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TMI Blog2019 (3) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 1,17,36,529? (ii) whether the CIT(A) is justified in deleting the disallowance of Rs. 54,91,753 made by the Assessing Officer u/s 36(1)(va) of the I.T.Act ? We shall adjudicate the issues as under:- Whether the CIT(A) is justified in deleting the disallowance made by the Assessing Officer u/s 40(a)(ia) of the I.T.Act amounting to Rs. 1,17,36,529? 3. The Assessing Officer had disallowed expenditure of Rs. 1,17,36,529 by invoking the provisions of section 40(a)(ia) of the I.T.Act. According to the A.O., the assessee ought to have deducted tax at source u/s 194C of the I.T.Act in respect of above mentioned expenditure and having failed to deduct the tax at source, the expenditure has to be disallowed in view of the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleging that the payments were made to vehicle booking agents. This was absolutely wrong and the payments were made to persons specified above, who were all engaged in the business of plying, hiring or leasing doods carriages. The declarations from all the three persons are furnished herewith in evidence of the fact that they were all income tax assessee with permanent account numbers. So sub section (6) of section 194C squarely applied to these payments and TDS was not required to be deducted from these payments. Therefore the disallowance made u/s 40(a)(ia) is not sustainable under law." 3.2 The CIT(A) deleted the disallowance made by the Assessing Officer. The relevant finding of the CIT(A) reads as follows:- "5.4 I have gone throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avels. The learned AR submitted that the payments are made to contractors, who are in the business of running of plying, leasing of goods carriages and declaration was duly submitted u/s 194C(6) of the I.T.Act. Therefore, it was contended that the assessee was not liable for tax deduction at source. 3.5 We have heard the rival submissions and perused the material on record. The payment of Rs. 1,17,36,529 were made to three parties, viz., M/s.Amarnath Transports, M/s.QRL Tours & Travels, and M/s.Shri Shivbasav Travels. When such huge payments are made by the assessee, naturally there would be agreement entered by the assessee for such payments. It is not clear whether payments are made to contractors, who are in the business of plying, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(1)(va) of the I.T.Act ? 4. The Assessing Officer had disallowed a sum of Rs. 54,91,753, being employees' contribution to PF and ESI. The disallowance made by the A.O. was for the reason that the said employees' contribution to PF and ESI was not paid by the assessee within the due date specified in the respective labour statutes. 4.1 Aggrieved by the disallowance, assessee filed appeal to the first appellate authority. The CIT(A) was of the view that since the payment was made within the due date specified u/s 139(1) of the I.T.Act, the assessee was entitled to the deduction of claim of employees' contribution to PF and ESI amounting to Rs. 54,91,753. The CIT(A) also referred to the judgment of the Hon'ble High Court of Rajasthan in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective statute cannot be allowed as a deduction u/s 36(1)(va) of the I.T.Act. The judgment of the Hon'ble jurisdictional High Court in the case of Merchem Limited (supra) was followed by the recent judgment of the Hon'ble Kerala High Court in the case of Alliaz Corhill Information Services (P) Ltd. v. DCIT [(2018) 406 ITR 150 (Ker.)]. In view of the above judicial pronouncement of the Hon'ble jurisdictional High Court, we hold that the Assessing Officer has correctly disallowed the sum of Rs. 54,91,753. Therefore, the CIT(A) is not justified in deleting the addition made by the Assessing Officer u/s 36(1)(va) of the I.T.Act. It is ordered accordingly. 4.5 Therefore, ground 3 raised by the Revenue is allowed. 5. In the result, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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