KRAMSKI STAMPING & MOLDING INDIA P. LTD Vs. ASSISTANT COMMISSIONER OF INCOME TAX
HIGH COURT OF MADRAS
Kramski Stamping And Molding India P. Ltd
ASSISTANT COMMISSIONER OF INCOME TAX
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VINEET KOTHARI,J. -
(1.) The Assessee has filed the present Appeal under Section 260A of the Income Tax Act, 1961 ('Act' in short) raising the Substantial Questions of Law, arising from the order of the Income Tax Appellate Tribunal dated 02.04.2018, by which, the learned Tribunal dismissed the Assessee's Appeal for the Assessment Year 2012-2013 and upheld the disallowance made by the Assessing Authority as well as First Appellate Authority under Section 40A(ia) of the Act on account of not making Tax Deduction at Source by the Assessee on making payment to M/s.Spectronic Plating (P) Ltd, for the alleged job work of Electro-plating undertaken by the said Company on the copper rolls sent by the Assessee.
(2.) The Substantial Questions of Law raised in the present Appeal filed by the Assessee are as follows:
"1. Whether,on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the disallowance as prescribed u/s.40 (a)(ia) of the Income Tax Act for the non- deduction of TDS would be applicable to the appellant when the work done by M/s.Spectronics Plating (P) Ltd is not a job work?
2. Whether on the facts and circumstances of the case, the Tribunal was right in holding that the disallowance as prescribed u/s.40(a) (ia) of the Income Tax Act for the non-deduction of TDS would be applicable, ignoring the retrospective applicability of s.40(a)(ia) of the Income Tax Act?
3.Whether, on the facts and circumstances of case, the Tribunal was right in not taking into consideration that there is no revenue loss for the respondent as M/s.Spectronics Plating (P) Ltd has discharged the liability of the appellant by paying tax on that portion of income accrued?"
(3.) The learned counsel for the Assessee Mr.R.Sivaraman submitted before us that the provisions of Section 194C of the Act, providing for such Tax Deduction at Source on the job work, is not attracted in the present case. Therefore, the authorities below have erred in applying the said provisions and consequently upheld the disallowance under Section 40A(ia) of the Act. He drew our attention to Clause(iv) of Explanation appended to Section 194C of the Act, which is quoted below for ready reference:
"194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to-
(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;
(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein."
Explanation-For the purposes of this Section,-
(iv) "work" shall include-
(b)broadcasting and telecasting including production of programmes for such broadcasting or telecasting;
(c) Carriage of goods or passengers by any mode of transport other than by railways;
(e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer. ;
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