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TMI Blog2020 (1) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... rein, disallowance of Rs. 7,40,779/- under section 40(a)(ia) of the Act has been made. The payments were made to the labour sardars Shri S.N. Pothal & Sri R.K. Mohanty of Rs. 3,42,343/- and Rs. 3,98,436/-, respectively towards labour payments. Since, no tax was deduction u/s. 194C of the Act out of the payments made to labour sardars, the Assessing officer disallowed payment of Rs. 7,40,779/- invoking the provisions of section 40(a)(ia) of the Act. 4. The above disallowance was confirmed in first appeal. 5. At the time of hearing, ld. counsel for the assessee submitted that the assessee is a manufacturing concern and employs labourers. The payments to the labourers are made through labour sardars and for this there was no contract between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Jyoti Prasad Rout (supra), wherein, it was held as under: "6. On careful consideration of the submissions of both the parties and perusing the material available on the record of the Tribunal as well as the decision relied on by the ld. AR of the assessee, I am of the considered opinion that in the instant case, the controversy is regarding the payments made for disbursement of labour charges to labour sardars. The assessee had specifically stated before the lower authorities that there was no contract between the assessee and the labour sardars, without which ITA No. 431/CTK/2016 3 there cannot be any application of section 194C of the Act and as such the invocation of provision of sec. 40(a)(ia) is outside the scope and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has quashed the dis allowance of deduction of Rs. 41,33,710/- and on account of tax deduction at source. The learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not and cannot arise. In the absence of evidence of payment made by the assessee to the transporters, the assessee cannot be saddled with the liability of deducting tax at source. Before us no other point has been urged not it is said that the aforesaid fact finding is truthful without any basis whatsoever. 7.2. We find that the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of contract either in writing or the oral with the labour sardar. The AO has held that the assessee has not complied the provision of Sec. 194C r.w.s. 40(a)(ia) of the Act on the presumption and surmise. There is no evidence that the payments have been made to the contractors. We do not find any merit in the arguments placed by Ld. DR in this connection. The AO has given the clear finding in his order which is as follows: "In my opinion, all these labourers who are treated as Labour Sardars are enjoying some privileged position in the eyes of assessee because the assessee collects other labourers through them, make payments to the other labourers in their presence, though there is no written contract. In the absence of any documentary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdictional ITAT, Kolkata in the case of Samanwaya Vs. ACIT 34 SOT 332 has held as under: "Business expenditure- Dis allowance under s. 40(a)(ia)-Need for TDS under s. 194C relating to payments made for disbursement of labour charges to labour Sardars-Assessee had specifically stated before the lower authorities that there is no contract between the assessee and the labour Sardars- Revenue authorities could not controvert the submission of the assessee in this respect- Even before the Tribunal, the Department could not bring out any evidence by producing cogent material in respect of any contract between the assessee and the labour Sardars to contradict the submission of the assessee that there was no contract between the assessee and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecedents relied upon herein above, we do not find any reason to interfere with the order of the ld. CITA and accordingly dismiss the ground of the revenue. 9. Respectfully following the above, we are of the opinion that the CIT-A was justified in accepting the plea of assessee being the labour sardars are not suppliers of labours and as such he rightly deleted the impugned addition made u/s. 40(a)(ia) of the Act. We uphold the impugned order of the CIT-A. Therefore, the grounds raised by the revenue are liable to be dismissed." 7. In view of the facts and circumstances of the case and respectfully following the observations of the Tribunal in the case cited supra, I am of the considered opinion that the disallowance of Rs. 3,12,949/- ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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