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TMI Blog2013 (10) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... ified. Disallowance of repairs and maintenance - Held that:- The addition is adhoc in nature without pointing out any specific vouchers not produced before the AO. The assessee maintained books of account, which are audited and were produced before the AO. The AO made disallowance without pointing out any specific inadmissible expenditure and in order to cover up possible leakages of income, which would suggest that the addition is adhoc in nature. Therefore, the addition is wholly unjustified. X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000/- at one time/single day on a test check basis. The assessee also confirmed that at one time in a single day, no payment exceeding ₹ 20,000/- was made in cash. The AO also examined the issue in the light of the provisions of section 194C of the IT Act where the sum credited or paid was likely to exceed ₹ 20,000/-. The AO considering the provisions of section 194C found that the assessee has failed to deduct tax from the payments of sum amounting to ₹ 50,80,110/-. Therefore, there is violation of the provision of section 40(a)(ia) and as such, addition of ₹ 50,80,110/- was made for violation to deduct tax u/s. 194C of the IT Act. The addition was challenged before the ld. CIT(A) and the assessee reiterated the submissions already made before the AO. It was contended that the assessee has not made any payment, which exceeds ₹ 20,000/- individually and in aggregate ₹ 50,000/- in a year. Complete details were also filed. The ld. CIT(A), however, did not accept the contention of the assessee and confirmed the addition. 5. The ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it such particulars as may be prescribed in such form and within such time as may be prescribed; or] (ii) any sum credited or paid before the 1st day of June, 1972, [or] (iii) any sum credited or paid before the 1st day of June, 1973, in pursuance of a contract between the contractor and a co-operative society or in pursuance of a contract between such contractor and the sub-contractor in relation to any work (including supply of labour for carrying out any work) undertaken by the contractor for the cooperative society.] 7. The assessee has filed the details of each individual payment in paper book from pages 9 to 190 and it would prove that the payments were made in a sum below ₹ 20,000/- at one time/single day. The AO also accepted the same fact in the assessment order. Thus, the above provisions specifically provide for "any sum credited or paid or likely to be credited or paid", which, thus, would indicate to the singular payment. It is, therefore, admitted fact that the sum paid by the assessee to the owners of the truck did not exceed ₹ 20,000/- on each occasion and the aggregate amount also did not exceed ₹ 50,000/- during the financial year. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers/operators or through transporters - there was no oral or written contract between assessee and transporters - whether on facts, assessee was liable to deduct tax at source on freight charges paid to truck owners / operators - held, no." 7.4 Decision of Punjab & Haryana High Court in the case of CIT vs. Bhagwati Steels, 241 CTR 480 in which it was held - "Where the Tribunal has recorded a categorical finding of fact there was no material on record to prove any written or oral agreement between the assessee and the recipients of goods for transportation and that the payment of freight had not been shown to have been made in pursuance to contract of transportation of goods for a specific period, quantity or price and further, none of the individual payment exceeded ₹ 20,000, there was no liability to deduct tax under s. 194C and disallowance under s. 40(a)(ia)was rightly deleted." 7.5 Decision of Hon'ble Gujrat High Court in the case of CIT vs. Hatish Ramanlal Patel, 217 Taxman 26, in which it was held - "Section 194C, read with section 40(a)(ia), of the Income-tax Act, 1961 - Deduction of tax at source - Contractors/sub-contractors, payments to [condition precedent] - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nams is not the expenditure permissible under the law of land. Therefore, disallowance is justified and ground No. 5 of appeal of the assessee is accordingly dismissed. 11. On ground No. 6, the assessee challenged the disallowance of ₹ 1,00,000/- out of repairs and maintenance. The AO noted that certain expenses were either not supported by proper vouchers or there is no internal vouchers. In order to cover up possible leakages of income, sum of ₹ 1,00,000/- was disallowed. The assessee submitted before the ld. CIT(A) that complete books of account and vouchers were produced before the AO in which no specific shortcomings were found. Therefore, adhoc disallowance is not justified. The ld. CIT(A), however, did not accept the contention of the assessee and dismissed the appeal of the assessee on this issue. 13. On consideration of the rival submissions, we are of the view, the addition is adhoc in nature without pointing out any specific vouchers not produced before the AO. The assessee maintained books of account, which are audited and were produced before the AO. The AO made disallowance without pointing out any specific inadmissible expenditure and in order to cover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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