DCIT(TDS), TDS Cirlce-1(1), hyd, Hyderabad V. Hindustan Ratna JV, Hyd, Hyderabad

ITA 241/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6243 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Keywords: Recovery proceedings; Non-deduction of tax
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 241, 242 & 243/HYD/2016 ASSESSMENT YEARS : 2008-09, 2009-10 AND 2010-11 DY. COMMISSIONER OF INCOME TAX (TDS), APPELLANT CIRCLE 1(1), HYDERABAD. VS. M/S HINDUSTAN RATNA JV, RESPONDENT HYDERABAD. PAN AAEFH0901P APPELLANT BY : SHRI A. SITARAMA RAO RESPONDENT BY : SHRI A. SRINIVAS DATE OF HEARING : 22/08/2016 & 23/08/2016 DATE OF PRONOUNCEMENT : 21/09/2016 ORDER PER S. RIFAUR RAHMAN, A.M.: THESE APPEALS FILED BY REVENUE ARE DIRECT ED AGAINST SEPARATE ORDER OF CIT(A)-8, HYDERABAD, ALL, DATED 16/12/20 15, FOR ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11. 2. THE GROUND RAISED BY THE REVENUE IS COMMON, I N ALL THE THREE APPEALS UNDER CONSIDERATION, WHICH IS AS UNDER: 1. THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE JV WAS LIABLE TO DEDUCT TAX AT SOURCE U/S 194C(2) OF THE INCOME-TAX ACT, 1961 ON PAYMENTS MADE TO ITS C ONSTITUENTS AND THE IT ACT DOES NOT DISTINGUISH BETWEEN JV FOR MED FOR THE PURPOSE OF OBTAINING CONTRACTS AND OTHER JV. 3. WE REFER TO THE FACTS IN AY 2008-09, TO DIS POSE OF THESE APPEALS. 2 ITA NOS. 241, 242 & 243/HYD/2016 M/S HINDUSTAN RATNA JV 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A JOINT VENTURE FORMED BY TWO PARTNERSHIP FIRMS NAMELY M/S HES INFRA PVT. LTD. AND M/S RATNA INFRASTRUCTURE PROJECTS PVT. LTD . IT IS FORMED FOR THE PURPOSE OF PROCURING CONTRACTS FROM GOVERNMENT AND OTHER AGENCIES ON BEHALF OF ITS CONSTITUENTS. THE SURVEY WAS CONDUCTED U/S 133A ON 18/03/2010 TO VERIFY THE ADHERENCE OF TDS P ROVISIONS BY THE ASSESSEE. DURING THE SCRUTINY PROCEEDINGS, IT WAS N OTICED THAT THE ASSESSEE HAD NOT DEDUCTED THE TDS ON THE CONTRACT A MOUNTS PAID TO JOINT VENTURE CONSTITUENTS. THE ASSESSING OFFICER A CCEPTED THE CONTENTION OF THE ASSESSEE THAT THE CONSTITUENT COM PANIES (HES INFRA PVT. LTD. AND RATNA INFRASTRUCTURE PROJECTS PVT. LT D.) HAD SHOWN THE CONTRACT RECEIPTS IN THEIR BOOKS OF ACCOUNT AND THE SAME HAD BEEN OFFERED FOR TAXATION. KEEPING IN VIEW, THE HONBLE SUPREME COURTS DECISION IN THE CASE OF M/S HINDUSTAN COCA COLA BEV ERAGES PVT. LTD. VS. CIT, 293 ITR 226 (SC), THE ASSESSING OFFICER PA SSED THE ASSESSMENT ORDER BY RAISING A DEMAND OF RS. 3,472/- U/S 201(1) FOR NON DEDUCTION OF TAX ON AUDIT FEE OF RS. 33,708/- A ND INTEREST U/S 201(1A) OF RS. 1180/- ON AUDIT FEE, INTEREST ON REG ULAR BILLS RS. 6,44,186/- AND INTEREST ON MOBILISATION ADVANCES PA ID RS. 3,20,786/-. 5. IN VIEW OF THE FAILURE ON THE PART OF THE ASSESS EE FOR NON- DEDUCTION OF TAX AT SOURCE ON THE ABOVE PAYMENTS, T HE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271C BY I SSUING NOTICE ON 28/04/2011. AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY U/S 271C OF THE AC T OF RS. 30,04,860/- BEING THE NON-DEDUCTION OF TAX AT SOURC E ON CONTRACT AMOUNTS U/S 194C AND AUDIT FEE U/S 194J OF THE ACT. 6. ON APPEAL, THE CIT(A) OBSERVED THAT THE CIT(A)-I I, HYDERABAD VIDE ORDER DT.10.09.2013 HAS DECIDED THE ISSUE IN R ESPECT OF ORDER U/S, 201(1) & 201(1A) FOR THE AY 2008-09 IN FAVOUR OF THE ASSESSEE 3 ITA NOS. 241, 242 & 243/HYD/2016 M/S HINDUSTAN RATNA JV THE HON'BLE ITAT, HYDERABAD IN ITA NOS. 513, 514 & 515 FOR THE AYS 2008-09, 2009-10 AND 2010-11 HAD UPHELD THE ORDER O F THE CIT(A)-II, HYDERABAD AND DISMISSED THE DEPARTMENTAL APPEAL FIL ED. THE ORDER U/S.271C WAS PASSED ON 31/03/2014 AFTER RECEIPT OF THE ABOVE SAID ORDER OF CIT(A)-II, HYDERABAD AND ITAT. 6.1 IN VIEW OF THE ABOVE, THE CIT(A) HELD THAT THE ISSUE RELATING TO QUANTUM HAS BEEN ADJUDICATED BY THE CIT(A)-II, HYDE RABAD AND ITAT, HYDERABAD IN FAVOUR OF THE ASSESSEE, THE BASIS FOR LEVY OF PENALTY DOES NOT LIE. CHAPTER XVII-B DEALS WITH COLLECTION AND RECOVERY OF TAX DEDUCTION OF SOURCES. SECTIONS 201(1) AND 201(1A) ARE PART OF CHAPTER XVII-B. HE CONCLUDED THAT IN THE ABSENCE OF ORDERS UNDER 201(1) AND 201(1A), THE QUESTION OF LEVYING PENALTY U/S 271C WOULD NOT OBVIOUSLY ARISE. 7. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 8. CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES A ND PERUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF R EVENUE AUTHORITIES. AS OBSERVED BY THE CIT(A), AGAINST THE ORDER PASSED BY THE AO U/S 201(1) & 201(1A), WHEN THE ASSESSEE APPEALED BEFORE THE CIT(A)-II, WHO PASSED THE ORDER IN FAVOUR OF THE ASSESSEE. WHE N THE REVENUE APPEALED BEFORE THE ITAT AGAINST THE SAID ORDER, TH E ITAT DISMISSED THE REVENUE APPEAL BY OBSERVING AS UNDER: 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. IN ASSESSEES OWN CASE FOR AY 2009-10 VIDE ORDER DATED 18/12/2013 IN ITA NO. 372/HYD/2013, THE COORDINATE BENCH OF JURISDICTIONAL TRIBUNAL, HELD AS FOLLOWS: THERE IS NO SUB-CONTRACT BETWEEN JV AND THE CONSTI TUENTS AND SINCE THE JV HAS BEEN FORMED ONLY TO PROCURE CO NTRACT WORKS FROM THE GOVERNMENT AND THE CONTRACT IS BEING EXECUTED BY THE CONSTITUENT PARTNERS IN THEIR SHARI NG RATIO 60:40 AS PER THE TERMS OF PARTNERSHIP DEED, IT CANN OT BE SAID THAT THE JV IS A CONTRACTOR AND ITS CONSTITUEN TS ARE SUB- CONTRACTORS. 7.1 AS SUCH, WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE 4 ITA NOS. 241, 242 & 243/HYD/2016 M/S HINDUSTAN RATNA JV CIT(A) IN DIRECTING THE ASSESSING OFFICER TO DELETE INTEREST CHARGED U/S 201(1A) ON THE GROUND THAT THERE IS NO LIABILITY ON THE JV TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE T O THE CONSTITUENT MEMBERS AND ACCORDINGLY, THE ORDER OF T HE CIT(A) IS HEREBY CONFIRMED. THE GROUNDS RAISED BY THE REVENU E, WHICH ARE COMMON IN ALL THE YEARS UNDER CONSIDERATION ARE DIS MISSED. AS THE QUANTUM ISSUE WAS DISMISSED BY THE COORDINAT E BENCH OF THIS TRIBUNAL, THE BASIS FOR LEVY OF PENALTY DOES NOT A RISE AND FROM THE RECORDS, THE PENALTY ORDER U/S 271C WAS PASSED AFTE R THE QUANTUM APPEAL WAS DISMISSED. HENCE, SUCH PENALTY CANNOT WI THSTAND IN THE EYE OF LAW. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE CIT(A) IN CANCELLING THE PENALTY LEVIED BY THE AO U /S 271C OF THE ACT, AND THE SAME IS HERE BY UPHELD DISMISSING THE GROUN DS RAISED BY THE REVENUE IN ALL THE APPEALS UNDER CONSIDERATION. 8. IN THE RESULT, ALL THE THREE APPEALS UNDER CONSI DERATION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016. SD/- SD/- ( D. MANMOHAN ) VICE PRESIDENT ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 21 ST SEPTEMBER, 2016 KV COPY TO:- 1)ACIT (TDS), CIRCLE 1(1), HYDERABAD. 2)M/S HINDUSTAN RATNA JV, PLOT NO. 39, 8-2-293/A4/A 14, BN REDDY COLONY, ROAD NO. 14, BANJARA HILLS, HYD ERABAD 3) THE CIT (A)- 8 , HYDERABAD 4) THE CIT(TDS), HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD. 5 ITA NOS. 241, 242 & 243/HYD/2016 M/S HINDUSTAN RATNA JV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE OF DISPATCH OF ORDER