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TMI Blog2017 (10) TMI 1510X X X X Extracts X X X X X X X X Extracts X X X X ..... yment to the so-called Contract Labour expenses without appreciating facts of the case in right perspective. 2. Under the facts & circumstances, the Hon'ble CIT(A) has confirmed the addition of 3% of the Contract Expenses i.e. a sum of Rs. 8,26,630.00 on estimation basis without giving any justification and reasonableness of the case. 3. The Assessee may crave to amend, alter, modify or raise any other ground of appeal." 2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) (hereinafter referred to as the Act) Income Tax Act, 1961 was framed vide order dated 21.03.2014. While framing the assessment, the Assessing Officer observed that the assessee had made p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upporting vouchers and Attendance Register etc. as submitted before the Id. CIT (A) which could not be negated by the Authorities Below. Despite of such factual position, even other-wise also, these payments are not hit by the provisions of section 194C read with section 40(a)(ia) of the Act as held by the honorable ITAT, Jaipur Bench, Jaipur in the case of ITO v Tulsi Ram Modi (Appeal No.960(JP) of 2011(Copy of judgment is placed in the PB at page No.3 to 7 for your kind perusal and record) . Having considered such facts of the above case, no disallowance whatsoever is called for u/s 40(a)(ia) of the Act even if the payments made to the labor are taken as contracted labor by any stretch of imagination. (ii) Of-late, the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the provisions of section 40(a)(ia) would not come into play in respect of the amounts already 'paid'. In the present case, all the wages stood already paid and not a single penny is 'payable' at the end of the year. In the circumstances, disallowance of the wages within the meaning of section 40(a)(ia) of the Act for the alleged default u/s 194C is totally uncalled for and deserves to be deleted summarily." On the appeal, it is evident that the tax was not deductable as no amount was payable by the assessee. 3.2 On the contrary, Ld. D/R opposed the submissions and submitted that this issue has been decided in favour of the Revenue by the Hon'ble Supreme Court rendered in the case of Palam Gas Service vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions, perused the material available on record. We find that Assessing Officer on the one hand they had stated that the assessee has contravened provision of Section 40A (3) of the Act on the other hand he proceeded to make disallowance of 3% of the total contract expenses. Ld. CIT(A) confirmed the same by observing as under:- "5.3 I have carefully considered the findings of the AO as also arguments of the Ld. AR of the appellant. Regarding the disallowance of 3% of expenses by the AO, the appellant claimed Rs. 2,75,54,326/- under the head contract expenses out of which disallowance of Rs. 8,26,630/- was made on account of diesel, bajari, cement & grit by AO. These are cash payments, made by self made vouchers, genuineness of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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