Case Law Details

Case Name : Principal Commissioner Of Income Tax Vs Shri Tulsi Ram Modi (Rajasthan High Court at Jaipur)
Appeal Number : Income Tax Appeal no 53/2015
Date of Judgement/Order : 14/08/2015
Related Assessment Year :

Brief of the case

In the case of Pr. CIT Vs. Shri Tulsi Ram Modi,  HC of Rajasthan at Jaipur has held that labourer hired by the assessee employed as casual labourers could not be considered to be sub- contractor and therefore provisions of Section 194C and Section 40(a)(ia) of the Act were not applicable. Further, confirm that Section 40(a)(ia) of the Act was applicable to the amount outstanding at the end of the year .

Facts of the case

The respondent assessee is the proprietor of M/s. Riddhi Siddhi Industries & as alleged is engaged in sales of aluminum sections/profiles/profiles, glass sheets, wooden/gypsum boards etc. It has been alleged by the assessee that installation of fitting of such material at customers’ premises is undertaken by employing casual labourers. During the course of proceedings the AO was of the view that the amount paid by the assessee to the casual labourers was liable for TDS u/S 194C(3) & that being so the assessee became contractor & the casual labourers became sub-contractor, as such the assessee ought to have deducted TDS @1% on the payment made to sub-contractor and due to non deduction of TDS, such amount paid by the assessee was disallowed u/S40(a)(ia) of the Act.

Assessee preferred an appeal before CIT(A), CIT(A) looking to the nature of work undertaken by the assessee by employing casual labourers at the business premises of customers deleted the additions by holding as under :-

(i) that the provisions of Section 194C and Section 40(a)(ia) of the Act were not applicable.   (ii) besides the Section 40(a)(ia) of the Act was applicable to the amount outstanding at the in view of the ITAT special Bench decision in the case Merilyn Shipping & Transports vs. ACIT, (2012) 20 Taxman 474 Visakhapatnam Bench) and ITAT Jaipur Bench decision in the case of Jaipur Vidyut Vitran Nigam Ltd. vs. DCIT, 123 TTJ 888.

According to CIT(A), such labourer hired by the assessee employed as casual labourers could not be considered to be sub- contractor and finally was of the view that the assessee was not liable to deduct TDS u/S 194C and the disllowance u/S 40(a) (ia) of the Act is not warranted.”

Against the said order of CIT(A) Revenue preferred an appeal before Tribunal that while upholding order of CIT(A) & on re-appreciation of the evidence the Tribunal while confirming the view of CIT(Appeals) observed that no adverse inference can be derived from the auditors remark as it is only the statement of fact about wages and in any case auditors vague remarks cannot be construed as a conclusive statement and this is the job of AO to pursue the facts, circumstances and material in entirety and not to resort to piece meal observations that the view expressed by CIT(Appeals) holding that the assessee was not liable to deduct TDS u/S 194C.

Aggrieved against the said decision, the Revenue preferred an appeal before High Court

Issue

Whether in fact and circumstance of the case tribunal is justify in upholding CIT(A) order that provision u/s 194C to deduct tax is not applicable on casual labourer employed by assessee?

 High Court decision / observations

 After hearing counsel for appellant & taking note of the material on record, we are of the view that as regards applicability of the provisions of TDS u/S 194C of the Act is concerned, that has been examined on factual matrix in detail & the view expressed by CIT Appeals on appreciation of facts (viz. labourer hired by the assessee employed as casual labourers could not be considered to be sub- contractor and further held that , Section 40(a)(ia) of the Act was applicable to the amount outstanding) came to be confirmed by the Tribunal on reappreciation of evidence( viz. observed that no adverse inference can be derived from the auditors remark as it is only the statement of fact about wages and in any case auditors vague remarks cannot be construed as a conclusive statement and this is the job of AO to pursue the facts, circumstances and material in entirety and not to resort to piece meal observations )& in our considered view there appears no substantial question of law emerges for our consideration in the instant appeal.

Hence, appeal filed by assessee is dismissed.

More Under Income Tax

Posted Under

Category : Income Tax (27493)
Type : Judiciary (11690)

0 responses to “Section 194C- Casual labourer are not sub-contractor : HC”

  1. vsnmurty says:

    The Appeal is filed by the Dept.and not by he assesee,Remarks on Auditors comments are belitiling to say the least.

  2. J. JANARTHANAN says:

    Sir,

    Link provided in the article seems to be irrelevant to said subject.

    Kindly verify.

    Regards,

    J.Janarthanan

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