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TMI Blog2020 (12) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to disallowance under Section 40A(3) of the Act for Assessee having made cash payments to the Company for the alleged purchases of raw materials and building materials and also applying Section 40(a)(ia) of the Act for Service Charges paid by the Assessee to the Company for such agency work of purchasing those materials without deduction of Income Tax at Source cannot be determined. Since both the issues are inter-related and since the matter stood remitted by the learned Tribunal vide para 12 aforequoted for Section 40A(3), the issue with regard Section 40(a)(ia) of the Act also ought to have been restored to the file of the CIT (A). No substantial question of law. - Tax Case (Appeal) Nos.15 to 17 of 2017 - - - Dated:- 1-12-2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The expression in respect of has wide impart and it is not the requirement of law that the cash paid by the assessee to SNBT must reach the suppliers. Once the cash payment is aimed at the payments to suppliers, the condition specified in the law is met. Therefore, the Ld AR's argument that what is received by the suppliers of cement; steel; bricks etc is by cheque is, in our opinion, unsustainable in law. However, we did not find requisite clarity on the existence of principal and agent relationship between the assessee and the SNBT. No material is placed before us or before the lower authorities to demonstrate the existence of the said 'principal and agent relationship with SNBT. Further, the contents of Para 5.1.2 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statistical purposes. 13. With regard to the issue of disallowance u/s 40(a)(ia) of the Act, which is raised in the assessee s appeal ITA No.2432/Mds/2014 (AY 2008-09), it is the argument of the Ld Counsel for the assessee that the same constitutes a case of reimbursement where the payments are made by cheques to SNBT when there is no contract in any form within the meaning of section 194 of the Act. The provisions of section 194C read with section 40(a)(ia) cannot be invoked in the absence of any contract. He objected to the CIT(A)'s conclusions on the propositions of implied contract'. CIT (A) s decision in accepting the evidences furnished by the assessee to the Revenue about the arrangements between the assessee and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract between the appellant and the company M/s. Srinivas Buildtech Pvt Ltd (SNBT) was implied contract for supply of labour and also for doing the work of unloading. Otherwise, the appellant could have directly paid the amounts to the labourers. The factual evidence of payments towards labourers on behalf of the appellant by the company itself indicate that there was a contract between the appellant and the company for supply of labourers. There is no evidence to prove that this is a case of reimbursement of expenditure in respect of payment of ₹ 62,71,782/-. No TDS was made by the appellant at the time of making payments towards supply of labour to the company. The provision of section 194C are attracted in the case of paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove paragraphs of this order. Considering the commonality of the issue raised in the present appeal with that of the one raised in the Revenue s appeal for the AY 2008-09, our decision given therein squarely applies to the present appeal too. Considering the same, grounds raised by the Revenue are allowed for statistical purposes. 3. Having heard the learned counsel for the parties, we are of the opinion that since the matter stood remitted by the learned Tribunal with regard to Section 40A(3) of the Act, to first determine whether there was a contract of Agency Agreement between the Appellant/Assessee, an individual viz., Mr.R.Venugopal and the Company by name M/s.Srinivas Buildtech Pvt Ltd (SNBT) where the Assessee was the Managing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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