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TMI Blog2020 (2) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 29/07/2019 of ld. CIT(A)-3, Jaipur for the A.Y. 2011-12. The assessee has raised following grounds of appeal: 1. Under the facts and circumstances, the Hon ble CIT(A) has legally and factually erred by making an addition @ 20% on the labour expenses. The CIT(A) totally ignored the set aside order passed by the ITAT, Jaipur where the contract expenses (the labour expenses is a component of contract expenses) disallowance was deleted by the ITAT. 2. The Hon ble CIT(A) has legally and factually erred in ignoring the history of the case while making the addition @ 20% of the labour expenses. 3. The assessee may crave to amend, alter, modify or raise any other ground of appeal. 2. During the scrutiny assessment passed U/s 143(3) of the Income Tax Act, 1961 (in short, the Act) on 21/03/2014, the A.O. made, inter alia, disallowance of labour charges of ₹ 81,45,754/- U/s 40(a)(ia) of the Act for want of TDS. The ld. CIT(A) vide its order dated 07/01/2016 confirmed the disallowance made by the A.O. On further appeal, this Tribunal vide order dated 26/10/2017 set aside this issue to the record of the ld. CIT(A) for deciding the same afresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) for deciding the same afresh is only applicability of the provisions of Section 40(a)(ia) of the Act in respect of the wages payment made by the assessee. We further note that in the first round of appeal, the ld. CIT(A) has confirmed the disallowance made by the A.O. by observing that the evidences produced by the assessee in support of claim that the payment made was towards wages to the workers/labourers and is not a payment made under contract, do not inspire confidence. Therefore, there was no issue or any question either before the A.O. or taken up by the ld. CIT(A) in the first round of appeal regarding actual payment made by the assessee or any lack of supporting evidence for the claim of expenditure. The only issue which was taken up by the A.O. as well as by the ld. CIT(A) in the first round of appeal is disallowance made U/s 40(a)(ia) of the Act by treating the payment as a contractual payment and not merely a payment of wages to the labourers. Thus, the issue which was set aside by the Tribunal to the ld. CIT(A) is only regarding the disallowance U/s 40(a)(ia) of the Act and not the correctness of claim of expenditure. The ld. CIT(A) in the set aside proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work and the Assessee firm is continuously working with the PWD. The appellant filed copy of the Agreements with the PWD and Certificate issued by PWD in original that no sub-Contract was executed by the Assessee. The Assessing Officer has stated that Assessee firm has subcontracted work to the labourors. It is a funny situation that Assessee engaged with 73 sub-contracts with each labour. If he would have intended to Sub-contract, he would have given it to single Subcontractor. It is just impossible to imagine that a firm engages with 73 petty sub-contractors and measure the work done by them and make payments. It is just the imagination of the Assessing Officer that has termed a simple 'Employee-employer' relationship as Sub- Contract. The Assessing Officer also did not any adverse finding in his remand report on the certificate given by the appellant that no sub contract was executed by the appellant. The A/R also relied upon the following case laws. The issue of treating the casual labour employed as 'Contract labours' has arisen in the past and has been addressed by various courts. We produce the relevant judgments relating to the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(Appeals) holding that the assessee was not liable to deduct TDS u/s 194C deserves acceptance and there appears no violation of Sec.40(a)(ia) of the Act. After hearing counsel for appellant taking note of the material on record, we are of the view that as regards applicability of the provisions of TDS u/s 194C of the Act is concerned, that has been examined on factual matrix in detail the view expressed by CIT Appeals on appreciation of facts came to be confirmed by the Tribunal on re-appreciation of evidence in our considered view there appears no substantial question of law emerges for our consideration in the instant appeal. Consequently, the appeal fails and is hereby dismissed. In the case of ACIT vs. Kalinid Agro Biotech Limited (ITA No.4292/Delhi/2009) ITAT Delhi Bench D has held We have heard both the parties and gone through the material available on record. From the facts stated above, it is clear that the Assessing Officer has disallowed the payment on the presumption that the payment was made to the contractors and the assessee had kept the payments below ₹ 20,000/- deliberately in order to circumvent the provisions of section 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... octors was purely that of employer and employee and remuneration paid to them in terms of the said relationship was salary which attracted the provisions of section 192. The treatment given by the assessee as well as the consultant doctors to the remuneration paid in their respective books of account was not conclusive to decide the nature of the said remuneration which had to be ascertained on the basis of relationship between the assessee and the consultant doctors. There was an employer-employee relationship between the assessee and the consultant doctors and, consequently, remuneration paid to them was chargeable to tax under the head 'Salaries'. The said payments, thus, were subject to deduction of tax as per provisions of section 192 and not as per provisions of section 194J. Thus, the Assessing Officer was fully justified in treating the assessee as in default for short deduction of tax at source from the payments made to the consultant doctors. The assessee's appeal was, accordingly, dismissed. The honorable Delhi High Court has directly dealt with this point in the case of CIT vs. Dewan Chand (2009) 173 Taxman which has direct bearing on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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