Income-tax Officer, Ward - 3(1), Pune V. M/s. Shraddha & Prasad Joint Venture ( Khura Varoda Project), Pune

ITA 1928/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1122 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Keywords: TDS; Set aside
• Section: 40(a)(ia); 194C; 201

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1928/PUN/2017 / ASSESSMENT YEAR : 2013-14 THE INCOME TAX OFFICER, WARD-3(1), PUNE. . / APPELLANT. V/S M/S. SHRADDHA & PRASAD JOINT VENTURE (KHURA VARODA PROJECT), SHRADDHA HOUSE, CTS NO.1206/A/1, PLOT NO.887-A, SHIROLE ROAD, OFF. J.M. ROAD, SHIVAJINAGAR, PUNE 411 004. PAN : ABGFS6231A. . / RESPONDENT ASSESSEE BY : SHRI KISHORE PHADKE. REVENUE BY : MS. NANDITA KANCHAN. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 2, PUNE DATED 16.02.20 17 FOR THE ASSESSMENT YEAR 2013-14. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN AOP CARRYING ON THE BUSINESS OF CIVIL CON TRACTS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 201 3-14 ON / DATE OF HEARING : 20.08.2019 / DATE OF PRONOUNCEMENT: 12.09.2019 2 29.08.2013 DECLARING TOTAL INCOME AT RS.NIL. THE CASE WAS SE LECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3 ) OF THE ACT VIDE ORDER DATED 02.03.2016 AND THE TOTAL INCOME WAS DET ERMINED AT RS.11,75,00,000/-. AGGRIEVED BY THE ORDER OF AO, ASSESSE E CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 16.02.2017 ( IN APPEAL NO.PN/CIT(A)-2/ITO WD-3(1)/PN/599/2015-16) GRANTED SUBS TANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A ), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD.CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND C IRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT IN ABSENCE OF ANY CONTRACT OR SUB-CONT RACT WORK BY THE JOINT VENTURE TO ITS MEMBERS, PROVISIONS OF SECTION 194C WERE NOT APPLICABLE FOR THE PURPOSE OF TDS, WITHOUT APPRECIA TING THE FACT THAT THE WORK CONTRACT ORDER WAS ISSUED IN THE NAME OF T HE ASSESSEE (JV) AND RE-ALLOCATION OF THE CONTRACT BET WEEN THE MEMBERS OF THE JV WOULD AMOUNT TO SUB-CONTRACTING. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE JOINT VENTURE WA S IN FULL CONTROL OF THE CONTRACT, RESPONSIBLE FOR ITS COMPLETION, SU BMITTING BILLS, RECEIVING PAYMENTS AND MAKING THOSE PAYMENTS TO ITS MEMBERS TOWARDS SUB CONTRACT ON WHICH TAX WAS DEDUCTIBLE U/ S 194C. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT TAXING PROFIT IN THE HANDS OF THE JOINT VENTURE IRRESPECTIVE OF SUCH PROFIT WAS OFFERED TO TAX IN THE HANDS OF MEMBERS. RELIANCE IS PLACED ON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CH. ATCHAIAH (1996) 218 ITR 239 (SC) AND ON THE RULING OF HON'BL E AAR IN THE CASE OF GEOCONSULT ZT GMBH IN [2008] 304 ITR 283 (A AR). 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHE R. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE IS A JOINT VENTURE (JV) REPRESENTED BY M/S. S HRADDHA ENERGY AND INFRAPROJECTS PVT. LTD., AND M/S. PRASAD & CO., PVT. L TD., AS MEMBERS SHARING PROFIT AND LOSSES IN THE RATIO OF 80% - 20 %. AO NOTICED THAT GROSS CONTRACT RECEIPTS WERE DISTRIBUTED IN THE PROPORTION OF THE WORK EXECUTED BY THE MEMBERS OF THE JOINT VENTURE . AO NOTED THAT 3 SINCE THE ENTIRE CONTRACT RECEIVED BY THE FIRM WAS TRANS FERRED TO ITS MEMBERS FOR EXECUTING THE WORK, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE CONTRACT RECEIPTS TRANSFERRED TO ITS MEMBER S SHOULD NOT BE TREATED AS SUB-CONTRACTS AND SINCE NO TAX WAS DEDUCT ED BY THE ASSESSEE AS PER THE RATES PRESCRIBED IN CHAPTER XVII B OF THE A CT AND WHY THE SAME SHOULD NOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT. TO TH E QUERY OF THE AO, ASSESSEE INTER-ALIA SUBMITTED THAT SIMILAR ISSUE ARO SE IN A.YS. 2010-11 AND 2011-12 AND THE DISALLOWANCE WAS MADE U/S 40(A)(IA) OF THE ACT BUT THE SAME WAS DELETED BY THE LD.CIT(A). AO N OTED THAT SINCE REVENUE HAS PREFERRED APPEAL AGAINST THE ORDER OF LD.CIT (A) AND THE MATTER IS DISPUTED, TO KEEP THE ISSUE ALIVE HE DID NOT ACC EPT THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT ASSESSEE HAS NOT DEDUCTED TDS ON THE WORK ALLOTTED TO M/S. SHRADDHA ENERGY AN D IFRAPROJECTS PVT. LTD., AND DISALLOWED THE ENTIRE AMOUNT OF RS.11,75,00 ,000/- PAID TO IT U/S 40(A)(IA) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 4 . I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPE LL ANT AND ALSO PE R USED TH E MATER I AL ON RECORD . THE ISSUE RAISED IN GROUNDS NO. 1 TO 5 REVOLVES AROUND T HE S I NGLE I SSUE OF GIV I NG CRED I T OF TAX DEDUCT E D AT SOURCE TO THE JOINT VENTU R E I NS T EAD OF THE MEMBERS OF JOINT VENTURE I .E. M/S SHRADDHA ENERGY & INFRAPROJECTS PVT . LTD. AND M/S PRASAD & CO. LTD. AS HAS BEEN POINTED OUT BY THE APPELLANT THAT THE HON ' BLE ITAT PUNE BENCH HAS PASSED ORDERS IN THE CASE O F SHRADDHA & MAHALA X MI JOINT VENTURE , ' SHRADDHA & IHP JOINT VENTURE VIDE I TA NOS . 942/943/PN / 2 0 13' ON 28 . 11.2014 ON SIMILAR ISSUES. IN THIS ORDER HON ' BLE BENCH ANALYSED T H E ISS U E IN THE C O NTEXT O F ITS OWN DECIS I ON IN 'ITO VS SWAPNALI RDS JOINT VENTURE IN ITA N O. 771/PN/2 0 11. IN THAT CASE, THE FACTS OF WHICH ARE I DENTICAL, THE HON'BLE BENCH HAS HELD THAT THERE WAS NO RELATIONSH IP OF CONTRACTOR A N D CONTRACTEE BETWEEN THE JOINT VENTU R E AND ITS PARTNERS AND S I NCE CONTRACT R ECE I PTS, ASSETS, L I ABI L ITIES WERE APPORT I ONED BETWEEN THE MEMBERS, THEREFORE, TA X AB I LITY OF THE I NCOME HAS TO BE CONSIDERED IN THE HANDS OF THE MEMBERS AN D NO T THE JOINT VENTURE. FOLLOWING THE ABOVE DECISION OF THE HON'BLE ITAT PUNE , MY P R EDECESSOR HAS ALSO ALLOWED THE APPEAL S I N APPELLA N T ' S CASE FOR A.Y . 2010-11 , 2011-12 AND 2012-13. S I NCE THE HON'BLE B E NCH HAS AL R EADY D E C IDED THE MA TT E R I N S I MI L AR CASES, THEREFORE , HERE TOO IT I S HELD THAT THE I NCOME HAS T O BE TAXED I N THE HANDS OF THE MEMBERS. 4 4.1 REFERENCE IS ALSO INVITED TO THE RECENT DECISIO N OF HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS BHOOR ATNAM & COMPANY REPORTED AT 262 CTR 405 (AP). THE QUESTION ADDRESSED TO THE HIGH COURT WAS THAT WHETHER THE CREDIT FOR TDS BASED ON THE CERTIFICATES PRODUCED IN THE NAME OF THE JOINT VENT URE AND DIRECTORS IS NOT IN ACCORDANCE WITH RULE 37BA UNDER THE INCOM E-TAX RULES AND CREDIT COULD BE DENIED HOLDING THAT THESE DO NO T RELATE TO THE ASSESSEE FIRM OR COMPANY. THE HON'BLE HIGH COURT AF TER REVIEWING THE EVIDENCE GAVE THE FOLLOWING FINDING: 20. THE REVENUE CANNOT BE ALLOWED TO RETAIN TAX DED UCTED AT SOURCE WITHOUT CREDIT BEING AVAILABLE _ TO ANYBODY. IF THE CREDIT OF TAX IS NOT ALLOWED TO THE ASSESSEE AND THE JOINT VE NTURE HAS NOT FILED A RETURN OF INCOME THEN THE CREDIT OF TDS CAN NOT BE TAKEN BY ANYBODY. THIS IS NOT IN THE SPIRIT AND INTENTION OF LAW. 21. THEREFORE, IN OUR VIEW THE ASSESSING OFFICER ER RED IN DENYING THE BENEFIT OF THE TDS MENTIONED IN THE TDS CERTIFI CATE FILED BY THE ASSESSEE ON THE GROUND THAT THE TDS CERTIFICATE IS ISSUED IN THE NAME OF THE JOINT VENTURE OR A DIRECTOR AND NOT THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 5. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A) AND FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE FOR A .Y. 2012-13, THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NOS.35 AND 36/P UN/2016 VIDE ORDER DATED 28.02.2018 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE REVENUE. HE PLACED ON REC ORD THE COPY OF THE AFORESAID ORDER. HE THEREFORE SUBMITTED THAT THER E IS NO MERIT IN THE APPEAL OF REVENUE AND IT BE DISMISSED. HE THUS, SUPPO RTED THE ORDER OF LD.CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT. WE FIND THAT ON IDENTICAL FACTS WHILE DECIDING THE ISSUE IN ASSESSEES OWN CASE FOR A.Y. 2012-13 , THE CO-ORDINATE BENCH OF THE TRIBUNAL, BY FOLLOWING THE ORDER OF THE TRIB UNAL IN ASSESSEES OWN CASE IN ITA NOS.1597 & 1598/PN/2014 VIDE ORDER 5 DATED 29.07.2016 FOR A.YS. 2010-11 AND 2011-12 HAD DISMISS ED THE APPEALS OF THE REVENUE. 7. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON REC ORD TO DEMONSTRATE THAT THE DECISION OF CO-ORDINATE BENCH OF TH E TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEAR I.E., A.Y. 2012-13 IN I TA NOS.35 & 36/PUN/2016 (SUPRA) HAS BEEN SET ASIDE OR STAYED BY HIG HER JUDICIAL AUTHORITIES NOR HAS POINTED ANY DISTINGUISHING FEATURE IN TH E FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEAR. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD .CIT(A). THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 12 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH SEPTEMBER, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-2, PUNE. PR. CIT-1, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.