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TMI Blog2015 (4) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... sites for making metals etc. Payments were made on regular basis. In case of Associated Cement Ltd. (1993 (3) TMI 1 - SUPREME Court) was in connection with ‘any work’ and ‘on income comprised therein’ in Section 194C(1) of the Act. CIT(A) distinguishing the case law has rightly confirmed the addition made by Assessing Officer invoking the provisions of Section 40(a)(ia) of the Act. - Decided against assessee. In respect of payment to MohMangal Carting Contractor of ₹ 3,63,440 towards moving matter from mine to crusher-machine and crushed metal from crusher to storage place. In facts and circumstances, Assessing Officer was justified in invoking provision of Section 194C for making disallowance under the provisions of Section 40(a)(ia). Same is upheld because assessee hired Hydraulic Trucks for carting boulders from explosion sites to the crushers sites for making metals etc. - Decided against assessee. Payment made to Ramaiya Compressorwala and Ladubhai Compressorwala, payments were for hire or rent charge for equipment like compressor only. CIT(A) having considered the submission of assessee observed that assessee has been hiring equipment from year to year and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) was not applicable. Further stand of assessee has been that payments were made to these persons also covered in Explanation clause of Rule 6DD of sub-rule(g) because payment is made in a village- Alipore, Degam, which on the date of such payment was not served by any bank to any person who ordinarily reside or carrying on any profession, business or vocation in any of village. Payees had no bank account at Alipore-Degam, therefore assessee was required to make payment in cash. In this background, CIT(A) was justified in directing the Assessing Officer to delete addition because application was within eligible limits. This reasoned finding of CIT(A) needs no interference - Decided against revenue. Disallowance of 10% and 5% out of various expenses - Held that:- Assessing Officer made addition of ₹ 35,963/- being 10% out of above i to iv aggregate expenses of ₹ 3,59,633/- and made addition of ₹ 1,14,672/- being 5% out of above v & vi aggregate expenses of ₹ 22,93,423/-. In appeal, CIT(A) estimated lump sum 5% disallowance on Telephone expenses (Rs.70,825/-), petrol expenses (Rs.48,610/-) and diesel expenses (Rs.21,93,423/-) and directed the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding ₹ 20,000/- at one time in a single day. [4] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of ₹ 34,992/-out of total addition made by the AO of ₹ 150635/- on account of personal use of telephone, petrol, car and for want of proper check over the diesel, repair and maintenance expenses. [5] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of ₹ 3,50,000/- out of total addition of ₹ 9,57,810/- made on account of disallowances of bogus unverifiable agriculture income. 2.1 In ITA No. 541/Ahd/2011 for A.Y. 2006-07, assessee has filed appeal on the following grounds: (1) Lr. A.O. has erred in law and on facts to invoke provisions of Sec.40a(ia) of the Act in respect of payment to Manoj C. Patel, Proprietor of Mohmangal Carting Contractor for ₹ 3,62,440/ towards moving metal from mine to crusher machine and crushed metal from crusher machine to storage place ignoring the fact that movement of goods within factory premises does not came within abmit of Sec. 194C.Lr. CIT(Appls.), Valsad also erred in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sadi Centre and Nilkanth Industries. However, Assessing Officer did not accept the same and made the addition of ₹ 3,50,000/- under the provision of Section 68 of the Act. 3.2 Matter was carried before the First Appellate Authority, wherein assessee filed (1) a copy of confirmation from Shree Nanak Sadi Centre, Chikhli i.e. copy of assessee,s account in their books (2) Copy of Centurian Bank's current account's statement for a period of 30.6.2005 to 27.07.2005 showing an amount of ₹ 1,00,000/- advanced by Nilkanth Quarry Works to Nanak Sadi Centre on 21.7.2005 vide cheque No.248384 shown withdrawn on 27.07.2O05. Advance made by assessee vide above cheque No.248384 dtd. 18.07.2005 drawn on his Centurian Bank was cleared on 21.07.2005 which is shown as credited / withdrawn on 21.07.2005. Nanak Sadi Centre repaid this amount on 18.03.2006 by cheque No.588355 drawn on their SBI account. The other addition made by Assessing Officer was of ₹ 2,50,000/- received from Nilkanth Industries on dates as shown by Assessing Officer in para 4, page 2 of its Order. This was also explained to be repayments of Advances made by assessee to Nilkanth Industries which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in case of Associated Cement Company Ltd. Vs. CIT (1993) 201 ITR 435 (SC) wherein it has been held that provisions of Section 194C would not be made applicable to the payment made for hiring or renting of equipment. Referring the said decision, it was contended on behalf of assessee that Hydraulic Truck was hired for removing blasted boulders to the crusher machine for crushing boulders into different sizes of stone. Hire charges were fixed per trip. Moh Mangal prepares one bill for every month and therefore, Section 194C does not apply in said case. Similar contentions were made for other payments. Assessing Officer rejecting the stand of assessee disallowed above amounts by invoking provisions of Section 40(a)(ia) of theAct. 4.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised as discussed above and having considered the same CIT(A) also confirmed the addition. With regard to addition made to MohMangal Carting Contractor, Ramaiya Compressorwala and Ladubhai Compressorwala while deleted the addition made on account of Fees paid to Auditor. Against deletion of ₹ 75,000/- made within meaning of Section 40(a)(ia) read with Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een hiring equipment from year to year and the payments are made on regular basis even if no written agreement exists between the contractor and contractee. The equipment is specialized one hired for the drilling work. Hiring of such equipment and payment on such hiring squarely falls within the scope of Section 194C. In view of above, CIT(A) confirmed the order with regard to above payments, disallowed by Assessing Officer by invoking provision of Section 40(a)(ia). This factual and reasoned finding of CIT(A) needs no interference from our side. We uphold the same. 4.2.3 Regarding disallowance of payment made for accounting work, Audit fees and Income Tax fees payable. Assessing Officer disallowed the payment made for accounting work, audit fees and income tax fees which fall under Section 194J and TDS was not made, expenses payable and paid disallowed u/s. 4o(a)(ia) as per para 7 of Assessment Order. The details of additions made by AO are as under: (1) Income Tax Consultant fees- Rs.30,000/- (2) Accountant Fees- Rs.20,000/ (3) Auditor's Remuneration- Rs.10,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. Regarding Accounting fees, amount of ₹ 20,000/- was shown payable on 01.4.2005 was the expenditure of earlier year and paid during the year is not expenditure but a discharging of liability which is not exigible to TDS Provision made of ₹ 20,000/- of Accounting fees for A.Y.2006-07 was as good as amount of fees payable for A.Y.2006-07. Amount of provision does not exceed ₹ 20,000/-, so, it was held not deductible to TDS and therefore non-deduction of Tax does not attract the provision of Section 4o(a)(ia). In view of the above, CIT(A) agreed with the contention of assessee that payment made on this account is not subject provision of Section 40(a)(ia) of the Act. Accordingly, CIT(A) rightly directed the Assessing Officer to delete the additions made on this account. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. This take care of ground no.1 2 raised in assessee s appeal and ground no.2 of Revenue s appeal. 5. Next issue is with regards to disallowance of ₹ 19,253/- made by the Assessing Officer by invoking provision of Section u/s. 40A(3) of the Act. Assessing Officer in para (6) of his Order has given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,78,017/ (iv) Depreciation on Tata Safari car ₹ 62,161/ Rs.3,59,633/ (v) Repairs Maintenance expenses Rs.1,38,920/ (vi) Diesel expenses Rs.21,54,503/- Rs.22,93,423/- Assessing Officer made addition of ₹ 35,963/- being 10% out of above i to iv aggregate expenses of ₹ 3,59,633/- and made addition of ₹ 1,14,672/- being 5% out of above v vi aggregate expenses of ₹ 22,93,423/-. In appeal, CIT(A) estimated lump sum 5% disallowance on Telephone expenses (Rs.70,825/-), petrol expenses (Rs.48,610/-) and diesel expenses (Rs.21,93,423/-) and directed the Assessing Officer to restrict the disallowance to 5% of ₹ 23,12,858/- [(Rs.70,825/- ) + (Rs.48,610/-) + (Rs.21,93,423/-) = 23,12,858/-]. This reasoned finding of CIT(A) need no interference from our side. We uphold the same. 7. Next issue is with regards to disallowance of agricultural income of ₹ 9,57,810/-. Assessing Officer after making inquiry from land records and from APMC gav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uphold the same. 8. In ITA No. 436/Ahd/2011 for A.Y. 2007-08, Revenue has filed appeal on the following grounds: [1] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of ₹ 1,00,000/- made on account of disallowance unexplained cash credit u/s.68 of the IT Act. [2) On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of ₹ 15,940/- out o total addition of ₹ 1,15,940/- made on account of disallowance of excess payment of royalty claimed. [3] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of ₹ 41,469/- made on account of personal use of car and telephone expenses. [4] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of ₹ 6,50,000/-out of total addition of ₹ 11,54,930/- made on account of bogus unverifiable agriculture income and treating it as business income. 8.1 In ITA No. 542/Ahd/2011 for A.Y. 2006-07, assessee has filed appeal on the following grounds: (1) Lr. A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of ₹ 6,15,231/-. 10.1 Matter was carried before the First Appellate Authority wherein CIT(A) confirmed the same. Same has been opposed before us. We find that in similar set of facts in A.Y. 2006-07 in assessee s own case while dealing the appeal said year, CIT(A) decided this ground of assessee considering the similar submissions made on behalf of assessee and following its predecessor s decision in A.Y. 2006-07, CIT(A) decided the issue against him. We have discussed and decided the similar issue against assessee in A.Y. 06-07 vide para 4 of this order on similar set of situation. In view of same, we are not inclined to interfere in the finding of CIT(A)(A) who had sustained the addition made by Assessing Officer following decision for A.Y. 06-07 under the provisions of Section 194C. Same is upheld. 11. Next issue in Revenue s appeal is with regards to addition of ₹ 15,940/- out of total addition of ₹ 1,15,940/- made on account of disallowance of excess payment of Royalty. Assessing Officer noticed that assessee had debited excess royalty charges in profit and loss account. He collected information form the Mining Department which confirmed royalty pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome shown Land Used Vegetables Rs.10,17,195/- ₹ 3,38,945/- ₹ 6,78,250/- O-59-33 Hector. Mangos 4,19,344/- 1,39,784/- 2,79,560/- O-37-43 Hector Paddy 34,800/- 11,600/- 23,200/- O-72-68 Hector Total 14,71,339/- 4,90,329/- 9,81,010/- The expenditure made by assessee although details were not produced before Assessing Officer, was 33.31%. The produce cost vis- -vis sales will be more, particularly for vegetable, compared to places well connected and consumers are located near by to the produce centre. In the instant case, assessee s produce centre is located in interior village limits. Assessee had also claimed of having grown sugarcane and chikku in protion of land which Assessing Officer had not disputed having taken into consideration the details filed by assessee. Assessing Officer has given definite fin ..... 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