such payments. The stand taken by the Revenue authorities in these proceedings, being not harmonious with the stand taken earlier in the context of regular assessment proceedings for assessment year 2007- 08 and 2008-09, based on the material found during the course of survey conducted on 23.10.2007, we are unab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the contention of the assessee is that the said charges have been incurred on account of equipment taken on hire purchase from those parties, and the payments made to those parties are not in the nature of interest. In this connection, it is submitted, placing reliance on the Circulars No.738 dated 25th March, 1996 and Circular No760 dated 13.1.1998 of the CBDT that the TDS provisions are not applicable to the hire purchase transactions. The CIT(A), after discussing the instructions of the CBDT on the issue, observing that there is nothing on record to suggest that the transactions are genuine hire purchase transactions, upheld the view taken by the Assessing Officer. Since the this observation of the CIT(A) is contrary to the claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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