RAMESHCHANDRA LALJI AND COMPANY, NAVI MUMBAI v. ITO 22(3)(3), NAVI MUMBAI

ITA 3983/MUM/2014 | 2006-2007
Pronouncement Date: 24-11-2014 | Result: Allowed

Appeal Details

RSA Number 398319914 RSA 2014
Assessee PAN AAEFR9224M
Bench Mumbai
Appeal Number ITA 3983/MUM/2014
Duration Of Justice 5 month(s) 25 day(s)
Appellant RAMESHCHANDRA LALJI AND COMPANY, NAVI MUMBAI
Respondent ITO 22(3)(3), NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 24-11-2014
Assessment Year 2006-2007
Appeal Filed On 30-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH MUMBAI . . BEFORE SHRI I.P. BANSAL JM ./ I.T.A. NO.3983/MUM/2014 ( / ASSESSMENT YEAR : 2006-07 M/S.. RAMESHCHANDRA LALJI AND COMPANY P-14 APMC MARKET-II PHASE-II SECTOR -19 VASHI NAVI MUMBA 400 703. / VS. THE INCOME TAX OFFICER WARD 22(3) (3) INCOME TAX OFFICE VASHI RLY. STATION BUILDING NAVI MUMBAI 400 703. ! ./ '# ./ PAN/GIR NO. : AAEFR 9224M ( $ / APPELLANT ) .. ( %& $ / RESPONDENT ) APPELLANT BY SHRI HITESH SHAH RESPONDENT BY SHRI NEIL PHILIP ' ()! / DATE OF HEARING : 25/11/2014 *+ ' ()! / DATE OF PRONOUNCEMENT : 25/11/2014 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-33 DATED 28/3/2014 FOR ASSESSM ENT YEAR 2006-07. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT LD.A .O HAS ERRED IN INVOKING SECTION 154 TO MAKE DISALLOWANCE OF RS.1 12 017/- CLAIMED BY THE ASSESSEE AS LABOUR/WAGES UNDER SECTION 40(A)(IA) OF THE INCOM E TAX ACT 1961 (THE ACT) FOR ALLEGED NON DEDUCTION OF TAX UNDER SECTION 194C OF THE ACT. 3. EARLIER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 4/12/2008. COPY OF THIS ORDER IS PLACED AT PAGES 6 TO 9 OF THE PAPER BOOK. AS PER ASSESSMENT ORDER VARIOUS QUERIES WERE RAISED W HICH INCLUDE JUSTIFICATION OF LABOUR EXPENSES. THE AO AFTER VERIFYING THOSE DETA ILS AS PER PARA 5.1 HAS MADE AN ADHOC DISALLOWANCE OF RS.50 000/- WITH THE NARRA TION (I) OUT OF LABOUR ./ I.T.A. NO.3983/MUM/2014 ( / ASSESSMENT YEAR : 2006-07 2 CHARGES AND BROKERAGE ON ADHOC BASIS (AS PER PARA 5 .1) . LATER ON THE AO PASSED AN ORDER UNDER SECTION 154 ON 7/2/2012 WHEREIN THE AFOREMENTIONED ADDITION OF RS.1 12 017/- WAS MADE BY INVOKING OF SECTION 40 (A)(I) (A) OF THE ACT. 4. IT IS THE CASE OF THE ASSESSEE THAT THE LABOUR PAYMENTS MADE BY IT IS IN THE NATURE OF WAGES WHICH IS BEING PAID BY THE ASSESSE E TO SHRI PANDURANG SAHEBRAO PATNE ON THE BASIS OF WORK DONE BY HIM ON DAY TO DAY BASIS AND THE PAYMENTS WERE MADE ON MONTHLY BASIS. COPY OF LED GER ACCOUNT OF SUCH PAYMENTS MADE HAS BEEN FILED. RELIANCE IS ALSO PLA CED ON SECTION 2(H) OF MINIMUM WAGES ACT 1948 TO SAY THAT WAGES MEANS ALL REMUNERATION CAPABLE OF BEING EXPRESSED IN TERMS OF MONEY WHICH WOULD IF THE TERMS OF CONTRACT OF EMPLOYMENT EXPRESSED OR IMPLIED WERE FULFILLED B E PAYABLE TO A PERSON EMPLOYED IN RESPECT OF HIS EMPLOYMENT OR WORK DONE IN SUCH EMPLOYMENT. THUS IT IS THE CLAIM OF THE ASSESSEE THAT THESE PAYMENTS MADE BY THE ASSESSEE ARE NOT IN THE NATURE OF PAYMENT MADE IN RESPECT OF A CONT RACT WHICH FALLS WITHIN THE PURVIEW OF SECTION 194C OF THE ACT. FOR THIS PURPO SE RELIANCE HAS BEEN PLACED BY LD. AR ON THE DECISION OF PUNE BENCH IN THE CASE OF GOKULDAS VIRJIBHAI & COMPANY VS. ITO 27 TAXMANN.COM 26 (PUNE) WHEREIN IT HAS BEEN HELD THAT SECTION 194C HAS NO APPLICATION WHEN THE ASSESSEE R EMITS THE PAYMENT IN RESPECT OF THE WAGES PAYABLE TO WORKERS OR LABOURS ENGAGED THROUGH THE MATHADI BOARD. IT WAS SUBMITTED THAT THESE PAYMENTS HAVE B EEN MADE BY THE ASSESSEE ON THE BASIS OF RATES PRESCRIBED BY APMC MARKET BOA RD. IT WAS SUBMITTED THAT AUDITOR HAS ALSO NOT REPORTED THAT THESE PAYMENTS A RE LIABLE FOR DEDUCTION OF TAX UNDER SECTION 194C. MY ATTENTION WAS INVITED TO TH E COPY OF THE AUDIT REPORT WHICH IS FILED AT PAGES 28 TO 47 OF THE PAPER BOOK. REFERENCE WAS MADE TO CLAUSE 27(A) AND (B) WHEREIN DEFAULT IN RESPECT OF TDS DE SCRIBED ONLY WITH REGARD TO SOME LATE PAYMENT OF TAXES WHICH DO NOT RELATE TO L ABOUR PAYMENTS. IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE AO HAD EXAMINED THE ACCOUNTS OF THE ASSESSEE IN DETAIL AND ASSESSEE WAS NOT FOUND FOR DEFAULT UNDER SECTION 194C. IT WAS SUBMITTED THAT SCOPE OF POWER OF AO UNDER SECTION 154 IS VERY LIMITED AND HAS RESTRICTED TO O BVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO O PINIONS. REFERENCE IN THIS ./ I.T.A. NO.3983/MUM/2014 ( / ASSESSMENT YEAR : 2006-07 3 REGARD WAS MADE TO THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF T.S.BALARAM ITO VS. WOLKART BROTHERS 82 ITR 50 (S C). IT WAS PLEADED THAT ADDITION MADE BY AO UNDER SECTION 154 SHOULD BE DEL ETED. 5. ON THE OTHER HAND LD. DR SUBMITTED THAT ACCORDI NG TO THE FACTS OF THE CASE THERE WAS AN OBLIGATION ON THE ASSESSEE TO DE DUCT AND PAY TAX UNDER SECTION 194C OF THE ACT. THEREFORE LD. DR SUBMIT TED THAT AO WAS RIGHT IN INVOKING SECTION 154 FOR MAKING SUCH ADDITION AND HIS ACTION IS SUPPORTED BY THE PROVISIONS OF LAW. LD. DR SUBMITTED THAT LD. C IT(A) HAS RIGHTLY SUSTAINED THE ADDITION AND HIS ORDER SHOULD BE UPHELD. 6. I HAVE HEARD BOTH THE PARTIES. I HAVE ALSO GONE THROUGH THE DETAILS SUBMITTED IN THE PAPER BOOK AND ALSO GONE THROUGH T HE CASE LAW ON WHICH RELIANCE HAS BEEN PLACED. IN THE PRESENT CASE A DE TAILED ASSESSMENT ORDER HAS BEEN PASSED BY THE AO UNDER SECTION 143(3) OF THE A CT. AFTER CONSIDERING THE DETAILS SUBMITTED DURING THE ASSESSMENT PROCEEDI NGS THE AO FORMED AN OPINION THAT THE PAYMENT MADE BY THE ASSESSEE TO SH RI PANDURANG SAHEBRAO PATNE WAS LIABLE FOR DEDUCTION OF TAX UNDER SECTION 194C OF THE ACT. EARLIER THE AO HAS ONLY MADE SOME ADHOC ADDITION WHICH INCLUDE LABOUR EXPENSES ALSO. THUS THE VIEW TAKEN BY THE AO IN RECTIFICATION PRO CEEDINGS IS A VIEW ON WHICH THERE CAN BE CONCEIVABLY TWO OPINIONS. ONE OPINION WOULD BE THAT SUCH LABOUR PAYMENTS FALL WITHIN THE AMBIT OF WAGES DEFINED U NDER MINIMUM WAGES ACT 1948 THEREFORE CANNOT BE SAID TO BE PAYMENT MAD E UNDER CONTRACT BUT THIS WOULD FALL WITHIN THE DEFINITION OF SALARY AS DEFI NED IN SECTION 17 OF THE INCOME TAX ACT 1961. THE SECOND VIEW WOULD BE THAT THES E PAYMENTS MADE IN PURSUANCE TO SOME CONTRACT WHICH IS IMPLIED AND IS BETWEEN THE ASSESSEE AND THE LABOUR. HOWEVER IT REMAINS A DEBATABLE ISSUE WHICH CANNOT BE TERMED AS MISTAKE APPARENT FROM RECORD AS EXPLAINED BY HON BLE SUPREME COURT IN THE AFOREMENTIONED DECISION OF T.S.BALARAM ITO VS. WOL KART BROTHERS (SUPRA). THEREFORE I HOLD THAT LD. CIT(A) HAS COMMITTED AN ERROR IN CONFIRMING THE ADDITION AND HIS ORDER IS SET ASIDE AND THE ADDITI ON IS DELETED . THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ./ I.T.A. NO.3983/MUM/2014 ( / ASSESSMENT YEAR : 2006-07 4 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/11/2014 . ' *+ ! - ./ 24/11//2014 + ' 0 SD/- . . (I.P.BANSAL) /JUDICIAL MEMBER MUMBAI; . DATED 24/11/2014 ' '' ' %(1 %(1 %(1 %(1 21( 21( 21( 21( / COPY OF THE ORDER FORWARDED TO : 1. $ / THE APPELLANT 2. %& $ / THE RESPONDENT. 3. 3 ( ) / THE CIT(A)- 4. 3 / CIT 5. 140 %( / DR ITAT MUMBAI 6. 05 6 / GUARD FILE. / BY ORDER &1( %( //TRUE COPY// 7 77 7 / 8 8 8 8 ' ' ' ' (DY./ASSTT. REGISTRAR) / ITAT MUMBAI . . .VM SR. PS