Srico Projects Private Limited , Hyderabad V. Income Tax Officer, Ward-3(3), Hyderabad

ITA 1765/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5153 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 16-01-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 30-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K MOHAN REDDY
• Assessee Lawyers: B SAI PRASAD
• Keywords: Principle of natural justice
• Section: 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S . R IF A UR R AH MAN , ACCOUNTANT MEMB E R I.T.A. NO. 1 765 /H YD /201 8 ASSESSMENT YEAR: 20 13 - 14 M/S. SRI CO PROJECTS PRIVATE LIMITED, HY DERABAD [PAN: A AGCS7109F ] VS THE INCOME TAX OFFICER, WARD - 3 ( 3 ) HYDERABAD ( APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI B. SAI PRASAD, A R FOR REVENUE : S HRI K. MOHAN REDDY , DR DATE OF HEARING : 1 6 - 0 1 - 201 9 DATE OF PRONOU NCEMENT : 30 - 0 1 - 201 9 O R D E R PER S MT. P . M A D H AVI DEVI , J .M. : T HIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE C OMMISSIONER OF INCOM E TAX (APPEALS) - 3 , HYD ERAB AD, DATED 0 1 - 0 6 - 2 01 8 . A S SESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT (A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. (A) THE APPELLATE DECISION OF THE CIT(A) IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, IN AS MUCH OPPORTUNITY OF HEARING WAS NOT AFFORDED TO THE ASSESSEE. (B) THE CIT( A) OUGHT NOT TO HAVE ENTERTAINED AN AUTHORIZED PERSON TO REPRESENT THE A SSESSEE, AS THE PERSON (SHRI R LAKSH M ANA RAO) MENTIONED AT PAGE 1 OF THE APPELLATE ORDER) IS NOT A PERSON IT A . NO . 1 765 / HYD / 201 8 : - 2 - : AUTHORIZED BY THE ASSESSEE IN TERMS OF SECTION 288 OF THE INCOME TAX ACT, 1961 . 3. THE CIT(A) ERRED IN DISMISSING THE APPEAL ON ASSUMED REPRESENT ATION; AND TOTALLY FOLLOWING A DIFFERENT AND UNRELATED ISSUES/ASSUMPTIONS. 4. THE CIT (A) OUGHT TO HAVE APPRECIATED THAT PROVISIONS OF SECTION 194A ARE NOT APPLICABLE IN THE CASE AS THE ASSESSEE HAS NOT PAID THE AMOUNT AND THE INTEREST ON THE MOB ILIZATION ADVANCES WAS RECOVERED BY THE CONTRACTEE FROM THE RUNNING BILLS BEFORE RELEASING THE CONTRACT CHARGES TO THE ACCOUNT OF THE ASSESSEE. 5. CRAVE LEAVE TO URGE/RAISE ANY GROUND THAT MIGH T BE NECESSARY AT THE TIME OF HEARING . 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE D OES NOT WISH TO PRESS GROUND NOS. 2 & 3. A CCORDINGLY TH E SAID TWO GROUNDS ARE DISMISSED AS NOT PRESSED . GRO UN D NOS. 1 & 5 ARE GENERAL IN NATUR E AND HENCE , NEED NO ADJUDICATION. 3 . AS REGARDS THE GROUND NO. 4, THE B R IEF FACTS ARE THAT, THE ASSESSEE - COMPANY , ENGAGED IN EXECUTION OF ENGINEERING AND CONSTRUCTION WO RKS , E - FILED ITS RETURN OF INCOME FOR THE AY. 2013 - 14 ON 29 - 0 9 - 2013 ADMITTING INCOM E AT RS. 58,10,110/ - . D URING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT [ACT] , ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS RECEIVED INTEREST ON MOBILIZATION AD VANCE FROM IOCL AND THE SAME I S DEDUCTED BY IOCL AT THE TIME OF PAYMENT OF RA B ILLS . ASSESSING OFFICER OBSERVED TH AT ASSESSEE HAS NOT MADE TDS ON SUCH INTEREST , AMOU N TING TO RS. 9,07,706/ - AND THEREFORE THE A SSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 194A OF THE ACT . IT A . NO . 1 765 / HYD / 201 8 : - 3 - : T HE REFORE , HE INVOKED THE PROVISIONS OF SECTION 40(A)(IA) TO DISALLOW THE INTEREST ON MOBILIZATION OF ADVANCE AMOUNTING TO RS. 9,07,706/ - . 3.1. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ORDER OF ASSESSING OFFICER AND AGAIN AGGRIE VED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 4 . L D. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE S IMILAR ISSUE HAD COME UP BEFORE B BENCH OF TH IS TRIBUNAL IN THE CASE OF A CIT VS. M/S. UAN RA JU IVRCL IN ITA NO. 1425/HYD/2010, DT. 18 - 10 - 2013 , WHEREIN T HE HON'BLE ITAT HAS HELD T HAT THE PROVISIONS OF SECTIO N 194A A RE NOT ATTRA CTED WHEN THE CONTRACTEE HAS R ECOVERED THE INTEREST ON MOBILIZATION ADVANCE FROM RUNNING B ILLS BEFORE RELEASING THE CO NTRACT CHARGES TO THE ASSESSEE . A COPY OF THE SAID ORDER IS FILED BEFORE US. 5 . LD.DR ON THE OTHER HAND RELIED ON THE ORDE RS OF THE AUTHORI TIES BELOW. 6 . HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT THE CO - ORDINATE BENCH OF TH IS TRIBUNAL IN THE A BOVE REFERRED CASE AT PARA 8 O F ITS ORDER , DEALING WITH SIMILAR ISSUE, HAS HELD AS UNDER: 8. WE HAVE CO NSIDERED SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS CAN BE SEEN FROM THE FINDING OF THE ASSESSING OFFICER, HE HAS NOT DISPUTED THE FACT THAT THE INTEREST ON MOBILISATION ADVANCE WAS RECOVERED BY THE CONTRACTEE M/S KONKAN RAILWAY CORP ORATION LTD., FROM RUNNING BILLS OF THE ASSESSEE AND THE ASSESSING OFFICER ALSO ACCEPTS THAT 6 IT IS DIFFICULT ON THE PART OF THE IT A . NO . 1 765 / HYD / 201 8 : - 4 - : ASSESSEE FOR MAKING TDS AS INTEREST WAS RECOVERED BY THE CONTRACTEE M/S KONKAN RAILWAY CORPORATION LTD., WHILE MA KING THE PAYM ENT OF CONTRACT CHARGES. THEREFORE, IN REAL SENSE IT CANNOT BE SAID THAT THE ASSESSEE HAS CREDITED THE INTEREST TO THE ACCOUNT OF THE CONTRACTEE IN TERMS OF SECTION 194A OF THE ACT. AS OBSERVED BY THE CIT (A) IN HIS ORDER THE TERMS OF THE CONT RACT ENTERED INTO BETWEEN THE PARTIES AUTHORISES THE CONTRACTEE TO RECOVER INTEREST ON THE MOBILISATION ADVANCES AND ALSO PRESCRIBES THE MODE AND MANNER OF CALCULATION OF INTEREST. THEREFORE, WHEN THE INTEREST ON MOBILISATION ADVANCE WAS RECOVERED BY THE C ONTRACTEE FRO M THE RUNNING BILLS BEFORE RELEASING THE CONTRACT CHARGES TO THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE HAS CREDITED THE INTEREST PAID OR PAYABLE TO THE ACCOUNT OF THE ASSESSEE. IN FACT, THE CIT (A) HAS ALSO NOTED THAT THE ASSESSEE HAS NOT CREDITED ANY SUCH AMOUNT TOWARDS PAYMENT OF INTEREST TO THE ACCOUNT OF THE CONTRACTEE IN ITS BOOKS OF ACCOUNTS. IN THE AFORESAID FACTUAL SITUATION, IT CANNOT BE SAID THAT THERE IS ANY VIOLATION OF PROVISIONS OF SECTION 194A OF THE ACT. A LIABILITY CANN OT BE FASTENE D ON THE ASSESSEE OR A DEFAULT CANNOT BE ATTRIBUTED TO THE ASSESSEE FOR NOT DISCHARGING AN OBLIGATION WHICH IS IMPOSSIBLE ON ITS PART TO PERFORM. THE DECISION OF THE HONBLE MADRAS HIGH COURT IN CASE OF VISWAPRIYA FINANCIAL SERVICES AND SECURI TIES LTD., VS . CIT (SUPRA) IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS IN THAT CASE THE ASSESSEE ACTUALLY MADE THE PAYMENT BUT DID NOT TREAT IT AS INTEREST. IN AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T (A) . 6 .1. SI NCE THE FACTS AND CIRCUMS TANCES OF THE CASE BEFORE US A R E EX ACTLY SAME , RES PECTFULLY FOLLOWING THE ABOVE DECISION, WE HOLD THAT THE PROVISIONS OF SECTION 194A ARE NOT APPLICA BLE IN THE PRESENT FAC TS OF TH E CASE . HENCE, T HIS GR OUND OF APPEA L RAISED BY THE ASSESS EE IS ALLOWED. 7 . IN THE RE SULT, THE APPEAL OF ASSESSEE IS PARTLY A LLOWED . OR D ER P RO NOU NCED IN THE OPEN COU RT ON 30 TH JANUARY , 201 9 SD/ - SD/ - ( S . RIFAUR RAHMAN ) ( P. MADHAV I DEVI ) ACCO UNTAN T MEMBE R JUDICIAL MEMBER HYDERABAD, DATED 30 TH JANUARY , 201 9 TNMM IT A . NO . 1 765 / HYD / 201 8 : - 5 - : C OPY T O : 1. M/S. SRICO PROJECTS PRIVATE LIMITED, 178/A, MLA COLO NY, R OAD NO. 12, BANJAR A HILLS, HYD ERABAD. 2 . T HE INC OME T A X OFFICER, WARD - 3 ( 3 ) , HYDERA BA D. 3 . CIT(A) - 3 , HYDERABAD . 4 . PR. CIT - 3 , HYDERABAD. 5 . D.R. ITA T, HYD ERA BA D. 6 . GUARD FILE.