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TMI Blog2015 (7) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... ated:- 17-7-2015 - Shri G.D. Agrawal and Shri Shailendra Kumar Yadav, JJ. For the Petitioner : Smt. Arti N. Shah, AR For the Respondent : Smt Sonia Kumar, Sr. DR. ORDER PER G.D. AGRAWAL, VICE PRESIDENT: ITA No. 2878/Ahd/2012 is the appeal filed by the assessee against the order of the learned Commissioner of Income-tax (Appeals)-IV, Bardoa dated 08.11.2012, for Assessment Years 2009-10. ITA Nos. 2170 to 2172/Ahd/2012 are the appeals filed by the assessee against separate orders of the learned Commissioner of Income-tax (Appeals)-IV, Baroda, all dated 06.07.2012, for Assessment Years 2009-10, 2010-11 and 2011-12 respectively. Since these appeals involve common issues, these were heard together and are being disposed of by this consolidated order for the sake of convenience. ITA No. 2878/Ahd/2012 Assessee s Appeal for Assessment Year 2009-10 2. The only ground raised in this appeal by the assessee reads as under:- The Learned Commissioner of Income Tax (Appeals)-IV, Baroda has erred in law as well as on facts of the case by confirming disallowance of ₹ 48,64,187/- u/s 40(a)(ia) of the I.T. Act, 1961 made by the Assessing Officer . 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s reliance on the aforesaid decision cannot be entertained. Therefore, in agreement to the decision of the ITO(TDS), Anand, the claim of expenses in respect of labour charges aggregating to ₹ 48,64,187/- is disallowed u/s 40(a)(ia) of the Act (Disallowance ₹ 48,64,187/-) 4. On appeal, the CIT(A) sustained the addition; hence, this appeal by the assessee. 5. At the time of hearing before us, it is submitted by the ld. Counsel that the payment was made to 14 labour supervisors who brought the labourers. That the payment to the labour supervisors was a collective payment in respect of all the labourers brought by him. There was no contract between the assessee and the labour supervisors and therefore, section 194C was not applicable. In support of this contention, she relied upon the following decisions:- i. Karnataka Rural Infrastructure Development Ltd vs. ITO, [2015] 370 ITR 222 (Karn.) ii. ITO vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section (1) is credited to any account, whether called Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source- (i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. (4) No individual or Hindu undivided family shall be liable to deduct income tax on the sum credited or paid to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1 Departmental Unskilled labour supply MD 100 3848.44 384,844 1,633.25 5,481.69 548,169 2 Departmental Skilled labour supply-Mason MD 200 1332.367 266,473 95.50 1,427.87 285,573 3 Travelling Allowance for Labour 0 8,000 - - 8,000 4 Salary 2500 6 15,000 1.00 7.00 17,500 5 Extra 10% Rate on work done between 15/3/2008 to 15/4/2008 8,680 8,680 TOTAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopmental construction works directly by eliminating middlemen like contractors and sub-contractors to avoid exploitation of the rural poor, thereby passing on the full worth of money to the people. The material on record discloses that the Corporation transfers the amount earmarked for said projects to the account of the engineer who is in charge of the such project, who is also an employee of the assessee-company. The said engineer at the spot engages the services of the workers. Probably, he cannot go in search of employees, the responsibility is given to a person who brings the labour force, who is called as a group leader. He is also one among the workers who is engaged in executing the works. The payment is made to the group leader, in turn who disburses the amount to his co-employees. Thus, the facts before the Hon ble Karnataka High Court were altogether different than the facts in the case under appeal before us. In the said case, admittedly, there was no contractor or sub-contractor, but the labourers were directly employed by the assessee and the payment was made to the Group Leader for and on behalf of his co-employees and he in turn distributed the amount to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r supply. Against those bills, payment is made to those 14 persons from time to time and some payment is outstanding which is shown in the balance-sheet of the assessee. From these facts and the bills/vouchers issued by the 14 persons, it is evident that it is a case of contract for supply of labourer and therefore, section 194C was squarely applicable. Since the assessee failed to deduct the tax at source, in our opinion, the Assessing Officer rightly disallowed the labour charges paid to the labour contractors by invoking the provisions of Section 40(a)(ia). Accordingly, the assessee s appeal is dismissed. ITA Nos. 2170 to 2172 /Ahd/2012 Assessee s Appeal: AYs 2009-10 to 2011-12 11. In all these three appeals, only one ground is raised which reads as under:- AY 2009-10 The Learned Commissioner of Income Tax (Appeals)-IV, Baroda has erred in law as well as on facts of the case by confirming the order of Income Tax Officer (TDS), Anand holding that Appellant has failed to deduct tax of ₹ 1,00,202/- u/s 201(1) of the I T Act, 1961 and levying interest of ₹ 33,066/- u/s 201(1A) of the Income Tax Act, 1961 thereon. AY 2010-11 The Learned Commi ..... 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