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TMI Blog2017 (6) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to disallowance of Rs. 1,07,69,581/- by invoking section 40(a)(ia) of the Act and leviability of interest u/s.234A/234B/234D of the Act. 2.1 The assessee raised the following additional grounds for our adjudication. 1. The Commissioner of Income Tax (Appeals) erred in upholding the disallowance u/s 40(a)(ia) of payments made to the manufacturers observing that the payments in question were required to be made after deduction of tax and as the assessee had not done so such payments would not be an allowable expenditure in terms of the disqualification contained in the provisions of section 40(a)(ia). 2. The Petitioner I appellant submits that on the facts of her case the provisions of section 194C are not applicable; consequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a total income of Rs. 1,56,450/-, which was accepted u/s.143(1) of the Act. Subsequently, the case was selected for scrutiny and the assessment was completed u/s.143(3) of the Act on 31.12.2007 in which the AO disallowed a sum of Rs. 1,07,69,581/- u/s.40(a)(ia) of the Act on the ground that tax was not deducted in respect of payment of job work charges for production of appalam. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, the Ld.CIT(A) observed that the payments made to the sub contractors were in substance, not payments for purchase of goods, but payments in pursuance of a works contract. The provisions of the section 37 are wide enough in scope to accommodate the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced. A sum of Rs. 1,07,69,581/- was shown as job work cooly expenses in the P&L A/c. According to Ld.CIT(A), no TDS was done in respect of these payments made through sub contactors. For non-deduction of TDS in respect of cooly payments, the assessee vide letter date 10.12.2007 put forth the following points before Ld.CIT(A). i) Individual payments will not exceed Rs. 50,000/-, all the labourers are native of villages and are illiterate ii) They are not employees of the assessee. Their work is seasonal. iii) The basis nature of appalam making is that of a cottage industries, in which there is constant mobility of labour. iv) In a cottage industry, that too in a village, it is impractical and impossible to insist on stric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81 ITR 99 (Bom.) ii) Teja Constructions Vs. ACIT (2010) 129 TTJ 57 (Hyd.)(UO) Ld.CIT(A) observed that assessee's case can be distinguished on facts from that of the case cited supra. Further, Ld.CIT(A), in his order extracting the provisions of the section 40(a)(ia) at the time of bill stage/Finance Act in Finance (No.2) Bill 2004 [268 ITR(St.)P.121, amendment to Sec.40(a)(ia) and Finance (No.2) Act, 2004 [269 ITR(St.)P.110 at page No.8 & 9, observed that in view of amended provisions of the Act, the amount payable would only attract the disallowance u/s.40(a)(ia) of the act. 3.5. According to Ld.CIT(A), in assessee's case, a sum of 18,10,611/- was outstanding payable to sub contractors as on 31.03.2005. Since this outstanding amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was submitted that each payment is less than Rs. 20,000/- and aggregate payment is less than Rs. 50,000/- to each party in the assessment year under consideration. Being so, Sec.194C(2) of the Act cannot be applied. According to him, these facts were not examined by the Ld.CIT(A), though raised before him and prayed the issue may be remitted to the file of AO for considering all the facts. 7. In our opinion, it is fair and appropriate to remit the issue in dispute to the file of AO to consider all the above arguments and decide the issue afresh. Accordingly, the entire issue in dispute is remitted to the file of ld. Assessing Officer for fresh consideration. 8. Since we have remitted the issue raised by the assessee to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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