Income Tax Officer, Ward -10(4), Hyderabad V. M/s Neelima Constructions, Secunderabad

ITA 1495/HYD/2012

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6007 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 28-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NAVEEN
• Assessee Lawyers: KIRAN
• Keywords: Tax effect
• Section: 194C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1495/HYD/2012 ASSESSMENT YEAR: 2008-09 ITO, WARD-10(4), HYDERABAD. VS. M/S NEELIMA CONSTRUCTIONS, SECUNDERABAD. PAN AAFFN5453K (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M. NAVEEN ASSESSEE BY : SHRI KIRAN DATE OF HEARING : 28-05-2018 DATE OF PRONOUNCEMENT : 31-05-2018 ORDER PER SHRI B. RAMAKOTAIAH, AM: THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF CIT(A)-VI, HYDERABAD DATED 16.07.2012. THE APPEAL IS ORIGINALLY DISMISSED ON TAX EFFECT BY THE ORDER DATED 13.10.2016. SUBSEQUENTLY, REVENUE HAS PREFERRED AN MA VIDE ORDER DATED 09.08.2017. THE APPEAL WAS RECALLED AND RESTORED AS A TAX EFFECT IS MORE THAN RS. 10 LAKHS. IN THE MEANTIME, ASSESSEES CROSS APPEAL WAS WITHDRAWN ON 18.11.2016 AS REVENUE APPEAL WAS DISMISSED. IN THAT APPEAL ASSESSEE QUESTIONED THE APPLICABILITY OF PROVISIONS OF TDS ON THE PAYMENTS MADE. 2. IN THE ASSESSMENT COMPLETED BY A.O, A.O HAS DISALLOWED THE PAYMENTS TO LABOUR CONTRACTORS TO AN EXTENT 2 ITA NO. 1495/HYD/2012 M/S NEELIMA CONSTRUCTIONS, SECUNDERABAD. OF RS. 43,78,592/-, STATING THAT THESE ARE COVERED BY PROVISIONS OF 194C OF THE IT ACT AND TDS OF RS. 90,199/- HAS NOT BEEN DEDUCTED. LIKEWISE FEES FOR PROFESSIONAL SERVICES WERE CONSIDERED U/S 194J OF THE IT ACT AND THE TDS WAS DETERMINED AT RS. 23,146/-. COMMISSION TO AN EXTENT OF RS. 70,000/- WAS CONSIDERED U/S 194H OF THE IT ACT AND TDS AT RS. 1,442/- AND PAYMENTS FOR SECURITY SERVICES WERE CONSIDERED AT RS. 3,84,903/- U/S 194C OF THE ACT. SINCE THE CORRESPONDING TDS AMOUNT TOTALING TO RS. 1,22,716/- WAS NOT DEDUCTED ON THE ABOVE AMOUNTS, A.O DISALLOWED THE ENTIRE AMOUNT OF RS. 50,58,215/- U/S 40(A)(IA) OF THE IT ACT. 3. IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE LD. CIT(A), IT WAS SUBMITTED THAT THE PAYMENTS HAVE BEEN MADE TO LABOURERS TO GROUP LEADERS AND THEREFORE NO DEDUCTION OF TAX WAS REQUIRED. LIKEWISE IT WAS CONTENDED THAT THE OTHER PAYMENTS ARE ALSO NOT REQUIRED TO BE COVERED BY THE PROVISIONS OF TDS AND ACCORDINGLY THE DISALLOWANCE UNDER 40(A)(IA) OF THE IT ACT IS NOT WARRANTED. HOWEVER, SINCE THERE ARE NO OUTSTANDING AMOUNTS AT THE END OF THE YEAR ASSESSEE RELIED ON THE SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS ACIT IN ITA NO. 477/VIZ/2008 DATED 29.03.2012 AND LD. CIT(A) ACCEPTED THE ABOVE SUBMISSION AND DIRECTED A.O TO VERIFY THE AMOUNT OF EXPENSES REMAINING PAYABLE UNDER THESE FOUR HEADS AND TO RESTRICT THE DISALLOWANCE TO SUCH AN EXPENSE. A.O PASSED THE CONSEQUENTIAL ORDER ON 24.12.2012 ALLOWING 3 ITA NO. 1495/HYD/2012 M/S NEELIMA CONSTRUCTIONS, SECUNDERABAD. THE SUBSTANTIAL AMOUNTS, THEREBY ASSESSEE WITHDREW THE APPEAL, ONCE THE REVENUE APPEAL WAS DISMISSED EARLIER. 4. IT WAS THE CONTENTION OF LD. DR THAT THE DECISION OF THE MERILYN SHIPPING AND TRANSPORTS VS ACIT (SUPRA) WAS NO LONGER VALID CONSEQUENT TO THE REVERSAL OF THE SAME, ULTIMATELY BY THE HONBLE SUPREME COURT IN THE CASE OF PALAM GAS SERVICES VS. CIT, REPORTED IN 517 TAXPUNDIT 101. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT THERE IS MERIT IN REVENUES APPEAL AS PRINCIPLE IN THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS ACIT (SUPRA) STANDS REVERSED BY THE DECISION OF THE HONBLE SUPREME COURT ON THE ISSUE AND ACCORDINGLY THE ORDER OF CIT(A) IS TO BE SET ASIDE TO THE EXTENT. HOWEVER, SINCE ASSESSEES APPEAL ON MERITS BEFORE LD. CIT(A) WAS NOT CONSIDERED, WE ARE OF THE OPINION THAT THE APPEAL BEFORE CIT(A) CAN BE RESTORED AND THE ISSUE WHETHER THE AMOUNTS PAID BY ASSESSEE ARE COVERED BY TDS PROVISIONS, SO AS TO DISALLOW U/S 40(A)(IA) OF THE IT ACT IS REQUIRED TO BE EXAMINED AFRESH BY LD. CIT(A). CONSEQUENTLY ALLOWING THE GROUNDS OF REVENUE, WE MODIFY THE ORDER OF CIT(A) AND RESTORE THE ISSUE TO THE FILE OF CIT(A) TO CONSIDER WHETHER THE AMOUNTS ARE COVERED BY THE PROVISIONS OF TDS AND SO TO DECIDE THE DISALLOWANCE U/S 40(A)(IA) OF THE IT ACT, ON THE MERITS. 4 ITA NO. 1495/HYD/2012 M/S NEELIMA CONSTRUCTIONS, SECUNDERABAD. 6. IN THE RESULT, APPEAL FILED BY REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2018. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST MAY, 2018. KRK 1) M/S NEELIMA CONSTRUCTIONS, FLAT NO. 201, GAYATRI ARCADE, WEST MAREDPALLY, SECUNDERABAD. 2) ITO, WARD-10(4), HYDERABAD. 3) CIT(A) -VI, HYDERABAD. 4) THE ADDL. CIT, RANGE-10, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE