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TMI Blog2019 (12) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... which was processed u/s 143(1) of the Act. Subsequently, under scrutiny notice u/s 143(2) dated 20.09.2012 was served upon the assessee on 22.09.2012. During the course of assessment proceeding, it appears from the records submitted by the assessee that the assessee has claimed deduction u/s 80IB of the Act on the other income also. Upon perusal of the Profit and Loss account, it was further found that the assessee has shown income from other sources at Rs. 7,93,823/- and Rs. 12,18,000/- as supervision income. According to the Learned AO such income cannot be considered as income attributable to manufacturing activities and hence clarification asked for as to why the said income from supervision of Rs. 12,18,000/- and other income of Rs. 7,93,823/- considered as income from other than manufacturing activities. The assessee in response to the same submitted as follows: "Deduction u/s 80IB and other Income : We are submitting herewith a statement showing nature of other income. We have considered interest income from bank FDR as income from other source and balance income being relate to manufacturing activities of the company it is treated as business income. The statement is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this that while the Electric Panels are supplied for industrial use, the installation and commissioning of the same becomes the responsibility of the assessee and as an evident he further relied upon the purchase order of BPCL. He, therefore, prays for deletion of such addition made by the authorities below. 6. On the contrary, Learned D.R relied upon the order passed by the authorities below. 7. Heard the parties, perused the relevant materials available on records. It appears that the purchase order of BPCL substantially states the following. 1. M/s. EIC has to depute its representative at BPCL & at our client's site for supervision of commissioning on free of cost basis. We have also gone through the details regarding the supervision bills and/invoices raised by the assessee to other customers commencing from page 3 to 21 of the paper book submitted before us by the assessee. It is an admitted fact that in terms of the purchase order of BPCL it is the duty incumbent upon the assessee to supervise the commissioning work at free of cost; the supervision cost is a part of the bills raised to the BPCL though the separate bills were not issued by the assessee to that effect li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material on record has passed the impugned judgment and order. Therefore, he urged that there is no germane reason to interfere with the impugned judgment and order of the Tribunal. 6. We have heard learned advocate for theparties and perused the material on record. Itappears from the record that in previous yearsalso, the assessee had claimed for the benefit of Section 80-1 of the Income Tax Act and the samewas granted to the assessee. Further, it appearsthat before the Assessing Officer, the assessee also ascertained the aforesaid fact, which is evident from the Assessment Order, wherein it hasbeen mentioned that"It was also claimed that as the amount has been allowed in the past for the sake of uniformity it should be allowed in thisyear also. The assessee relied on the Bombay High Court's decision in the case of CIT Vs. Buckau Wolk NewIndia Engg. Works, reported in 160 ITR 7. The Apex Court in the case of Excel Industries (supra) held that in several assessment Years, the Department accepted the order of the Tribunal in favour of the assesse and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the Ld. AO is fees for technical services rendered by those persons and thus covered under section 194J of the Act. The same was, therefore, disallowed by the Ld. AO. Similarly payment of Rs. 2,84,050/- of PLC Programming has not been considered as contract payment under section 194C of the Act and disallowed by the Ld. AO. Both the disallowance were confirmed by the Ld. CIT(A). Hence, the instant appeal before us. The case of the assessee is this that the drawing charges which was paid to the contractor do not involve any kind of technical work rather all the work which involves engineering or technical activities is carried out in house at the premises of the assessee by its own employed engineers and technical contractors. Only to overcome the shortage of semi-skilled man power, all the associated clerical work is handled to suitable contractors meaning thereby the payments made to labour contractors only for providing semi-skilled man power which has nothing to do with any kind of technical or professional services; thus applicability of Sec. 119J of the Act as made by the authorities below for non-deduction of tax at source is not permissible in the eye of law as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 194C and hence the disallowance was made under section 40(a)(ia) by the authorities below. It is also a fact that the assessee was with the bona fide wrong impression regarding the applicability of the provision of Sec. 194C or Sec. 194J to such nature of payments. It is also a fact that Sec. 40(a)(ia) after its amendment brought in by Finance (No. 2) Act, 2014 given a specific relief to the assessee that in case of non-deduction of tax at source or non payment of tax though was deducted on payments made to residents as specified in Sec. 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the expenditure so claimed by the assessee. If that be so, the disallowance of entire expenditure of Rs. 7,65,700/- for drawing charges and Rs. 2,84,050/- towards PLC Programming Charges ought not to have been made by the authorities below. We, therefore, taking into consideration the amended provision of Sec. 40(a)(ia) of the Act, restrict 30% of such disallowance. In the result, these grounds of assessee's appeal are partly allowed. 11. Ground No. 4:- This ground of appeal is identical to that of the issue already been dealt with by us in ITA No. 2837/Ahd/2014 for A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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