I.T.O Wd - 2(2),Hooghly., Hooghly v. Ratna Mukherjee ( L/H of Late Kamal Mukherjee), Durgapur

ITA 559/KOL/2013 | 2006-2007
Pronouncement Date: 21-10-2016 | Result: Dismissed

Appeal Details

RSA Number 55923514 RSA 2013
Assessee PAN AFGPM9065C
Bench Kolkata
Appeal Number ITA 559/KOL/2013
Duration Of Justice 3 year(s) 7 month(s) 6 day(s)
Appellant I.T.O Wd - 2(2),Hooghly., Hooghly
Respondent Ratna Mukherjee ( L/H of Late Kamal Mukherjee), Durgapur
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-10-2016
Date Of Final Hearing 04-10-2016
Next Hearing Date 04-10-2016
Assessment Year 2006-2007
Appeal Filed On 15-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED ACCOUNTANT MEMBER AND SHRI K.NARSIMHA CHARY JUDICIAL MEMBER ITA NO.559/KOL/2013 ASSESSMENT YEARS:2006-07 ITO WARD-2(2) AAYAKAR BHAWAN CHINSURAH HOOGHLY / V/S . RATNA MUKHERJEE (L/H OF LATE KAMAL MUKHERJEE RD-18 COLLINS PATH BIDHAN NAGAR DURGAPUR-713 212 [ PAN NO.AFGPM 9065 C ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI DULAR CHAND MONDAL JCIT-DR /BY RESPONDENT SHRI SOUMITRA CHOUDHURY ADVOCATE /DATE OF HEARING 04-10-2016 /DATE OF PRONOUNCEMENT 21-10-2016 /O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXXVI KOLKATA DATED 06.12.201 2. ASSESSMENT WAS FRAMED BY ACIT CIRCLE-2 HOOGHLY U/S 147/144 OF T HE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 30.11.2010 FOR ASSESSMENT YEAR 2006-07. SHRI DULAR CHAND MONDAL LD. DEPARTMENTAL REPRESENTA TIVE APPEARED ON BEHALF OF REVENUE AND SHRI SOUMITRA CHOUDHURY LD. ADVOCAT E APPEARED ON BEHALF OF ASSESSEE. ITA NO.559/KOL/2013 A.Y. 2006-07 ITO WD-2(2) HGL. VS. RATNA MUKHERJEE PAGE 2 2. AT THE THRESHOLD IT WAS NOTED THAT THERE IS A DE LAY OF 28 DAYS IN FILING THE APPEAL BY THE REVENUE. THE REVENUE HAS FILED CONDON ATION PETITION IN THIS REGARD STATING THE REASON THAT THE DELAY IS OCCURRE D DUE TO PENDENCY OF WORK LOAD. LD. AR FOR ASSESSEE RAISED NO OBJECTION FOR C ONDONATION CONSIDERING THE DELAY. THIS IN OUR CONSIDERED OPINION AND ON THE F ACTS AND CIRCUMSTANCES OF THE CASE THE DELAY DESERVES TO BE CONSIDERED. ACCORDIN GLY WE CONDONE THE DELAY AND PROCEED TO HEARING THE APPEAL. 3. SOLITARY INTERCONNECTED ISSUE RAISED BY REVENUE IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER FOR 89 64 419/- ON ACCOUNT OF NON DEDUCTION OF TAX DEDUCTED AT SOURCE (TDS FO R SHORT) U/S 194C(2) R.W.S. 40(A)(IA) OF THE ACT. 4. FACTS IN BRIEF ARE THAT ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN BUSINESS OF CONTRACTING. ASSESSEE FOR TH E YEAR UNDER CONSIDERATION HAS FILED ITS RETURN OF INCOME DISCLOSING INCOME AT 8 18 250/- COMPRISING OF PROFIT UNDER THE HEAD BUSINESS AND PROFESSION. SU BSEQUENTLY THE CASE WAS SELECTED FOR INCOME ESCAPING ASSESSMENT U/S 147 OF THE ACT AND ACCORDINGLY NOTICE U/S. 148 OF THE ACT WAS ISSUED UPON ASSESSEE . THE ASSESSMENT WAS FRAMED U/S. 147/144 OF THE ACT AT A TOTAL INCOME OF 98 82 470/- BY MAKING CERTAIN DISALLOWANCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO OBS ERVED THAT ASSESSEE HAS PAID LABOUR CHARGES AMOUNTING TO 89 64 219/- WITHOUT DEDUCTING TDS. THEREFORE SAID EXPENSE WAS DISALLOWED UNDER THE HE AD PROFESSION OF SEC. 40(A)(IA) OF THE ACT AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT LABOURERS TO WHOM THE WAGES WERE PAID ARE THE ITA NO.559/KOL/2013 A.Y. 2006-07 ITO WD-2(2) HGL. VS. RATNA MUKHERJEE PAGE 3 EMPLOYEES. THERE WAS NO RELATIONSHIP OF CONTRACTOR AND CONTRACTEE BETWEEN THE ASSESSEE AND THE LABOURERS THEREFORE THE PROVISION OF SEC. 194C R.W.S. 40(A)(IA) OF THE ACT ARE NOT ATTRACTED. FURTHER ASSESSEE SUB MITTED THAT THE PAYMENT WAS MADE TO THE EMPLOYEES AFTER DEDUCTING PF AND ESI IN RESPECT OF ALL THE LABOURERS. CONSIDERING THE FACTS AND CIRCUMSTANCES LD. CIT(A) DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 8. HOWEVER IN THE LIGHT OF THE REMAND REPORT OF T HE AO WHICH IS REPRODUCED ABOVE IT IS FOUND THAT THE PAYMENTS MADE ON ACCOUN T OF LABAOUR CHARGES WERE PASSED MUSTER THROUGH PF & ESI ACCOUNT DULY CONFIRM ED BY THE APPROPRIATE AUTHORITY. I HAVE ALSO GONE THROUGH THE DIFFERENT S TATS OF LABOUR CHARGES PAY STRUCTURE OF THE LABOURERS LABOUR-WISE DETAILS OF DEDUCTION OF PF & ESI FOR SEVERAL MONTHS ETC. ON PERUSAL OF THESE EVIDENCE AN D CONSIDERING THE REMAND REPORT OF THE AO STATING THAT DEDUCTIONS OF PF & ES I HAVE BEEN DULY VERIFIED FROM THE PF. AUTHORITY I AM OF THE CONSIDERED VIEW THAT THE APPELLANTS CASE FALLS UNDER THE PURVIEW OF SEC. 194C(2) OF THE ACT. HOWEVER AS THE LABOURERS WERE THE APPELLANTS EMPLOYEES FROM WHOM DEDUCTIONS OF PF & ES HAVE BEEN MADE IN REGULAR COURSE THERE WAS NO RELATIONSHIP O F CONTRACTOR AND CONTRACTEE TO ATTRACT PROVISIONS OF SEC. 40(A)(IA) R.W.S 194C( 2) OF THE ACT. THEREFORE THE LABAOUR CHARGES CLAIMED WERE NOTHING BUT WAGES PAID TO THE EMPLOYEES AS THE COST OF LABOUR AND IN SUCH CIRCUMSTANCES THERE IS NO SCOPE TO INVOKE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. THAT BEING SO THE DI SALLOWANCE MADE BY THE AO U/S 40(A)(IA) OF THE ACT IS DELETED AND THE AO IS DIREC TED TO ALLOW THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE OF RS.89 64 419/ - INCURRED ON PAYMENT OF WAGES TO LABOURERS. GROUND NO.1 OF THIS APPEAL IS T HUS ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US LD. DR SUBMITTED THAT LABOURERS ARE NO T EMPLOYEES OF ASSESSEE AND IN NONE OF THE CASE NO EMPLOYMENT LETTERS HAVE BEEN ISSUED TO THOSE LABOURERS. HE VEHEMENTLY RELIED ON THE ORDER OF AO. ON THE OTHER HAND LD. AR SUBMITTED THAT ALL THE LABOURERS TO WHOM THE WAGES HAVE BEEN PAID ARE THE EMPLOYEES OF THE ASSESSEE AND IN SUPPORT OF THIS CL AIM LD. AR FURTHER SUBMITTED THAT PAYMENT WERE MADE TO THE LABOURERS A FTER DEPOSITING THE PF AND ESI ON BEHALF OF ALL THE LABOURERS. HE ALSO RELIED ON THE ORDER OF LD. CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT CASE IS THAT TH E AO HAS TREATED THE PAYMENT ITA NO.559/KOL/2013 A.Y. 2006-07 ITO WD-2(2) HGL. VS. RATNA MUKHERJEE PAGE 4 OF WAGES TO THE LABOURERS AS SUBJECT TO THE PROVISI ONS OF SECTION 194C OF THE ACT. BUT THE ASSESSEE CLAIMS THAT THE LABOURERS ARE THE EMPLOYEES OF IT AND THEREFORE THEY ARE GOVERNED BY THE PROVISIONS OF SECTION 192 OF THE ACT I.E. SALARY TO THE EMPLOYEES. ACCORDINGLY THE LD. CIT(A) HAS GIVEN THE RELIEF TO THE ASSESSEE FOR NOT DEDUCTING THE TDS ON THE PAYMENT OF WAGES TO TH E LABOURERS UNDER SECTION 194C OF THE ACT. NOW THE ISSUE BEFORE US ARISES SO AS TO WHETHER THE LABOURERS TO WHOM THE PAYMENTS ARE BEING MADE ARE THE EMPLOYEES OF THE ASSESSEE. WE FIND THAT AS PER THE PROVISIONS OF SECTION 17(1) OF THE ACT SALARY INCLUDES WAGES AND THEREFORE CONCEPTUALLY THERE IS NO DIFFERENCE BETWE EN SALARY & WAGES. WAGES ARE TREATED JUST LIKE SALARY AND ARE TAXABLE ON SAM E BASIS. THE EMPLOYMENT RELATIONSHIP CAN BE COMPLEX WITH NO QUICK AND EASY FORMULAE TO USE WHICH WILL PROVIDE AN INSTANT SOLUTION. THE GENERAL PRINCIPLES OF CONTRACT LAW GOVERN THE FORMATION OF THE CONTRACT OF EMPLOYMENT. A CONTRACT OF EMPLOYMENT IS A CONTRACT BY WHICH A PERSON THE EMPLOYEE UNDERTAKE S FOR A LIMITED OR INDETERMINATE PERIOD OF TIME TO DO WORK FOR REMUNER ATION ACCORDING TO THE INSTRUCTIONS AND UNDER THE DIRECTION OR CONTROL OF ANOTHER PERSON I.E THE EMPLOYER. WITHIN THE FRAMEWORK OF A CONTRACT OF EMP LOYMENT A PERSON CARRIES OUT THE SERVICE OF WORK RECEIVES REMUNERATION AND THE WORK IS CARRIED OUT ACCORDING TO THE DIRECTION AND CONTROL OF THE EMPLO YER. THE TERMS OF THE CONTRACT MAY BE EITHER IN WRITING OR GIVEN ORALLY BUT BOTH ARE EQUALLY BINDING AND ENFORCEABLE. WHEN A PERSON IS HIRED TO BE AN EMPLOY EE THE PERSON ENTERS INTO A CONTRACT OF SERVICE WHICH IS AN EMPLOYER/EMPLOYE E RELATIONSHIP. ANOTHER TYPE OF CONTRACT BETWEEN TWO PARTIES IS THAT OF AN INDEP ENDENT CONTRACTOR OR A CONTRACT FOR SERVICE. THIS TYPE OF CONTRACT MAY BE DEFINED A S A CONTRACT BY WHICH A PERSON CONTRACTOR OR SERVICE PROVIDER MAKES A COMM ITMENT TO ANOTHER PERSON THE CLIENT TO CARRY OUT MATERIAL OR INTELLECTUAL W ORK OR TO PROVIDE A SERVICE FOR A PRICE OR FEE. THE CHARACTERISTICS OF A CONTRACT FOR SERVICE ARE THAT THE CONTRACTOR IS FREE TO CHOOSE THE MEANS OF PERFORMING THE CONTRACT AND NO RELATIONSHIP OF SUBORDINATION EXISTS BETWEEN THE CONTRACTOR OR THE PROVIDER OF SERVICES AND THE ITA NO.559/KOL/2013 A.Y. 2006-07 ITO WD-2(2) HGL. VS. RATNA MUKHERJEE PAGE 5 CLIENT IN RESPECT OF SUCH PERFORMANCE. IN THE INSTA NT CASE BEFORE US THE LD. DR HAS NOT BROUGHT ANYTHING CONTRARY TO THE FINDINGS O F LD. CIT(A). IN OUR CONSIDERED VIEW THE WAGES IN THE INSTANT CASE ARE C OVERED UNDER SECTION 192 OF THE ACT. THEREFORE THE PROVISIONS OF SECTION 194C A RE NOT APPLICABLE. IN THE INSTANT CASE THE PAYMENT HAS BEEN MADE TO THE EMPLO YEES OF THE ASSESSEE. IN VIEW OF ABOVE WE DO NOT FIND ANY REASON TO INTERFER E IN THE ORDER OF LD. CIT(A). HENCE REVENUE APPEAL IS DISMISSED. 6. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21/10/2016 SD/- SD/- (K.NARSIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP SR.P.S ! - 21 /10/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-2(2) AAYAKAR BHAWAN CHINSURAH HOOGHLY 2. /RESPONDENT-RATNA MUKHERJEE RD-18 COLLIONS PATH BIDHAN NAGAR DURGPUR-713212 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# '# / DR ITAT KOLKATA 6. (*+ / GUARD FILE. BY ORD ER/ /TRUE COPY/ / '#