Case Law Details
SK. Jaynal Abddin Vs CIT (Calcutta High Court)
The case of SK. Jaynal Abddin vs. CIT presented a crucial question regarding the applicability of Section 40A(3) of the Income Tax Act concerning payments made to labourers. T
The appellant, engaged in embroidery and stitching business, made payments to labourers through supervisors, with each payment not exceeding Rs. 20,000. However, the assessing officer invoked Section 40A(3) due to non-compliance with certain statutory requirements.
The CIT(A) overturned the assessment order, recognizing the supervisors as employees of the appellant and emphasizing that payments didn’t exceed Rs. 20,000 per labourer. Yet, the ITAT, contradicting this, deemed supervisors as subcontractors, leading to disallowance under Section 40A(3).
The Court scrutinized the facts, emphasizing the employment status of supervisors supported by the appellant’s records. It highlighted the legal framework of agency, asserting that supervisors acted as agents of the appellant in disbursing payments to labourers.
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