March 8, 2010 :  

ASSISTANT COMMISSIONER OF INCOME TAX vs. GRANDPRIX FAB. (P) LTD.

ITAT, DELHI

ITA No. 1208l/2009

Asst. yr. 2005-06

Decided on 23rd October, 2009

Gist of decision :  

The assessee has explained that assessee was required to deduct tax at source only in respect of the payment relating to the labour charges, and not in respect of the cost of material supplied by the party. This explanation of the assessee is not substantiated by any sort of evidence that there were two different contracts for providing the labour and for supplying the material. It seems that the payments were made towards repairing and maintenance of the building. The nature of the work undertaken was painting, polishing, POP, punning of walls, fixing of mirrors, optic light fixing complete with tubelights, P&F, and floor tiles etc. The whole work is composite, and the supply of the goods were not made independently to that of the labour works. Merely because the assessee has bifurcated the payment into two groups that by itself is not sufficient to say that there were two independent and distinct contracts entered into by the assessee with the contractor. The assessee’s contention is, thus, found to be without merit, and since the assessee has not deducted the tax with regard to the payment of Rs. 1,34,900 paid to UC, the AO was very much justified in disallowing the deduction by invoking the provision of s. 40(a)(ia). Therefore, the order of the CIT(A) on this issue is set aside, and that of the AO is restored, meaning thereby that the disallowance of Rs. 1,34,900 made by the AO is justified, and is to be added back to the total income of the assessee.