Madhav Hytech ECCI (JV), Bangalore V. ACIT, Bangalore

ITA 1344/BANG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8575 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 10-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2013
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI NARENDRA KUMAR CHOUDHRY, JUDICIAL MEMBER ITA NO.1344(BANG)/2013 (ASSESSMENT YEAR : 2009-10) MADHAVA HYTECH ECCI (JV) NO.19, 8 TH A CROSS, PAMPA LAYOUT HEBBAL, KEMPAPURA, BANGALORE-560 024 APPELLANT PAN NO.AABAM2734P VS THE ASST. COMMISSIONER OF INCOME-TAX CIRLCE-6(1), BANGALORE RESPONDENT AND & 1345(BANG) 2013 (ASSESSMENT YEARS : 2009-10) MADHAVA HYTECH BRAHMAPUTHRA(JV) NO.19, 8 TH A CROSS, PAMPA LAYOUT HEBBAL, KEMPAPURA, BANGALORE-560 024 APPELLANT PAN NO.AABAM21857B VS THE ASST. COMMISSIONER OF INCOME-TAX CIRLCE-6(1), BANGALORE RESPONDENT ASSESSEE REP. BY : SHRI C.P. RAMASWAMY, CA REVENUE REP. BY : SMT. PRAVEENA, ADDL.CIT DATE OF HEARING : 10-03-2016 DATE OF PRONOUNCEMENT : 1 8-03-2016 O R D E R PER SHRI NARENDRA KUMAR CHOUDHRY, JM: THESE ARE TWO APPEALS PREFERRED AGAINST THE ORDERS PASSED BY LEARNED CIT(A)-III, DATED 26-07-2013 IN ITA NO.423/C-6(1)/C IT(A)-III, BANGALORE - 11-12 AND ITA NO.424/C-6(1)/CIT(A)-III, BANGALORE. ITA NOS.1344-1345(BANG)/2013 2 B. IN BOTH THE APPEALS THE ISSUES ARE COMMON, THEREFOR E THE SAME ARE TAKEN UP FOR DISPOSAL BY A COMPOSITE ORDER. B.1 THE ASSESSEE IN ITS APPEAL RAISED THE FOLLOWING GR OUNDS; 1 THE ORDER OF THE CIT(A) INSOFAR AS THE IT IS PRE JUDICIAL TO THE INTERESTS OF ASSESSEE, IS AGAINST LAW, WEIGH T OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. THE LD.CIT(A) GROSSLY ERRED IN DISMISSING THE AP PEAL AS SHE FAILED TO APPRECIATE THAT THE PROVISIONS OF SEC.194C WOULD BE APPLICABLE ONLY IN THE CASE OF A PAYER AND NOT IN THE CASE OF THIS ASSESSEE/PAYEE. 3. THE LD.CIT(A) OUGHT TO HAVE RECOGNIZED THE POSIT ION THAT INTERNAL AGREEMENTS BETWEEN JV PARTNERS WOULD NOT FALL WITHIN THE MISCHIEF OF PROVISIONS FOR TDS. CONSEQ UENTLY, SHE IGNORED THE RECONCILIATION STATEMENTS FILED WIT H REGARD TO THE MOBILIZATION ADVANCE AND CONFIRMED THE ADDITION OF SUCH ADVANCE U/S 40(A)(IA). SHE OUGHT TO HAVE DELETED THE ADDITION. 4. THE LD./CIT(A) OUGHT TO HAVE APPLIED THE PROVISI ONS OF SEC.199(3) R/W RULE 37BA AND WITH PRINCIPLES OF ACCRUAL OF INCOME AS PER AS-9 BEFORE UPHOLDING THE CONCLUSION OF THE AO THAT MOBILIZATION ADVANCE WOULD ALSO BECOME INCO ME OF THE YEAR OF RECEIPT. CONSEQUENTLY, SHE ERRED IN C ONFIRMING THE ADDITION OF RS.1,47,72,785/-. 5. THE LD.CIT(A) FAILED TO APPRECIATE THAT MOBILIZA TION ADVANCE WAS ULTIMATELY ADJUSTED ON COMPLETION OF TH E PROJECT FOR WHICH SUCH ADVANCE WAS RECEIVED AND DEC LARED AS INCOME IN THE YEAR OF ADJUSTMENT ON ACCRUAL BASI S. CONSEQUENTLY, SHE ERRED IN CONFIRMING THE ADDITION. 6. FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THA T MAY BE URGED AT THE TIME OF HEARING THE ASSESSEE PR AYS THAT THE APPEAL BE ALLOWED. ITA NOS.1344-1345(BANG)/2013 3 7. THE ASSESSEE CRAVES LEAVE TO ADD, TO AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. B.2 IN THE SECOND APPEAL IN ITA NO.1345(B)/2013 THE ASSESSEE HAS RAISED ALMOST THE SAME GROUNDS EXCEPT THE ADDIT ION TO THE TUNE OF RS.1,07,51,630/- IN GROUND NO.4. B.3 THE LD AR OF THE ASSESSEE CONTENDED THAT THE APPELL ANT MADHAVA HYTECH ECCI (JV) HAD NO INCOME IN THE FINAN CIAL YEAR UNDER QUESTION AS THE SAME REFLECTS FROM THE PROFIT & LOS S BALANCE A/C SHEET. IT WAS FURTHER ARGUED THAT THE AMOUNTS INVOLVED IN THE INSTANT CASES WERE IN THE NATURE OF MOBILIZATION OF ADVANCE ONLY. BUT THE LEARNED AO, CONSIDERED THE SAME AS INCOME AND ADDED THE SAM E TO THE TOTAL INCOME AND THE SAID ORDERS OF THE AO WERE ALSO BEIN G CONFIRMED BY THE LEARNED CIT(A). ITS IS ALSO SUBMITTED BY THE LD AR THAT ACTUAL TURN OVER OF THE APPELLANT (MADHAVA HYTECH BRAHMAPUTHRA(JV) ) WAS RS . 428,09,363 AFTER ADJUSTING MOBILIZATION ADVANCE OF RS. 143,57, 850/-. 1. FIRST GROUND RAISED BY THE ASSESSEE RAISES THE QUESTION THAT TH E ORDER OF THE CIT(A) NOT ONLY PREJUDICIAL TO THE INT EREST OF REVENUE BUT ALSO AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBAB ILITIES OF THE CASE. ADJUDICATION OF THIS GROUND GOES TO THE ROOT OF THE CASE AND SHALL BE THE OUTCOME OF THE SUBSEQUENT GROUNDS. 2. GROUND NO.2, THE ASSESSEE ARGUED THAT THE LEARNED CIT (A) FAILED TO APPRECIATE THAT THE PROVISIONS OF SEC.194C WOULD BE APPLICABLE ONLY IN THE CASE OF PAYER AND NOT IN CASE OF PAYEE. ITA NOS.1344-1345(BANG)/2013 4 WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE GROUN D NO.2 RAISED BY THE ASSESSEE AND ANALYZED THE SEC.194C WH ICH REFLECTS THAT THE SAME IS NOT APPLICABLE TO THE PAYEE AS INDIVIDU AL, AS THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE FROM THE BBMP AND FURTHER TRANSFERRED TO ITS SISTER CONCERN FOR EXECUTION OF WORK, THEREFORE THE ASSESSEE WAS NOT SUPPOSED TO DEDUCT TDS. 3. GROUND NO.3 , VIDE THIS GROUND THE ASSESSEE MAINLY URGED THAT MOBILIZATION ADVANCE CANNOT BE TREATED AS INCOME OF THE YEAR OF RECEIPT. IT IS ARGUED BY THE LEARNED AR THAT MOBIL IZATION ADVANCE WAS ULTIMATELY ADJUSTED ON COMPLETION OF PROJECT FOR WH ICH SUCH ADVANCE WAS RECEIVED AND TO BE DECLARED AS INCOME IN THE YE AR OF ADJUSTMENT ON ACCRUAL BASIS, BUT THE AUTHORITIES BELOW ERRED I N CONFIRMING THE ADDITION. THE LEARNED AR ALSO DRAWN OUR ATTENTION TO THE RELEVANT DOCUMENTS FILED IN PAPER BOOK. ON THE OTHER HAND, THE LEARNED DR OBJECTED ON THE SUBMISSIONS OF THE LEARNED AR AND RELIED UPON THE C IT (A)S ORDER. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE A RGUMENTS ADVANCED BY THE PARTIES AS WELL AS FACTS AND CIRCUM STANCES OF THE CASE AND SPECIALLY ORDERS PASSED BY THE AUTHORITIES BELOW , THE AMOUNT WHICH IS TREATED AND ADDED BY THE LEARNED A O AND CONFIRMED BY THE LEARNED CIT(A) AS INCOME I S UNTENABLE BECAUSE THE SAID AMOUNT WAS ONLY MOBILIZATION AD VANCE AND FROM ITA NOS.1344-1345(BANG)/2013 5 THE DOCUMENTS IT CLEARLY REFLECTS THAT THE SAME WAS ADJUSTED AT THE FINAL SETTLEMENT OF THE BILLS. WE ARE OF THE OPINI ON, THAT THE ORDERS PASSED BY THE LEARNED CIT(A) ARE CONTRARY TO THE LA W THEREFORE, THE SAME ARE SET ASIDE AND ADDITIONS ARE DELETED . 4-5. GROUNDS NO. 4 AND 5 ARE FORMAL IN NATURE HENCE DOES NOT REQUIRE ADJUDICATION, HOWEVER GROUND NO.1 STANDS ALLOWED AS ADJUDICATED ON THE AFORESAID CONCLUSIONS . 6. THE LEARNED AR IS DIRECTED TO PASS THE ASSESSMENT ORDER AFRESH, WHILE CONSIDERING THE AMOUNTS INVOLVED AS M OBILIZATION ADVANCES ONLY. CONSEQUENTLY, BOTH THE APPEALS ARE INTER-LINKED AND HENCE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18-03-2016. SD/- SD /- (BOMMARAJU RAMAKOTAIAH) ACCOUNTANT MEMBER ( NARENDRA KUMAR CHOUDHURY) JUDICIAL MEMBER BANGALORE: D A T E D : 18-03-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE