GOKHALE CONSTRUCTIONS,PUNE V. DEPUTY COMMISSIONER OF INCOME TAX (TDS), PUNE, PUNE

ITA 1372/PUN/2023

AI Insights

The case involves Gokhale Constructions, a real estate development firm, appealing against the order of the CIT(A), Pune-11, which confirmed the action of the DCIT (TDS), Pune. The DCIT had treated the assessee as 'in default' for not deducting tax at source under section 194(IC) of the Income Tax Act on payments made under various Joint Development Agreements during the assessment year 2018-19. The primary contention of the assessee was that the provisions of section 194(IC) were not applicable to the payments in question, and even if they were, the tax had been duly paid by the landowners, the deductees. The Tribunal decided to remand the case for a detailed examination of the additional evidence to be provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126800 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P. MURKUNDE
• Assessee Lawyers: DEEPA KHARE
• Keywords: Additional evidence; TDS
• Section: 201(1); 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1372/PUN/2023 िनधाᭅरण वषᭅ / Assessment Year : 2018-19 Gokhale Constructions, 2 1175/1, Nirmiti Eminence Mehendale, Garage Road, Pune- 411004. PAN : AAJFG9020D Vs. DCIT (TDS), Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 16.10.2023 passed by Ld. CIT(A), Pune-11 [‘Ld. CIT(A)’] for the assessment year 2018-19. 2. The appellant has raised the following grounds of appeal :- “1. The ld CIT(A) erred in law and on facts in confirming the action of DCIT(TDS) in treating the assesse in default within the meaning of section 201(1) and 201(1A) of the Act for not deducting tax u/s 194(IC) in respect of payments made under various Joint Development agreements without appreciating that the provisions of Section 194(IC) were not applicable. 2. The ld CIT(A) erred in law and on facts in not appreciating that the liability to deduct tax at source u/s 194(IC) arises in respect of payments under the agreements referred to in Section 45(5A) which deems the consideration received or accruing only in the year of Assessee by : Smt. Deepa Khare Revenue by : Shri Ramnath P. Murkunde Date of hearing : 27.01.2025 Date of pronouncement : 25.04.2025 ITA No.1372/PUN/2023 2 completion and therefore the liability to deduct would arise in the year of completion of project. 3. The ld CIT(A) erred in law and on facts in confirming the action of DCIT(TDS) in treating the assesse in default within the meaning of section 201(1) and 201(1A) of the Act for not deducting tax u/s 194(IC) in respect of payments made under the various Joint Development agreements without appreciating that provisions of Section 1941C were applicable to any sum by way of consideration within the meaning of the respective agreements and will not apply to amounts paid or credited before falling due or subject to specific conditions within the meaning of respective agreements. 4. Without prejudice to the above Grounds, the ld CIT(A) erred in law and on facts in not appreciating the fact that the AO has demanded TDS on those payments which were neither due nor paid during the AY 2018-19, even after producing the bank statements and extracts from the audited financial statements of the Appellant before him. 5. The ld CIT(A) erred in law and on facts in not appreciating that the respective payments or credits though made during the year were made subjective to specific conditions in the agreements and can be treated as paid or due only on the fulfillment of the respective conditions. 6. The ld CIT(A) erred in law and on facts in not appreciating that the meaning of specified agreements u/s 45(5A) would have to be seen with reference to the each of the recipient individual landowner's separately and not to all the co-owners collectively. 7. The ld CIT(A) erred in law and on facts in not appreciating that the liability to deduct tax under the joint development agreements is subject to debate of applicability of provisions of two sections i.e 194(IC) or 194(IA) and when two or more provisions are applicable, the interpretation as to applicability of provisions more beneficial to the assessee may be adopted. 8. Whether on facts and in circumstances, the benefit of proviso to Section 201(1) be given to the appellant for not treating him as \"an assessee in default” on fulfillment of the conditions stated in the said proviso. 9. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.” 3. Facts of the case, in brief, are that the assessee is engaged in the business of Real Estate Development. Survey action u/s 133A of the IT Act was carried out on 16.03.2018 to check TDS ITA No.1372/PUN/2023 3 compliance. During the survey proceeding, various Joint Development Agreements between the land owners and the assessee were found and were cross checked with books of accounts maintained in tally module on computer. After verification, it was found that the assessee was not complying with TDS provisions of section 194-IC of the IT Act as TDS @ 10% was not deducted on monetary consideration paid to the land owners as per the Joint Development Agreements for following projects:- (i) Project name: Swastishree (land owners names are Vidyadhar P. Dixit, Smt Kunda D. Dixit and Sh. Shridhar Pandurang Dixit). (ii) Project name: Sulabh Monali (land owner name: Shri Jayant S. Abhyankar, Shruti Shridhar Thakur, Mrs. Trupti Shailesh Kulkarni). (iii) Project Name: Shraddha (Land owner name: Sh. Ulhas Dattaray Bhave) 4. The DCIT (TDS), Pune issued the show cause notice to the appellant however the assessee did not attend the proceedings and the DCIT (TDS), Pune passed an order on 23.05.2018 determining liability amounting to Rs.1,06,55,182/- u/s 201(1) and interest u/s 201(1A) of the IT Act. ITA No.1372/PUN/2023 4 5. After considering the reply of the assessee, Ld. CIT(A) partly allowed the appeal filed by the assessee. It is this order against which the assessee is in appeal before this Tribunal. 6. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) to the extent of upholding the order passed by the DCIT (TDS), Pune is unjustified. Ld. AR further submitted before the Bench that during the course of survey proceedings books of accounts maintained on tally module in computer were find wherein bank account was also maintained and wherein certain entries regarding payments to land owners were made and the DCIT (TDS), Pune has accepted those figures as correct and calculated the TDS liability on the basis of those figures. It was contended before the Bench that the entries made in the tally module bank account were not correct and therefore, the TDS liability determined was also not correct. In support of this contention, Ld. AR produced copy of HDFC Bank Account Statement which was also produced before Ld. CIT(A). Ld. AR submitted before the Bench that most of the land owners have themselves furnished their return of income wherein they have disclosed income on the basis of Joint Development Agreement with the assessee. Accordingly, it was submitted by Ld. AR that ITA No.1372/PUN/2023 5 since the deductee/payee has already shown their income and paid income tax on such income the assessee should not be treated in default and no demand should be raised in his hands on the basis of non-deduction of TDS u/s 194IC of the IT Act on monetary consideration paid to land owners with regard to Joint Development Agreements. In this regard reliance was placed on first proviso to section 201(1) of the IT Act. Ld. AR also submitted that certain payments were paid in the financial year 2018-19 and the DCIT (TDS), Pune has wrongly imposed TDS during the period under consideration on such payments. Ld. AR produced two paper books wherein various documents such as copy of Joint Development Agreement, copy of land owners ledgers, copy of bank account statements through which payments was made to land owners, copy of challan already deposited by assessee regarding TDS payments, copy of Form 16A and copy of written submission furnished before Ld. CIT(A) and submitted that if one opportunity is provided to the assessee he will furnish the proof regarding payment of taxes by the deductees/payees. Accordingly, Ld. AR requested before the Bench to remand the matter back to the file of Ld. CIT(A) with a direction to provide one more opportunity to the assessee to furnish all the above relevant/additional documents in support of its claim. ITA No.1372/PUN/2023 6 7. Ld. DR appearing from the side of the Revenue supported the orders passed by the subordinate authorities and requested to confirm the same. 8. We have heard Ld. Counsels from both the sides and perused the material available on record including two paper books furnished by the assessee. In this regard, we find that the sole grievance of the assessee is that he is not liable to deduct TDS u/s 194IC of the IT Act as determined by the Assessing Officer and also confirmed by Ld. CIT(A) to certain extent. It was also the contention of Ld. AR that if one opportunity is provided to the assessee to submit further evidences in support of its claim, in the light of first proviso to section 201(1) of the IT Act, he would be able to substantiate the grounds of appeal before Ld. CIT(A). Considering the totality of the facts of the case and the interest of justice, without going into the merits of the case, we deem it appropriate to remand the matter back to the file of Ld. CIT(A) with a direction to decide the appeal after considering the additional evidences, if any, furnished by the assessee before him as well as after calling remand report from the AO in this regard and then pass a speaking order as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby ITA No.1372/PUN/2023 7 directed to respond to the notices issued by Ld. CIT(A) in this regard and produce relevant/additional evidences, if any, in support of its claim, without taking any adjournment under any pretext, otherwise Ld. CIT(A) shall be at liberty to pass appropriate order as per law. Thus, the grounds of appeal raised by the assessee are allowed for statistical purposes. 9. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on 25th day of April, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 25th April, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), Pune-11. 4. The Pr. CIT/CIT concerned. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "