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TMI Blog2015 (11) TMI 1870X X X X Extracts X X X X X X X X Extracts X X X X ..... t no disallowance is called for. Therefore, in such a scenario, on the facts and circumstances of the case, we do not find any error in the order of the Assessing Officer. In this case, Commissioner of Income Tax had tried to read too much from the mind of the Assessing Officer. Once, we reach to a conclusion that provisions of section 40(a)(ia) of the Act are not applicable on the facts and circumstances of this case, whatever was going through in the mind of the Assessing Officer at that time, it is a fact that he has reached to a correct conclusion. The order of the Assessing Officer cannot be said to contain any error on this count. The fact that the payments were made for supply of material also got strengthen by the fact that the assessee was engaged in such kind of project from Sahara India Commercial Corporation Ltd. during the year. The issue of nomenclature commission given to the said payments also got clarified during the assessment proceedings. Therefore, there is no question of invoking the provisions of section 194H of the Act. Further, there being no contract or son-contract, the provisions of section 194C are also not applicable. The nature of payments is q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2011. In this case, assessment u/s 143(3)/153C of the I.T. Act, 1961 was completed on 21.12.2011 at Rs.27,250/- as against returned income of Rs.430/-. 2. On perusal of records, it is noticed that assessment order has become erroneous in so far as it is prejudicial to the interest of revenue on account of following issues : (I) In course of the said assessment proceedings, the then Assessing Officer observed that the assessee had in its profit loss account claimed 'Expenses incurred in connection with commission' to the tune of Rs.5,91,40,500/-. On the other hand, sum of Rs.5,99,78,310/- has been shown as 'commission received' on credit side of profit and loss account. On being asked to furnish the nature and details of the same, the assessee, vide its letter dated 01.11.201.1 submitted that Actually this is expenses against job work income of data entry etc. Details of job work income is enclosed. Against total receipt of Rs.5,99,78,310/- expenses is Rs.5,91,40,500/-. It is seen that job charges have been made to 20 different concerns. Total sum of Rs.5,91,40,500/- was paid to 20 other concerns to whom the job was subcontracted, the job which was tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bcontractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, [has not been paid on or before the due date specified in sub- section (1) of section 139:] [Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid] It is clear from the facts of the case and as held in the assessment order that the assessee has not deducted tax at source on the amount of contract/sub-contract payment of Rs.5,91,40,500/- as required under Chapter XVII-B as per section 194C of the I.T. Act, 1961. Even if the assessee company's nomenclature of 'commission' as used in the profit loss account is accepted, tax is required to be deducted as per section 194H which has not been done. Therefore, sum of Rs.5,91,40,500/- was required to be disallowed u/s 40(a)(ia) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer during the course of assessment proceedings and the Assessing Officer having taken one of the permissible views, provisions of section 263 of the Act cannot be invoked in this case. Submissions were also made on the merits of the issue stating that since the payments have been made for procurement of raw material, the provisions of section 40(a)(ia) of the Act are not applicable to the same. Rejecting all the contentions of the assessee, the learned Commissioner of Income Tax formed an opinion that the assessee has claimed expenses of Rs.5,91,40,500/-, which has been shown in the Profit Loss Account as expenses in connection with commission on which tax at sources was liable to be deduced under section 194H of the Act. Without prejudice to the above, the TDS was liable to be deducted under section 194C of the Act, which is in fact in the nature of contract or sub-contract payments and since no tax has been deducted on the said expenses, the order of the Assessing Officer dated 21.12.2011 made under section 143(3) of the Act r.w.s. 153C of the Act is erroneous and prejudicial to the interest of the Revenue. In this manner, the learned Commissioner of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the year major work was supply of earth(mittee) and stones to Sahara India Commercial Corporation Ltd. for their project at Siliguri, West Bengal. As this was supply of material, no TDS was deducted by our company from the parties who supplied the said material. In a separate letter dated 16.11.2011 placed at page 51 of the Paper Book filed before the JCIT, the assessee has again clarified that since the payments were made for supply of material, no TDS was required to be deducted. All these papers were shown to us to emphasize the fact that the issue of TDS was there with the Assessing Officer. The issue was specifically taken up by the Assessing Officer, specific queries were raised and specific replies were filed. Therefore, revision under section 263 of the Act is not warranted under the said circumstances. Another glaring fact was brought to our notice that during the assessment proceedings the Assessing Officer made enquiries by issuing notice to various persons from whom the material was acquired and these notices were duly replied to by these parties to the Assessing Officer. Since the learned counsel for the assessee expressed his inability to produce said quer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied the provisions of section 271C of the Act for non-deduction of tax at source. However, the bone of contention in the mind of the learned Commissioner of Income Tax is that even after observing that the TDS was required to be deducted from the said payments, the Assessing Officer has not invoked the provisions of section 40(a)(ia) of the Act. Now the issue to be decided by us is that whether in the said facts and circumstances of the case, the invoking of provisions of section 263 of the Act are warranted or not. 6. It is a trite law that the Commissioner of Income Tax can assume jurisdiction under section 263 of the Act if he finds the order of the Assessing Officer to be erroneous in so far as prejudicial to the interest of the Revenue. The two conditions of the order being erroneous as well as prejudicial to the interest of the Revenue are to be satisfied simultaneously as per section 263 of the Act. In case the Commissioner of Income Tax finds the order to be erroneous, he has to give a specific finding whey the order is erroneous and the order is said to be erroneous if on an important issue, the Assessing Officer fails to make any enquiry. However, there are cases whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce payment for supply of material is not exigible to TDS, there was no need for the assessee to deduct such tax at source and resultantly the provisions of section 40(a)(ia) do not come into play. In this way, there was no need for the Assessing Officer to make disallowance of these expenses. Since these letters are a part of assessment records, we are of the view that the Assessing Officer did not invoke the provisions of section 40(a)(ia) and did not make disallowance, getting convinced by the fact that the payments were made for supply of material. The fact that the Assessing Officer in his order did not mention these investigations made by him does not itself make his action illegal. He may not have referred to these documents may be because he was convinced that no disallowance is called for. Therefore, in such a scenario, on the facts and circumstances of the case, we do not find any error in the order of the Assessing Officer. In this case, the learned Commissioner of Income Tax had tried to read too much from the mind of the Assessing Officer. Once, we reach to a conclusion that provisions of section 40(a)(ia) of the Act are not applicable on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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