Income Tax Officer, Ward-8(1), Hyderabad V. MVVS Aliens (JV), Hyderabad

ITA 1162/Hyd/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7369 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2012-2013
• Appeal Filed On: 07-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: S RAMA RAO
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1162/HYD/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-8(1), HYDERABAD VS M/S.MVVS ALIENS (J.V), HYDERABAD [PAN: AABAM2712R] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI P.CHANDRA SEKHAR, CIT-DR, FOR ASSESSEE : SHRI S.RAMA RAO, AR DATE OF HEARING : 24-06-2021 DATE OF PRONOUNCEMENT : 17-08-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2012-13 ARISES FROM THE CIT(A)-9, HYDERABADS ORDER DATED 28-02-2017 PASSED IN CASE NO.0168/ITO, WARD-8(1)/2016-17, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE NOTICE AT THE OUTSET WITH THE ABLE ASSISTANCE OF BOTH THE PARTIES THAT THE REVENUES SOLE SUBSTANTIVE GRIEVANCE HEREIN SEEKS TO REVERSE THE CIT(A)S ACTION REVERSING SECTION 40(A)(IA) DISALLOWANCE OF RS.7,12,81,805/- MADE IN THE COURSE OF ASSESSMENT ON ACCOUNT OF ASSESSEES FAILURE IN NOT DEDUCTING TDS QUA ITS PAYMENTS MADE TO THE JV PARTNERS, ITA NO. 1162/HYD/2017 :- 2 -: M/S.ALLIENS DEVELOPERS PVT. LTD. THE CIT(A)S DETAILED DISCUSSION DELETING THE IMPUGNED DISALLOWANCE READS A S UNDER: 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A JOINT VENTURE, FILED ITS RETURN OF INCOME FOR A.Y. 2012-13 ON 27.09.2012 ADMITTING TOTAL INCOME OF RS.1,09,260/-. DURING THE ASSESSMENT PROC EEDINGS IT IS OBSERVED THAT THE JV ENTRUSTED THE ENTIRE WORK RECE IVED ON CONTRACT TO ONE OF ITS CONSTITUENTS VIZ., ALIENS DEVELOPERS PVT LTD., AND PAID RS. 7,12,81,705/- TOWARDS SUB-CONTRACT. ASSESSING OFFIC ER HELD THAT THE RELATION BETWEEN THE ASSESSEE JV AND M/S.ALIENS DEV ELOPERS PVT LTD., (ADPL) IS THAT OF A CONTRACTOR AND SUB-CONTRA CTOR. AS THE ASSESSEE DID NOT DEDUCT ANY TDS U/S 194C, ASSESSING OFFICER DISALLOWED THE ENTIRE PAYMENT MADE AMOUNTING TO RS. 7,12,81,705/- INVOKING THE PROVISIONS OF SECTION 40(A)(IA). IT IS AGAINST THIS ORDER THAT THE PRESENT APPEAL IS FILED CONTESTING THE DISALLOW ANCE MADE . 4.DURING THE APPELLATE PROCEEDINGS IT IS SUBMITTED BY THE ASSESSEE THAT THE CONSTITUENTS OF JV AGREED TO EXECUTE THE C ONTRACT. AS PER THE UNDERSTANDING OF JV PARTNERS THE ENTIRE WORK WAS EN TRUSTED TO M/S. ADPL. IT IS ARGUED THAT THE AGREEMENT BETWEEN THE J V AND ITS CONSTITUENTS CANNOT BE TERMED AS A SUBCONTRACT AGRE EMENT. ASSESSEE IN THIS REGARD RELIED ON THE FOLLOWING DECISIONS: 'A. MADHUCON SINO HYDRO (JV) IN ITA NO, 646 & 701/ HYD/2010; B. TANSSTORY (INDIA) LTD. VS. ITO IN 134 ITD 269, I TAT HYD; C. HYUNDAI ROTEMCO., KOREA / MITSUBISHI CO., JAPAN 323 ITR 277; D. SOMA ENTERPRISES LTD., IN ITAT NO. 1117 & 1117/H /2010 (ITAT, HYD)' 4.1 WITHOUT PREJUDICE TO THE ABOVE ARGUMENT IT IS A LSO ARGUED BY THE ASSESSEE THAT IN VIEW OF SPECIAL BENCH DECISION IN CASE OF MERLYN SHIPPING AND TRANSPORT PROVISIONS OF SECTION 40(A)( IA) ARE APPLICABLE ONLY TO THE AMOUNTS PAYABLE. ALTERNATELY IT IS ALSO ARGUED THAT IN VIEW OF AMENDMENT TO SECTION 40(A)(IA) THE PROVISIO NS ARE NOT APPLICABLE IF THE RECIPIENT ADMITTED THE AMOUNT I P AID AS INCOME. AS ADPL ADMITTED THE AMOUNT PAID AS ITS INCOME IT IS A RGUED THAT NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESS EE JV. ON CONSIDERATION OF THE FACTS OF THE CASE, IN VIEW OF THE JURISDICTIONAL TRIBUNAL DECISIONS THAT THE AGREEMENT TO ENTRUST TH E WORK TO JV CONSTITUENTS IS NOT IN THE NATURE OF SUB-CONTRACT A GREEMENT, I AM OF THE CONSIDERED OPINION THAT NO DISALLOWANCE CAN BE MADE IN THIS CASE U/S. 40(A)(IA). THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE MADE. 5. IN THE RESULT, THE APPEAL IS ALLOWED. ITA NO. 1162/HYD/2017 :- 3 -: 3. LEARNED CIT-DR INVITED OUR ATTENTION TO THE ASSESSEES DETAILED PAPER BOOK IN GENERAL AND PAGES 82 TO 88 INTER ALIA CONTAINING THE ASSESSEES SUB-CONTRACT AGREEMENT DT.29-03 - 2010 AS WELL AS THE CORRESPONDING STIPULATIONS REGAR DING TDS DEDUCTION AT PG.87 IN CLAUSE NO.13. HIS CASE IS THAT THI S TAXPAYERS IMPUGNED PAYMENTS INDEED ATTRACT APPLICATION OF CHAPTER-XVII TDS MECHANISM. HE NEXT QUOTED HON'BLE APE X COURTS RECENT DECISION (2012) [118 TAXMANN.COM 47] (S C) SHREE CHOUDHARY TRANSPORT COMPANY VS. ITO THAT SECT ION 194C INCLUDES BOTH THE CONTRACTS AS WELL AS SUB-CONTRACTS WITHOUT PROVIDING FOR ANY EXCLUSION THEREOF IN AN INS TANCE OF A JOINT VENTURE AND ITS PARTNER. HE THEREFORE URGED BEFO RE US THAT THE ASSESSING OFFICERS IMPUGNED DISALLOWANCE BE RESTORED. 4. LEARNED COUNSEL ON THE OTHER HAND HAS QUOTED THIS TRIBUNALS CO-ORDINATE BENCH DECISION IN ITO VS. SHRA DDHA & PRASAD JOINT VENTURE ITA NO.2665/PUN/2017, DT.17-05-20 21 THAT THE IMPUGNED DISALLOWANCE DOES NOT APPLY IN AN INS TANCE OF JV; ITS PARTNER AS ARE THE FACTS BEFORE US. MR.RAMA RAO, NEXT INVITED OUR ATTENTION TO THE TRIBUNALS CO-ORDINATE B ENCHS ORDER IN ASSESSEES CASE ITSELF, ITA NO.696/HYD/2016 , DT.17- 03-2017 (AY.2011-12) RESTORING IDENTICAL ISSUE BACK TO THE ASSESSING OFFICER. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL SUBMISSIONS AGAINST AND IN SUPPORT OF THE CIT(A)S FOR EGOING DETAILED DISCUSSIONS DELETING SECTION 40(A) DISALLOWA NCE. SUFFICE TO SAY, THERE IS HARDLY ANY DISPUTE THAT SECTION 40(A)(IA) PAYABLE EXPENDITURES DISALLOWANCE ISSUE IS NO MOR E RES ITA NO. 1162/HYD/2017 :- 4 -: INTEGRA IN LIGHT OF HON'BLE APEX COURTS YET ANOTHER RECENT DECISIONS OF PALAM GAS SERVICE VS. CIT 394 ITR 300 (SC) DECIDING THE ISSUE IN REVENUES FAVOUR. WE THUS REVE RSE THE CIT(A)S FINDINGS DELETING THE IMPUGNED DISALLOWANCE TO THIS EFFECT. 6. COMING TO OTHER REMAINING ASPECTS, IT HAS COME ON RECORD THAT LEARNED CO-ORDINATE BENCHS DIRECTIONS IN AY.2011- 12 ARE YET TO ATTAIN FINALITY IN ASSESSING OFFICERS C ONSEQUENTIAL ASSESSMENT. WE THEREFORE ADOPT JUDICIAL CONSISTENCY AN D RESTORE THE INSTANT ISSUE AS WELL BACK TO THE ASSESSING OFFICER TO BE DECIDED AFRESH IN VIEW OF THE RELEVANT FACTS ON R ECORD. 7. THIS REVENUES APPEAL IS ALLOWED FOR STATISTICAL P URPOSES IN FOREGOING TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 17-08-2021 TNMM ITA NO. 1162/HYD/2017 :- 5 -: COPY TO : 1.THE INCOME TAX OFFICER, WARD-8(1), HYDERABAD. 2.M/S.MVVS-ALIENS(J.V), SY.NO.384, 385, SPACE STATI ON, TELLAPUR, HYDERABAD. 3.CIT(APPEALS)-9, HYDERABAD. 4.PR.CIT-2, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.