Uttara Broilers Breeders & Hatcheries, ... vs Assessee

This assessee's appeal for A.Ys.2007-08, arises from order of the CIT(A) Valsad dated 10.09.2011 passed in case no.251/09-10 affirming the Assessing Officer's action in disallowing salary and wages of Rs.5,66,600/- for non deduction of TDS, in proceedings u/s.143(3) of the Income Tax Act in short 'the Act'.

2. The assessee-firm is in poultry and hatchery business. It filed return on 10.10.2007 admitting income of Rs.3,89,290/-. The same was processed. The Assessing Officer took up scrutiny. The ITA No.3053/Ahd/2011 M/s. Uttara Broilers Breeders & Hatcheries For A.Y. 2007-08 -2-

assessee had claimed wages and salary expenses at Rs.15,60,664/- debited/paid to contract breeding farm workers.. No TDS had been deducted. The Assessing Officer sought to invoke Section 40(a)(ia). He quoted assessee's failure in filing a reasonable explanation for non TDS deduction on the aforesaid payment and made the impugned disallowance of Rs.15,60,664/- u/s.40(a)(ia) accordingly in assessment order dated 18.12.2009.

3. The assessee preferred an appeal. The CIT(A) upholds the Assessing Officer's action applying section 194C of the Act qua the impugned salary and wages payments. He observes that the payees in question are assessee's regular employees getting yearly remuneration. However, he has restricted the impugned disallowance of Rs.15,60,664/- to Rs.5,66,600/- by observing that only nine workers have received salary and wages exceeding to Rs.50,000/- in each case. This leaves the assessee aggrieved.

4. Case called twice. The assessee's authorized representative had file an adjournment letter on 18.4.2015. However, there is no one to pursue the same. Thus, we reject the adjournment prayer and proceed to decide the case on merits.

5. We have heard the Revenue and gone through the case file. It strongly supports the CIT(A)'s order. It is evident from the lower appellate order that the payees in question are the assessee's regular employees getting yearly remuneration. This makes us to observe that the claim of wages in question is their salary amounts. That ITA No.3053/Ahd/2011 M/s. Uttara Broilers Breeders & Hatcheries For A.Y. 2007-08 -3-

being the case, there is hardly any scope of a second opinion that TDS deduction on salary payments is covered by a specific statutory provision i.e. section 192 instead of that invoked by the lower authorities i.e. section 194C. It is not the Revenue's case that any of the assessee's employee earns salary income more than the exemption limit in the impugned assessment year. Therefore we differ with the lower authorities on this legality principle and delete the impugned disallowance made u/s.194C r.w.s 40(a)(ia). We reiterate that we are dealing with a charging provision in a fiscal statute liable to be literally interpreted. The assessee's grounds on merits succeed.

6. The assessee's appeal is allowed.

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 30/04/2015 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