Suresh Ship Breaking Pvt.Ltd., ... vs Department Of Income Tax

This Revenue's appeal for A.Ys.2008-09, arises from order of the CIT(A)-XX, Ahmedabad dated 26.09.2011 passed in case no.487/10-11 deleting the impugned disallowance of Rs.51,84,255/- made by the Assessing Officer under the head workers wages for non deduction TDS u/s.40(a)(ia), in proceedings u/s.143(3) of the Income Tax Act in short 'the Act'.

2. The assessee-company manufactures yarn and thread. It filed return on 25.9.2008 admitting income of Rs.4,13,620/-. The ITA No.3006/Ahd/2011 Sureshship Breaking Pvt. Ltd.

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Assessing Officer took up scrutiny. The assessee had claimed impugned deduction of worker wages amounting to Rs.51,84,255/-. The Assessing Officer sought for all relevant details. The assessee pleaded to have been engaged in manufacturing activity and paid its workers the impugned wages allowable u/s.37(1) of the Act, its workers/payees has stayed in its factory for a period of 9 to 12 months and thereafter only; they would be paid after successful completion of the said period and the work assigned and that they did not have requisite taxable income in their hands so as to give PAN details. The Assessing Officer observed in assessment order dated 24.12.2010 that the impugned payments had been made to labour contractors to whom the necessary contract had been assigned, no TDS have been deducted u/s.194C on the worker's wages in question and even if the assessee's plea of making the payment only at the time of completion of the assigned work, the same was only in the nature of a contract payment under the aforesaid provision mandating TDS deduction. He adopted this reasoning for disallowance the assessee's claim on worker's wages at Rs.51,84,255/-.

3. The CIT(A) has reversed the Assessing Officer's disallowing by observing that there is no dispute about genuineness of the impugned wages claimed, no evidence of involvement of any labour contractor is forthcoming and the impugned wages have been paid directly to the assessee's workers without any evidence to infer otherwise to invoke section 40(a)(ia) disallowance in question. The ITA No.3006/Ahd/2011 Sureshship Breaking Pvt. Ltd.

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assessee has succeeded in the lower appellate order. This leaves the Revenue aggrieved.

4. The case has been called twice. The Revenue is present through its departmental representative. The registry has sent an RPAD notice on 17.3.2015. The same has been returned back unserved. In these circumstances, we proceed exparte against the assessee.

5. The Revenue has strongly contested for restoration of the impugned section 40(a)(ia) disallowance relating to assessee's workers for non deduction of TDS. We have already narrated the relevant facts in the preceding paragraphs. The assessee has paid wages to its workers on successful completion of the work assigned. The Revenue argues that the said workers in the nature of daily wages could not have survive without getting salary at regular intervals. However, we do not find any iota of discussion in the assessment order challenging genuineness of the impugned wages. Nor is any factual evidence produced before us at this second appellate stage. There is also no material pin pointing involvement of any labour contractor in the assessee's payment. Once the assessee has claimed to have paid the wages to its workers without involvement of any contractor and all, we observe that the same are not contractual payments u/s.194C but they come under section 192 of the Act. It is not the Revenue's case that these payments exceed the exemption remits pertaining to the impugned assessment year in ITA No.3006/Ahd/2011 Sureshship Breaking Pvt. Ltd.

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any individual case. We make it clear that section 192C is a specific provision which excludes operation of Section 194C of the Act in the facts and circumstances of the case hereinabove. Thus we affirm the CIT(A) findings. The Revenue's grounds are rejected.

6. The Revenue's appeal is dismissed.

Order pronounced in the Court on this day, the 30th April, 2015 at Ahmedabad.

Sd/- Sd/- (PRAMOD KUMAR) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated /04/2015 Prabhat Kr. Kesarwani, Sr. P.S. आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad

5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदेशानुस ार / BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad