The Commissioner Of Income Tax – 1, Madurai v. M/S.eswari Murugan Constructions, 24A, Pappammalpuram, Aundipatti Post, Theni District

CORAM: THE HON'BLE MR. JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI T.C.A.No.301 of 2012 The Commissioner of Income Tax – 1,Madurai. ... AppellantVs. M/s.Eswari Murugan Constructions,24A, Pappammalpuram,Aundipatti Post,Theni District.... Respondent Appeal preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras, "B" Bench, dated 16.03.2012 in I.TA.No.447/Mds/2012 forthe assessment year 2007-08, directed against the RevisionalOrder passed by the Commissioner of Income Tax-I, Madurai inC.No.401/06/CIT-I/2009-10 against the Assessment order passed bythe Income Tax Officer, Ward-I(1), Theni in Pan No. . For Appellant : Mr.M.Swaminathan, Senior Standing CounselFor Respondent : Mr.T.Vasudevan JUDGMENT (Judgment was delivered by M.DURAISWAMY, J.) Challenging the order passed in I.TA.No.447/Mds/2012 for theassessment year 2007-08 on the file of the Income Tax AppellateTribunal, Chennai, "B" Bench, the Revenue has filed the aboveappeal. 2.The above appeal was admitted on the following substantialquestions of law: “1)Whether on the facts and in thecircumstances of the case, the Appellate Tribunalwas right in holding that the revision orderpassed u/s 263 by the CIT Madurai is erroneousand not sustainable in law? https://hcservices.ecourts.gov.in/hcservices/ 2)whether on the facts and in thecircumstances of the case, the Appellate Tribunalwas right in holding that the assessee is notrequired to deduct TDS when the sub-contractamounts were credited into the ledger account ofthe sub-contractor's which is against theprovision of Section 194C? 3)Whether on the facts and in thecircumstances of the case, the Appellate Tribunalwas right in holding that the Commissioner ofIncome Tax has not examined whether such paymentswas less than Rs.20,000/- and cumulative paymentwas less than Rs.50,000/- which is contrary tothe material evidence filed by the assesseebefore the Assessing Officer?” 3.The Commissioner of Income Tax, on an examination of therecords of the case, found that the sub-contract paymentscredited was Rs.1,45,50,000/-, whereas the sub-contract amountpaid was Rs.30,64,000/- and instead of making a disallowance ofthe entire sum of Rs.1,45,50,000/- the Assessing Authority hasmade a disallowance of Rs.30,64,000/- alone. The Commissioner ofIncome Tax held that the assessment order was erroneous andprejudicial to the interest of the Revenue. The assesseecontended before the Commissioner of Income Tax that everysingle payment made to the sub-contractor was in fact made tothe labourers and such amount paid did not exceed Rs.20,000/-and also the over all payment did not exceed Rs.50,000/- and insuch circumstances, the provision of TDS is not applicable tothe case of the assessee. However, the Commissioner of IncomeTax rejected the contention of the assessee on the ground thatthe assessee had shown Rs.1,63,251/- as TDS provision for sub-contract payment. Ultimately, the Commissioner of Income Tax setaside the assessment order and disallowed a further amount ofRs.1,13,22,749/- and added the same back to the income of theassessee and determined the total income at Rs.1,53,27,510/-. Asagainst the order passed by the Commissioner of Income Tax, theassessee preferred an appeal before the Income Tax AppellateTribunal. The Tribunal, after taking into consideration the caseof the assessee, found that the Commissioner of Income Tax haserroneously rejected the contention of the assess with regard tothe payments which were made in a manner where individualpayment was less than Rs.20,000/- and cumulative payment wasless than Rs.50,000/-. The Tribunal observed that withoutexamining this crucial aspect, the Commissioner of Income Taxhad rejected the case of the assessee on a technical reason. 4.It is pertinent to note that what has been credited by the https://hcservices.ecourts.gov.in/hcservices/ 4.It is pertinent to note that what has been credited by the https://hcservices.ecourts.gov.in/hcservices/ assessee was only a provision towards possible liability and thesaid liability may be an actual liability or a contingentliability or the provision must have been made as a result ofample precaution by the assessee. The fact that the assessee hasmade a provision for TDS in its accounts does not in fact decidewhether the assessee is bound by the provisions of the TDS ornot. As already stated, the Commissioner of Income Tax has notgiven any finding that the assessee has made payments in excessof the mandatory limit prescribed for TDS or the assessee hascredited the accounts of the sub-contractors with commensurateamounts. 5.It is pertinent to note that though the order passed bythe Assessing Officer may be prejudicial to the interest of theRevenue, it cannot be termed as erroneous. In such case, theorder passed by the Commissioner of Income Tax cannot besustained. The Tribunal taking into consideration all theseaspects, rightly set aside the order passed by the Commissionerof Income Tax and allowed the appeal. We do not find any groundmuch less any substantial question of law to interfere with theorder passed by the Appellate Tribunal. The appeal is liable tobe dismissed. Accordingly, the Tax Case Appeal is dismissed. Nocosts. Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant Registrar VA To 1.The Income Tax Appellate Tribunal, Chennai, "B" Bench 2.The Commissioner of Income Tax-1, Madurai. Madurai. 3.The Income Tax Officer, Ward-I(1), Theni. Ward-I(1), Theni. GMI(CO)KM(16/04/2021)