M/s. Rithwik Projects Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-3(1), Hyderabad

ITA 1206/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66563 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 08-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Rectification of order
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1206/HYD/2012 ASSESSMENT YEAR 2007-08 M/S. RITHWIK PROJECTS PVT. LTD., HYDERABAD PAN: AABCR5748L V S. THE DEPUTY CIT CIRCLE-3(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI P. MURALI MOHAN RAO RESPONDENT BY: S MT. AMISHA S. GUPT DATE OF HEARING: 20 .11.2012 DATE OF PRONOUNCEMENT: 07.12.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV, HYDERABAD DATED 29.6.2012 FOR A.Y. 2007- 08. 2. IN THIS APPEAL, THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN REJECTING THE CLAIM OF THE ASSESSEE IN RES PECT OF TDS OF RS. 35,87,265 WITHOUT CONSIDERING THE EXPLANATION OFFER ED BY THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE, ASSE SSMENT ORDER U/S. 143(3) OF THE ACT WAS PASSED ON 26.12.2008, DETERMI NING THE TOTAL INCOME AT RS. 14,80,75,403. LATER, AN ORDER U/S. 15 4 WAS PASSED ON 24.2.2009 FOR GIVING CREDIT OF TDS OF RS. 1,86,35,9 80. AS PER THE RECTIFICATION ORDER, ON VERIFICATION OF THE ASSESSM ENT RECORDS, THE ASSESSING OFFICER OBSERVED THAT WHILE PASSING THE S AID RECTIFICATION ORDER U/S. 154, CREDIT FOR ONE TDS CERTIFICATE AMOU NTING TO RS. 35,87,265 WAS WRONGLY GIVEN, AS THE SAID CERTIFICA TE WAS IN THE NAME OF 'CEC-MAYTAS-RITHWIK JOINT VENTURE (JV). HE, THEREF ORE, PROPOSED TO RECTIFY THE SAID MISTAKE BY ISSUING A NOTICE U/S . 154 ON 12.3.2010. IN I.T.A. NO. 1206/HYD/2012 M/S. RITHWIK PROJECTS PVT. LTD. ======================= 2 REPLY TO THE SHOW CAUSE ISSUED BY THE ASSESSING OFF ICER, THE ASSESSEE SUBMITTED THAT THE COMPANY HAD DISCLOSED ENTIRE TRA NSACTION IN ITS BOOKS OF ACCOUNT FOR THE F.Y. 2006-07 RELEVANT TO T HE A.Y. 2007-08. IT, THEREFORE, REQUESTED THE ASSESSING OFFICER TO CONSI DER THE TDS AMOUNT OF RS. 35,87,265 ALSO AND DROP THE PROPOSED RECTIF ICATION. 4. ON VERIFICATION, THE ASSESSING OFFICER NOTICED THAT THE TDS WAS DEDUCTED BY FA & CAO/P, KONKAN RAILWAY CORPORATION L TD., ON DEDUCTEE PAN NO. AAAAC5074B UNDER THE NAME 'CEC-MAY TAS- RITHWLK (JV)' AND NOT ON PAN NO. AAAAC5074B, I.E., NOT IN THE PAN OF RITHWIK PROJECTS P LTD., AND THEREFORE, HE REJEC TED THE CLAIM OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE REP RESENTATIVE OF THE ASSESSEE REITERATED THE FACTS SUBMITTED BEFORE THE ASSESSING OFFICER. HE FURTHER STATED THAT THE ASSESSEE WAS ONE OF THE JOINT VENTURES PARTNERS EXECUTING THE WORK 100% ON BACK TO BACK BA SIS AND DISCLOSED ENTIRE TRANSACTION IN THE BOOKS OF ACCOUNTS FOR THE F.Y. 2006-07 RELEVANT TO THE A.Y. 2007-08. HE SUBMITTED THAT HE HAD FILED AN AFFIDAVIT FROM CEC-MAYTAS-RITHWIK JV TO THE ASSESSI NG OFFICER, IN WHICH IT WAS SUBMITTED THAT THEY HAD NOT CLAIMED TD S FOR AN AMOUNT OF RS. 35,87,265. 6. ON HEARING THE APPEAL, THE CIT(A) DISMISSED THE CLA IM OF THE ASSESSEE BY OBSERVING THAT TDS CERTIFICATE FOR RS. 35,87,265 WAS IN THE NAME OF M/S. CEC-MAYTAS-RITHWIK JV AND NOT IN THE N AME OF PRESENT ASSESSEE SO AS TO HOLD THAT IT WAS ENTITLED TO CREDIT FOR THE TDS CREDIT, PRIMA FACIE. FURTHER, HE OBSERVED THAT THE ASSESSEE HAS NOT DEMONSTRATED THAT SUCH TDS WAS CREDITED TO ASSESSEE S ACCOUNT TO GIVE CREDIT TO THE SAME. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE ASSESSEE ALSO RAISED A REVISED/ADDITIONAL GROUN D STATING THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 154 OF THE ACT IS DEBATABLE AND IT CANNOT BE DEALT WITH IN THE PROCEE DINGS U/S. 154 OF THE IT ACT, 1961. I.T.A. NO. 1206/HYD/2012 M/S. RITHWIK PROJECTS PVT. LTD. ======================= 3 8. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER ERRED BY REJECTING THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF TDS FOR AN AMOUNT OF RS 35,87,265 WITHOUT CONSIDERING THE EXPL ANATION OFFERED BY THE ASSESSEE WHICH IS NOT CORRECT, NOT JUSTIFIED AN D BAD IN LAW. THE ASSESSING OFFICER ALSO ERRED BY REJECTING THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF TDS. SINCE THE ENTIRE TRANSACTION CO VERED BY THE TDS WAS REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR THE FINANCIAL YEAR 2006-07 RELEVANT TO ASST. YEAR 2007-08, CREDIT FOR TDS BE GIVEN TO THE ASSESSEE, RITHWIK PROJECTS PRIVATE LIMITED. THE AR SUBMITTED THAT THE ASSESSEE IS ONE OF THE JOINT VENTURES PARTNERS EXEC UTING THE WORK 100% ON BACK TO BACK BASIS AND DISCLOSED THE ENTIRE TRAN SACTION IN ASSESSEE'S BOOKS OF ACCOUNTS FOR THE FINANCIAL YEAR 2006-2007 RELEVANT TO THE ASSESSMENT YEAR 2007-08. A COPY OF THE AGREEMENT RE GARDING 100% WORK WAS ALREADY SUBMITTED TO THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE AR SUBMITTED THAT AN A FFIDAVIT FROM CEC- MAYTAS-RITHWIK JV IN WHICH IT WAS SUBMITTED THAT TH EY HAD NOT CLAIMED TDS FOR AN AMOUNT OF RS. 35,87,265 WAS ALS O SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. AND IT WAS NOT CONSIDERED BY THE ASSESSING OFFICER AND REJECTED THE CLAIM MAD E BY THE ASSESSEE IN RESPECT OF TDS WHICH IS NOT CORRECT, NOT JUSTIFIED. SINCE THE REVENUE COVERED BY THE TDS CERTIFICATE IS INCLUDED IN THE B OOKS OF ACCOUNTS OF THE ASSESSEE, THE AR REQUESTED THAT CREDIT FOR TDS BE GIVEN TO THE ASSESSEE, RITHWIK PROJECTS PRIVATE LIMITED. 9. FURTHER, THE AR RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. PRARDHANA CONSTRUCTION CO., NELLORE IN ITA NO. 1046/HYD/2010 DATED 7 TH JANUARY, 2011 WHEREIN THE TRIBUNAL DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE ON SIMILAR CIRCUMSTANCES HOL DING THAT WHEN THE TDS CERTIFICATE HAS BEEN ISSUED IN THE NAME OF JOIN T VENTURE, CREDIT FOR TDS HAS TO BE GIVEN TO THE PERSON IN WHOSE CASE THE RECEIPTS ARE SUBJECTED TO TAX. IN THIS CASE THE RECEIPTS COVERE D BY THE TDS CERTIFICATES OF THE JV COMPANY, THEY ARE OFFERED TO TAXATION IN THE HANDS OF THE CONSTITUENTS OF THE JV COMPANY AND THE PROPO RTIONATE CREDIT OF I.T.A. NO. 1206/HYD/2012 M/S. RITHWIK PROJECTS PVT. LTD. ======================= 4 THE TDS HAS TO BE ALLOWED IN THE HANDS OF THE INDIV IDUAL CONSTITUENTS AS PER THEIR RESPECTIVE SHARE PROVIDED IN THE JV AGREE MENT. 10. THE LEARNED DR SUBMITTED THAT THE JV IS AN INDEPEND ENT ASSESSEE FROM THE ASSESSEE AND HE DREW OUR ATTENTIO N TO THE PROVISIONS OF SECTION 199 OF THE INCOME-TAX ACT, 1961 AS PER W HICH TDS SHOULD BE TREATED AS THE TAX PAID ON BEHALF OF THE PERSON IN RESPECT OF WHOSE INCOME SUCH PAYMENT OF TAX HAS BEEN MADE. ACCORDIN G TO HER, TDS HAS BEEN PAID ON BEHALF OF THE JV AND THERE IS NO QUEST ION OF GIVING CREDIT TO THE CONSTITUENTS OF THE JV. SHE RELIED ON THE O RDER OF THE LOWER AUTHORITIES. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE, THE ASSESSING OFFICER PASSED THE ORIGINAL ASSESSMENT ORDER U/S. 143(3) OF THE ACT ON 26.12.20 08 AND GIVEN CREDIT FOR THE IMPUGNED TDS AMOUNT. LATER THE ASSESSING O FFICER TAKEN UP THIS ISSUE THROUGH RECTIFICATION PROCEEDINGS U/S. 1 54 OF THE ACT VIDE ORDER DATED 25.5.2010. AS SEEN FROM THE ARGUMENTS OF THE ASSESSEE COUNSEL THIS ISSUE WAS SUBJECT MATTER OF APPEAL BEF ORE THIS TRIBUNAL IN THE CASE OF M/S. PRARDHANA CONSTRUCTION CO., NELLOR E IN ITA NO. 1148/HYD/2006 DATED 4.4.2008. THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR A.Y. 2003-04. SAME ISSU E WAS TAKEN BY THE TRIBUNAL FOR A.Y. 2006-07 IN THE CASE OF PRARDHANA CONSTRUCTION CO., NELLORE, IN ITA NO. 1046/HYD/2010 VIDE ORDER DATED 7 TH JANUARY, 2011. FURTHER, THE SAME ISSUE WAS CONSIDERED IN THE CASE OF SMT. VARSHA G. SALUNKE VS. DCIT (98 ITD 141) (TM) WHEREIN IT WAS H ELD THAT UNLESS ASSESSEE OFFERS THE INCOME FOR TAXATION, TDS CANNOT BE GIVEN CREDIT. FURTHER SAME ISSUE CAME FOR CONSIDERATION BEFORE TH E CO-ORDINATE BENCH HYDERABAD TRIBUNAL IN THE CASE OF DCIT VS. M/ S. SOMA ENTERPRISES FOR A.Y. 2006-07 IN ITA NO. 1116/HYD/20 10 AND CO. NO. 87/HYD/2010 FOR A.Y. 2006-07. THE TRIBUNAL VIDE ORD ER DATED 15.6.2011 HELD AS FOLLOWS: '9. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISIO N OF THIS TRIBUNAL IN PROGRESSIVE CONSTRUCTION LTD. THIS TRIBUNAL AFTER CONSIDERING THE LANGUAGE OF SECTION 199 I.T.A. NO. 1206/HYD/2012 M/S. RITHWIK PROJECTS PVT. LTD. ======================= 5 FOUND THAT NEXUS BETWEEN TDS AND THE CORRESPONDING INCOME ELEMENT WOULD REMAIN NOTIONAL. HOWEVER, THE AMENDMENT MADE BY THE PARLIAMENT BY FINANCE ACT, 1987 WAS NOT TAKEN INTO CONSIDERATION BY THE BENCH WHILE DECIDING THE CASE IN PROGRESSIVE CONSTRUCTION LTD. (SUPRA). THIS BENCH OF THE TRIBUNAL IN PROGRESSIVE CONSTRUCTION LTD. APPARENTLY FOLLOWED THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN TOYO ENGINEERING ( I) LTD.. HOWEVER, THE CHANDIGARH BENCH OF THIS TRIBUNA L AFTER CONSIDERING THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN TOYO ENGINEERING (I) LTD. FOUND TH AT UNLESS INCOME IS OFFERED FOR TAXATION CREDIT CANNOT BE GIVEN FOR THE TDS. AS RIGHTLY SUBMITTED BY THE LEAR NED DR, THE DECISION OF THE THIRD MEMBER OF THIS TRIBUN AL WOULD HAVE MORE WEIGHTAGE THAN THE DIVISION BENCH O F THIS TRIBUNAL. IN OTHER WORDS, THE MAJORITY OPINIO N EXPRESSED BY THE CHANDIGARH BENCH OF THE TRIBUNAL I N PRADEEP KUMAR DHIR (SUPRA) WOULD HAVE A BINDING NATURE RATHER THAN THIS TRIBUNAL'S DECISION IN PROGRESSIVE CONSTRUCTION LTD. (SUPRA). EVEN OTHERWIS E, AS FOUND BY THE TRIBUNAL IN PROGRESSIVE CONSTRUCTION LTD. (SUPRA) THE MAJORITY OPINION EXPRESSED BY THE CHANDIGARH BENCH WOULD PREVAIL. 10. THE LEARNED COUNSEL FOR THE ASSESSEE MADE AN AT TEMPT TO DISTINGUISH THE DECISION OF THE CHANDIGARH BENCH OF THIS TRIBUNAL ON THE GROUND THAT THE ASSESSEE BEFOR E THE CHANDIGARH BENCH WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. HOWEVER, IN THE CASE BEFORE US THE ASSE SSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THIS ISSUE WAS ALSO CONSIDERED BY THE THIRD MEMBER IN CHANDIGARH BENCH OF THIS TRIBUNAL AND FOUND THAT METHOD OF ACCOUNTING HAS NOTHING TO DO IN GIVING CR EDIT TO THE TDS. IN VIEW OF THE ABOVE OBSERVATION OF THE THIRD MEMBER AND THE MAJORITY DECISION OF THE CHANDIGARH BENCH OF THIS TRIBUNAL, WE FIND NO SUBSTANCE IN THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE. MOREOVER, ADMITTEDLY, THE ASSESSEE HAS NOT OFFERED THE CORRESPONDING INCOME FOR TAXATION AND THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ALSO. IN VIEW OF THE ABOVE DECISION, WE ARE UNABLE TO UPHOLD THE ORDER O F THE CIT(A) AND THE SAME IS SET ASIDE AND THE ORDER OF T HE ASSESSING OFFICER IS RESTORED.' 7. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TR IBUNAL, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE WHETHER THE ASSESSEE OFFERED THE INCOME FOR TAXATION, AND IF THE ASSESSEE OFFERED THE INCOME FO R TAXATION FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N, I.T.A. NO. 1206/HYD/2012 M/S. RITHWIK PROJECTS PVT. LTD. ======================= 6 CREDIT TO THE TDS IS TO BE GIVEN ACCORDINGLY TO THE ASSESSEE. ' 12. AS SEEN FROM THE ABOVE ORDERS OF THE TRIBUNAL IT IS A DEBATABLE ISSUE. AN ISSUE WHEN IT IS DEBATABLE, IT CANNOT BE DEALT WITH BY THE PROCEEDINGS U/S. 154 OF THE ACT. BEING SO, IN OUR OPINION, THE ASSESSING OFFICER IS PRECLUDED FROM TAKING THE ISSUE IN THE P ROCEEDINGS U/S. 154 OF THE ACT. ACCORDINGLY, THE ORDER OF THE ASSESSING O FFICER IS ANNULLED. 13. IN THE RESULT, APPEAL OF TH E ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 7 TH NOVEMBER, 2012 TPRAO COPY FORWARDED TO: 1. M/S. RITHWIK PROJECTS PVT. LTD., C/O. M/S. P. MURAL I & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD-82. 2. THE DEPUTY CIT, CIRCLE - 3(1), HYDERABAD. 3. THE CIT(A) - IV, HYDERABAD. 4. THE CIT - III, HYDERABAD. 5. THE DR B BENCH, ITAT HYDERABAD.