Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 6086 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-03-2017
Appeal Filed By
Department
Bench Allotted
B
Next Hearing Date
16-03-2017
Assessment Year
2012-2013
Appeal Filed On
19-09-2016
Judgement Text
THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 1223/HYD/2016 ASSESSMENT YEAR: 2012-13 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE- 3(2) HYDERABAD VS. M/S SRICO PROJECTS PRIVATE LTD., HYDERABAD PAN AAGCS7109F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.J RAO ASSESSEE BY : SHRI KISHORE KUMAR CHOUDHARY DATE OF HEARING : 16-03-2017 DATE OF PRONOUNCEMENT : 16-03-2017 ORDER PER G. MANJUNATHA, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST ORDER OF THE CIT(A)-3, HYDERABAD DATED 03-06-2016 AND IT PERTAINS TO THE ASSESSMENT YEAR 2012-13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE OF RS. 20,22,537/- MADE BY INVOKING THE PROVISIONS OF SEC 40(A)(IA) OF THE IT ACT, 1961. 3. ANY OTHER GSROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE COMPANY IS IN THE BUSINESS OF CIVIL CONTRACT WORKS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 30- 2 ITA NO. 1223/HYD/2016 M/S SRICO PROJECTS PVT, LTD.,, HYD. 09-2012, DECLARING TOTAL INCOME OF RS. 1,30,14,880/-. THE CASE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S 143(2) AND 142(1) OF THE IT ACT, 1961 WERE ISSUED. IN RESPONSE TO THE NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED INFORMATION CALLED FOR. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE IT ACT, 1961 ON 16-03- 2015 DETERMINING THE TOTAL INCOME OF RS. 1,67,72,925 BY MAKING CERTAIN DISALLOWANCES INCLUDING DISALLOWANCE OF INTEREST ON MOBILIZATION ADVANCE U/S 40(A)(IA) OF THE IT ACT, 1961, FOR FAILURE TO DEDUCT TAX AT SOURCE U/S 194A OF THE IT ACT, 1961. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESS PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS AND CONTENDED THAT THE A.O WAS ERRED IN DISALLOWING INTEREST ON MOBILIZATION ADVANCE U/S 40(A)(IA) OF THE IT ACT, 1961FOR FAILURE TO DEDUCT TAX AT SOURCE U/S 194A OF THE IT ACT, 1961, AS PAYMENT OF INTEREST ON MOBILIZATION ADVANCE IS NOT COMING WITHIN THE PROVISIONS OF SEC. 194A OF THE IT ACT, 1961. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O ERRED IN CONCLUDING THAT THE IMPUGNED PAYMENTS ATTRACTS TDS PROVISIONS U/S 194A OF THE IT ACT, 1961, WITHOUT UNDERSTANDING THE FACT THAT THE ASSESSEE NEITHER CREDITED NOR PAID INTEREST ON MOBILIZATION ADVANCE TO THE PAYEES ACCOUNT. THE PROVISIONS OF SEC. 194A OF THE IT ACT, 1961 IS APPLICABLE, ONLY WHEN THE ASSESSEE CREDITED OR PAID ANY INTEREST OTHER THAN INTEREST ON SECURITIES. SINCE, THE ASSESSEE NEITHER CREDITED NOR PAID INTEREST ON MOBILIZATION 3 ITA NO. 1223/HYD/2016 M/S SRICO PROJECTS PVT, LTD.,, HYD. ADVANCE, AS THE SAME HAS BEEN RECOVERED BY THE INDIAN OIL CORPORATION LIMITED (IOCL) IN THE RA BILLS, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194A OF THE IT ACT, 1961. IN THIS REGARD, RELIED UPON THE DECISION OF ITAT, HYDERABAD IN THE CASE OF DCIT VS M/S. RITHWIK SWATHI JOINT VENTURE, IN ITA NO. 719/HYD/2010 DATED 18.02.2011 AND ACIT VS UAN RAJU IVRCL CONSTRUCTIONS JV IN ITA NO. 1425/HYD/2010. ALTERNATIVELY THE ASSESSEE FURTHER SUBMITTED THAT PROVISIONS OF SEC. 40(A)(IA) OF THE IT ACT, 1961, ARE APPLICABLE ONLY WHEN THE AMOUNT WAS PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR AND IF THE AMOUNTS ARE PAID WITHIN THE SAME FINANCIAL YEAR, THEN NO DISALLOWANCE CAN BE MADE FOR FAILURE TO DEDUCT TAX AT SOURCE. IN THIS REGARD, RELIED UPON THE DECISION OF ITAT, VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ACIT IN ITA NO. 477/VIZ/2008 DATED 29.03.2012. THE CIT (A) AFTER CONSIDERING THE RELEVANT SUBMISSIONS AND ALSO BY RELIED UPON THE DECISIONS OF ITAT, VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ACIT IN ITA NO. 477/VIZ/2008 DATED 29.03.2012 AND ALSO THE HONBLE ANDHRA PRADESH HIGH COURT, IN THE CASE CIT VS M/S JANAPRIYA ENGINEERS SYNDICATE IN ITA NO. 352/14, HELD THAT NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE IT ACT, 1961, IF AMOUNT IS PAID ON OR BEFORE THE LAST DAY OF THE FINANCIAL YEAR. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AT THE TIME OF HEARING, BOTH THE COUNSELS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS 4 ITA NO. 1223/HYD/2016 M/S SRICO PROJECTS PVT, LTD.,, HYD. COVERED BY THE DECISION OF ITAT, VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ACIT (SUPRA). WE FIND THAT THE ITAT, VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ACIT (SUPRA), HAS OBSERVED THAT NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE IT ACT, 1961, FOR FAILURE TO DEDUCT TAX AT SOURCE, IF THE AMOUNTS IS PAID ON OR BEFORE THE END OF THE FINANCIAL YEAR. AS REGARDS THE LD. DR ARGUMENTS THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF ITAT, VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ACIT (SUPRA), WE FIND THAT THE COORDINATE BENCH OF ITAT, HYDERABAD IN THE CASE OF USHODAYA ENTERPRISES VS DCIT IN ITA NO. 676/HYD/09, DATED 07-01-2015, HAS CONSIDERED THE ISSUE AND AFTER CONSIDERING REVENUE OBJECTION WITH REGARD TO THE SPECIAL BENCH DECISION AT ITAT, VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ACIT (SUPRA) AND ALSO CONSIDERING THE RATIO OF HONBLE A.P HIGH COURT IN THE CASE OF M/S JANAPRIYA ENGINEERS SYNDICATE (SUPRA), HELD THAT UNTIL AND UNLESS DECISION OF SPECIAL BENCH IS REVERSED BY THE JURISDICTIONAL HIGH COURT, IT WILL BE BINDING ON LOWER AUTHORITIES AS WELL AS THE COORDINATE BENCH OF THE TRIBUNAL. THEREFORE, WE ARE OF THE VIEW THAT NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE IT ACT, 1964, IF THE AMOUNTS ARE PAID ON OR BEFORE THE END OF THE FINANCIAL YEAR. IN THIS CASE THERE IS A DISPUTE WITH REGARD TO PAID AND PAYABLE AS THE ASSESSEE HAS DEMONSTRATED BEFORE THE A.O THAT INTEREST PAID ON MOBILIZATION ADVANCE HAS BEEN RECOVERED BY THE CONTRACTEE IN RUNNING BILLS WHICH FALLS WITHIN THE FINANCIAL YEAR 2011-12. THE CIT(A) 5 ITA NO. 1223/HYD/2016 M/S SRICO PROJECTS PVT, LTD.,, HYD. AFTER CONSIDERING THE RELEVANT FACTS HAS RIGHTLY DELETED ADDITIONS MADE BY THE A.O U/S 40(A)(IA) OF THE IT ACT, 1961. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHELD THE CIT(A) ORDER AND DISMISS APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2017. SD/- SD/- (D. MANMOHAN) (G. MANJUNATHA) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED: 16 TH MARCH, 2017 KRK 1) M/S SRICO PROJECTS PVT LTD., D.NO. 178/A, MLA COLONY, ROAD NO. 12, BANJARA HILLS, HYDERABAD-34. 2) DCIT, CIRCLE -3(2) HYDERABAD 3) CIT -3, HYDERABAD 4) PCIT-3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE
