Case Law Details
Amtech Engineers Vs ITO (ITAT Delhi)
Introduction: In the case of Amtech Engineers vs. ITO (ITAT Delhi), an essential clarification has been provided concerning Tax Deducted at Source (TDS). The Income Tax Appellate Tribunal (ITAT) ruled that TDS is not applicable under section 194C of the Income Tax Act for casual labor expenses related to road construction and crane hiring.
Detailed Analysis:
1. Background: Amtech Engineers, a partnership firm, is engaged in providing mechanical engineering services on a sub-contract basis, involving activities such as fabrication, erection, steel structural work, civil work, and painting. During the relevant assessment year, the firm incurred casual labor expenses for various activities.
2. TDS Controversy: The Assessing Officer (A.O.) had made an addition of Rs. 73,10,000 under section 40(a)(ia) of the Income Tax Act. This addition pertained to expenses on which Tax Deducted at Source (TDS) was not deducted by Amtech Engineers. The company contended that out of the total expenses, Rs. 36,50,000 was related to petty labor expenses that did not require TDS compliance. The remaining Rs. 36,60,000 was for crane hire charges, and the company had not deducted TDS due to issues of interpretation and a bona fide belief about the necessity of TDS deduction.
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