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TMI Blog2016 (6) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... d ₹ 20,000/- i.e., the prescribed limit for deducting tax at source. The Ld. CIT we find has not controverted all these facts. In fact the entire case of the Ld. CIT rests on the submission of the assessee in which he has termed these persons as “Contractor” This alone cannot lead to the conclusion that the payments were made to contractor, without controverting the evidences produced by the assessee in support of its contention. In view of the same, we hold that the impugned payments are not liable to be tds deduction. - Decided in favour of assessee Claim of 100% depreciation on temporary structures of office - CIT held that the assessee had claimed double deduction since no bills and vouchers in support of this expenditure had been furnished by the assessee on this aspect - Held that:- We find that this issue had been investigated during assessment proceedings and the AO after considering the assessee reply, had taken a plausible view and allowed the assessee 100% depreciation on the temporary structure. Moreover the case of the Ld. CIT we find is that in the absence of bills and vouchers pertaining to the impugned expenses, the assessee has claimed double deduction. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x at source but failed to substantiate the same with copies of ledger accounts , bills and voucher. In view of the same we hold that the assessee has not been able to establish categorically before the Ld. CIT that it was not required to deduct tax at source in the payments of rent and legal expenses and the same having not been examined during assessment proceedings also, the Ld. CIT had rightly held the order of the AO to be erroneous so as to cause prejudice to the Revenue.- Decided against assessee - ITA No.170/Ag/2013 - - - Dated:- 26-4-2016 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER For The Appel lant : Sh. Dipendra Mohan For The Respondent : Sh. Rajarshi Dwivedy ORDER PER ANNAPURNA MEHROTRA A.M. This appeal has been filed by the assessee against the order of Ld. CIT(1), Agra dt. 26/03/2013, passed under section 263 of the Income Tax Act 1961. 2. The assessee has raised the following grounds of appeal: 1. Because the Ld. Commissioner of Income Tax-I, Agra has erred n law and on facts in treating payments made to amani labour (daily wages) as amount paid to contractors for supply of labour and tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision of law. 8. Because the order of the Ld. CIT, Agra U/s 263 of the IT Act, is arbitrary , unjust, merely based on presumptions and that no error existed or prejudice was caused to the revenue, therefore, the order of CIT, Agra passed U/s 263 of the IT Act deserves to be quashed. 9. Because the order of Ld. CIT, Agra passed U/s 263 of the IT Act, 1961, is insupportable in law and on facts and is also contrary to the doctrine of finality therefore, deserves to be quashed. Any other relief or reliefs deemed fit in the facts and circumstances of the case may be granted. 3. Brief facts relating to the case are that return declaring income of ₹ 10,19,330/- was filed on 26/09/2008. Assessment under section 143(3) was completed on 29/10/2010 at an income of ₹ 22,19,330/- after making an addition of ₹ 12,00,000/- on agreed basis, since the AO noted that some of the vouchers of purchases and expenses were of unverifiable nature. Subsequently a show cause notice under section 263 of the Income Tax Act dt. 11/02/2013 was issued to the assessee on the following points. i. During the assessment proceedings, assessee filed month-wise details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2008 to the tune of ₹ 10,09,208/- from four parties. Therefore, this amount of ₹ 10,09,208/- should be added as work in progress or closing stock as it might not have been consumed on the same day. Therefore, an amount of ₹ 10,09,208/- may be added to the total income of the assessee. vi. From perusal of Profit Loss Account and TDS certificates it is noticed thtat during the year under consideration, the assessee has received interest at ₹ 81,507/- as interest from Sh. Ramesh Lal Prop. M/s Vidha Mal Idan Das, Dibiapur and claimed TDS of ₹ 8,395/- but in the Profit Loss Account it was shown at ₹ 45,220/- . Hence the difference of ₹ 36,287/- is required to be added to the total income of the firm. vii. Further, from perusal of Profit Loss Account it is noticed that a sum of ₹ 4,92,250/- has been debited towards rent equipment and ₹ 34,150/- as legal expenses. No TDS was made by the assessee as per provisions of section 194 I and 194 J on the above amounts of expenses. Hence, an amount of ₹ 5,26,400/- [ ₹ 4,92,250 + ₹ 34,150/- ] is liable to be added u/s 40a(ia) of the Act. 4. During procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r etc. on rent for transport purposes of the assessee. Ld. AR stated that in this case also payment was made by the assessee directly to the tractor owner from whom Ram Transport used to take commission. Ld. AR therefore submitted that no payment was made to any contractor but infact it was a direct payment to the labour or to the transporter and no payment exceeded ₹ 20,000/- and therefore there was no case for deducting any TDS on the same. Ld. AR drew our attention to the details relating to the aforesaid payment filed before the Ld. CIT placed at PB 22-101 in support of its above pleadings. Ld. AR placed reliance on the decision of the Hyderabad bench of ITAT in the case of Teja Construction Vs. CIT (2010) 39 SOT (Hyd) in this regard. Alternatively the Ld. AR pleaded that the entire amount had been paid during the year itself which was an admitted fact and nothing was outstanding for payment. Therefore following the decision of the Jurisdictional High Court in the case of CIT Vs. M/s Vector Shipping Services (P) Ltd. Muzaffarnagar in ITA No. 122 of 2013 dt. 09/07/2013, no disallowance under section 40a(ia) could be made on the amount which had been paid during the year. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed these persons as Contractor This alone cannot lead to the conclusion that the payments were made to contractor, without controverting the evidences produced by the assessee in support of its contention. In view of the same, we hold that the impugned payments of ₹ 86,65,626/- on account of labour and transportation was not made to contractors and therefore provision of section 194C of the Act were not violated by the assessee. There was therefore no error in the order of the AO so as to cause prejudice to the Revenue and the revisionary proceedings on this issue are therefore set aside. 11. The second issue pertained to claim of 100% depreciation amounting to ₹ 13,82,300/- on temporary structures of office which the Ld. CIT held that the assessee had claimed double deduction since no bills and vouchers in support of this expenditure had been furnished by the assessee on this aspect. Ld. AR stated that this issue had been examined during assessment proceeding and due reply was filed by the assessee after considering which the AO had formed an opinion that the assessee was eligible to claim 100% depreciation on the same . Ld. AR drew our attention to the question r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #2366; एवं कार्य समाप्त होने पर विध्वंस करना पड़ा था अतः यही धनराषि डेप्रेशियेशन की रु 1382300.00 खर्च हुयी थी जिसे खाते में डाला गया है इस खर्चे को अन्य व्यक्तियों द्वारा कार्य करवाया जाता है जिससे मैटीरियल एवं लेवर दोन ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Sh. Tula Ram Rajput and Sh. Bhawar Lal Thekedar. Ld. AR submitted that they were persons who supplied temporary labourers to the assessee on daily basis and since payments could not be recorded in the name of each labour, since the labour changed every day the payment was shown to be made in the name of the contractor. Ld. AR submitted that these contractors had no agreement with the assessee and received no payment for their services from the assessee but infact received commission from the labour themselves. Further the Ld. CIT also raised the issue of purchase made from two different parties i.e. Bajrang Int Udyog amounting to ₹ 47,31,100/- and Rahimuddin Sons amounting to ₹ 53,60,594/- whose genuineness needed to be verified since the parties were not registered with the Trade Tax Department though there turnover exceeded ₹ 40 Lacs. With regard to purchases made from the Bajrant Int Udyog and Rahimuddin Sons. Ld. AR stated that the ld. CIT had doubted these purchases for the reason that they were not registered with the Trade Tax Department though their turnover exceeded ₹ 40 lacs. Ld. AR stated that the assessee had furnished complete bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 40 Lacs made from Bajrang Int Udyog and Rahimudding Sons. Ld. DR relied upon the order of the Ld. CIT. 16. We find that during assessment proceedings, the issue of purchases was considered by the AO and a lump sum addition of ₹ 12 lacs on account of unverified purchases was made. Having done so, we find that the Ld. CIT intends to revisit this very issue in the current proceedings and that too for verifying the genuineness of the impugned purchases. Meaning thereby that there is no categorical finding of any error in the order of the AO. In our considered opinion, revisionary powers under section 263 cannot be exercised in such circumstances. Moreover, the fact that two supplies are presumably defaulters being not registered under the relevant law, does not lead to any adverse inference being drawn against the assessee, more particularly when no defect has been found in the bills and vouchers produced by the assessee. Further we find that in the assessment order passed in consequence to the order passed under section 263, no addition on this issue has been made. Therefore the issue remains purely academic in nature. We therefore hold that on the issue of purchases ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36,287/- had not been received by it during the year there was no occasion to include the same in its P L Account and hence there was no error in the order of the AO on this count. Ld. DR stated that the assessee had not furnished any evidence to substantiate its claim that it only received interest of ₹ 45,220/- during the year and therefore the proceeding under section 263 on this count was valid. 21. On this issue, we uphold the order of the Ld. CIT, since clearly there was an error in the order of the AO, having not examined the issue of taxability of interest, which resulted in an amount of ₹ 36,287/- escaping assessment thus causing prejudice to the Revenue. The assesssee we find has given no plausible explanation for not disclosing the impugned amount in its Profit Loss account. 22. We therefore uphold the order of the Ld. CIT on this issue. 23. The next issue pertains to disallowance of rent paid for equipment amounting to ₹ 4,92,250/- and legal expenses of ₹ 34,150/- on which no TDS was found to have been deducted and which as per the Ld. CIT had to be added back to the income of the assessee as per the provision of Section 40a(ia) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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