ITO, New Delhi V. M/s. Oriental Structural Engineers Pvt. Ltd., New Delhi

ITA 2691/DEL/2012

• Counselvise Citation: 269120114 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Advance ruling; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI J.S.REDDY, ACCOUNTANT MEMBER I.T.A .NO.-2691/DEL/2012 (ASSESSMENT YEAR-2009-10) ITO, WARD-38(3), ROOM NO-176, C.R. BUILDING, I.P.ESTATE, NEW DELHI (APPELLANT) VS M/S ORIENTAL STRUCTURAL ENGINEERS PVT LTD, GAMMON INDIA LTD.-JV, 21/48, COMMERCIAL COMPLEX, MALCHA MARG, CHANAKYA PURI, NEW DELHI-21. PAN-AAAFO06550D (RESPONDENT) I.T.A .NO.-2692/DEL/2012 (ASSESSMENT YEAR-2009-10) ITO, WARD-38(3), ROOM NO-176, C.R. BUILDING, I.P.ESTATE, NEW DELHI (APPELLANT) VS M/S ORIENTAL STRUCTURAL ENGINEERS PVT LTD, KMC CONSTRUCTIONS LTD.-JV, 21/48, COMMERCIAL COMPLEX, MALCHA MARG, CHANAKYA PURI, NEW DELHI-21. PAN-AAAAO0576A (RESPONDENT) APPELLANT BY SH. KEYUR PATEL, SR. DR RESPONDENT BY SH.K.V.S.R.KRISHNA, CA ORDER PER DIVA SINGH, JM THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST THE SEPARATE ORDER DATED 24.04.2012 OF ORIENTAL STRUCTURAL ENGINEER PVT. LTD . GAMMON INDIA LTD-JV, AND ORIENTAL STRUCTURAL ENGINEERS PVT. LTD. KMC CONSTRU CTIONS LTD. JV PERTAINING TO 2009-10 ASSESSMENT YEAR. BOTH THE APPEALS ARE TAKE N UP TOGETHER AS IDENTICAL ISSUE I.T.A .NO.-2691 & 2692/DEL/2012 2 IS AGITATED IN BOTH THE APPEALS BY THE REVENUE. FO R READY-REFERENCE WE REPRODUCE THE GROUNDS FROM ITA NO-2691/DEL/2012:- 1. THE LD. CIT(A) GROSSLY ERRED IN DELETING THE ADDITI ON MADE BY THE AO, DISREGARDING THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ITO V CH. ATCHAIAH (218 ITR 239) THAT THE R IGHT ENTITY SHOULD BE TAXED AT THE RIGHT PLACE. 2. THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO E ACH OTHER. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR MODI FY THE GROUNDS OF APPEAL AT MY TIME. 2. RIGHT AT THE OUTSET IT WAS SUBMITTED BY THE LD. AR THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE O F THE ORDER DATED 22.03.2013 IN ITA NO-1611-1613 AND 1654-1656/DEL/2010 FOR 2006-07 , 2007-08, 2008-09 ASSESSMENT YEARS. COPY OF THE SAID ORDER WAS PLACE D BEFORE THE BENCH. ON THE BASIS OF THIS ORDER IT WAS HIS CONTENTION THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE. 2.1. SINCE THE APPEALS HAD BEEN FILED BY THE REVENU E, THE LD. SR DR WAS REQUIRED TO LEAD THE ARGUMENTS. LD. SR. DR, SH. KE YUR PATEL STATED THAT THE ISSUE IS NOT COVERED AS SUCH IT WAS HIS STAND THAT LET THE AR ELABORATE AS TO HOW THE DEPARTMENTAL APPEALS CAN BE STATED TO BE COVERED IN FAVOUR OF THE ASSESSEE. 2.2. IN THE SAID BACKGROUND THE LD. AR INVITED ATTE NTION TO THE ASSESSMENT ORDER IN ITA NO-2691/DEL/2012 PAGES 12 & 13 WHEREIN IN TH E LAST FEW LINES OF PAGE 12 AND FIRST FEW LINES OF PAGE 13 IN PARA 27 THE AO MA KES A MENTION THAT HE IS FOLLOWING THE ORDERS OF HIS PREDECESSORS IN THE CA SE OF THE ASSESSEE FOR 2007-08 & 2008-09 ASSESSMENT YEARS. INVITING ATTENTION TO TH E SAID PARA IT WAS SUBMITTED THAT THE AO ESTIMATED THE PROFITS AT 5% OF THE TOTAL CON TRACTUAL RECEIPT OF RS.9,98,86,286/- RESULTING IN THE ADDITION OF RS.49 ,94,314/-. 2.3. REFERRING TO PAGE 34 PARA 9 OF THE IMPUGNED OR DER IT WAS SUBMITTED THAT THE CIT(A) TAKES NOTE OF THE POSITION OF THE 2004-05 AS SESSMENT YEARS IN ITA NO- 3058/DEL/2007 WHEREIN VIDE ORDER DATED 06.03.2009 O N THE VERY SAME FACTS THE I.T.A .NO.-2691 & 2692/DEL/2012 3 ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. IT WAS POINTED OUT BY THE LD. AR THAT THE CIT(A) HAD RELIED UPON THAT THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ORIENTAL STRUCTURE ENGI NEERS PVT. LTD. 195 TAXMANN 132. IT WAS POINTED OUT THAT THE DEPARTMENTAL SLP AGAINST THE SAID DECISION FOR 2004-05, 2005-06 ASSESSMENT YEARS HAS BEEN DISMISSE D BY THE APEX COURT. POINTING TO PAGE 35 OF THE IMPUGNED ORDER IT WAS SU BMITTED THAT THE APPEAL FOR 2006-07, 2007-08 & 2008-09 ASSESSMENT YEARS ON THE SIMILAR GROUNDS HAD BEEN ALLOWED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 22.02.2012; 23.02.2012 & 24.02.2012 AND IT IS THIS ORDER WHICH HAS BEEN UPHE LD BY THE ITAT AS SUCH THE POINT AT ISSUE IS COVERED IN ASSESSEES FAVOUR. QU A THE OTHER APPEAL IT WAS SUBMITTED THAT FACTS AND CIRCUMSTANCES ARE IDENTICA L EXCEPT THE DIFFERENCE IN AMOUNTS AS 5% OF THE TOTAL CONTRACTUAL RECEIPTS WOR KS OUT TO RS.4,61,56,661/-. 3. IN THE LIGHT OF THE ABOVE STAND OF THE ASSESSEE IN RESPONSE TO THE LD. SR. DRS ASSERTION THAT THE ISSUE IS NOT COVERED IN ASS ESSEES FAVOUR IT WAS CONSIDERED APPROPRIATE TO PASS OVER THE APPEALS AND TAKE UP TH EM FOR HEARING AT THE END OF THE BOARD. 3.1. ACCORDINGLY WHEN THE APPEALS WERE TAKEN UP AT THE END OF THE BOARD, THE SR. DR POINTING TO PAGE 7 PARA 22 OF THE ASSESSMENT ORD ER SUBMITTED THAT 2004-05 ASSESSMENT YEAR WHICH HAS BEEN A SUBJECT MATTER OF CONSIDERATION BY THE ITAT HAS DECIDED THE ISSUE IN ASESSEES FAVOUR WHICH HAS BEE N CONFIRMED BY THE HIGH AND HAS NOT BEEN UPSET BY THE APEX COURT ALSO BUT THE M ATERIAL FACT IS THAT IT HAS PROCEEDED ON DIFFERENT FACTS. IN THE FACTS OF THE PRESENT CASE IT WAS SUBMITTED THE AO HAS PROCEEDED TO EXAMINE THE ISSUE FROM AN ENTIR ELY DIFFERENT POSITION AND HAS TAKEN NOTE OF THIS FACT IN THIS PARA AND OBSERVED THAT THE ISSUE BEING CONSIDERED IS WHETHER THE RIGHT PERSON SHOULD NOT BE TAXED AT TH E RIGHT PLACE? FOR READY- REFERENCE, WE REPRODUCE THE SAID PARA FROM THE ORDE R ON WHICH RELIANCE IS PLACED BY THE DEPARTMENT:- I.T.A .NO.-2691 & 2692/DEL/2012 4 22. THE ASSESSEE JV HAS RELIED UPON THE DECISION O F THE HONBLE ITAT, GIVEN IN THE CASE OF M/S OSE-GIL JV FOR AY 2004-05 IN ITA NO-3058/DEL/2007 DATED 06.03.2009 AS WELL AS ADVANCE RULING GIVEN BY AAR I N 469/1999. AS REGARDS THE DECISION OF HONBLE ITAT (SUPRA), IT IS A FACT THA T FOR THE SAID AY IN THAT CASE AS WELL AS FOR AY 2005-06 IN THE SAME CASE, THE PAYMEN TS MADE BY THE ASSESSEE JV TO ITS PARTNERS WERE FOUND TO BE REASONABLE BY THE HON BLE ITAT, HAVING REGARD TO THE FAIR MARKET VALUE OF THE SERVICES RENDERED BY T HEM. HOWEVER, WITH ALL DUE RESPECT TO THE SAID DECISION, THE ISSUE IN CONTENTI ON PRESENTLY IS WHETHER THE RIGHT PERSON SHOULD NOT BE TAXED AT THE RIGHT PLACE ?, WHICH ISSUE WAS NOT BEFORE THE HONBLE ITAT IN THE CITATION QUOTED BY T HE ASSESSEE (SUPRA). THE ISSUE BEING ARGUED HERE IS THAT AT THE TIME OF ENTE RING INTO SUB-CONTRACT, THE ASSESSEE JV SHOULD HAVE KEPT A CERTAIN PERCENTAGE O F THE TOTAL RECEIPTS, SAY @1%, TO ITSELF AS PROFITS AND THEN GIVEN THE SUB-C ONTRACT, AS IS THE NORMAL PRACTICE BEING FOLLOWED IN THE BUSINESS ACTIVITY TH AT THE ASSESSEE JV IS IN. (EMPHASIS PROVIDED BY THE BENCH) 3.2. CONSIDERING THE ARGUMENTS OF THE SR. DR, ATTEN TION WAS INVITED TO THE GROUND RAISED BY THE REVENUE IN ITA NO.1611 TO 1613, 1654 TO 1656/DEL/2010 WHERE THE CO-ORDINATE BENCH VIDE ITS ORDER DATED 22 ND MARCH 2013 CONSIDERED AN IDENTICAL ISSUE IN GROUND NO-2 WHICH IS REPRODUCED FOR READY-REFERENCE:- 2. LD. CIT(A) HAS GROSSLY ERRED IN NOT FOLLOWING T HE PRINCIPLE THAT THE INCOME OF THE JOINT VENTURE (JV) IS TO BE TAXED IN THE HANDS OF JV AND NOT IN THE HANDS OF ITS MEMBERS, AS HAS BEEN HELD BY THE HONB LE ITAT, DELHI G BENCH, IN I.T.A.NO.17/DEL/2007 DATED 31.08.2007(SB), IN THE C ASE OF PRADEEP AGENCIES (JV) WHICH STATES THAT THE RIGHT PERSON TO WHOM THE INCO ME ACCRUES HAS TO BE TAXED, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT , RENDERED IN THE CASE OF ITO VS. CH. ATCHAIAH (218 ITR 239). 3.3. A PERUSAL OF THE ORDER SHOWS THAT THE CO-ORDIN ATE BENCH CONSIDERED THE IDENTICAL ISSUE IN THE CASE OF THE ASSESSEE DISMISS ED THE DEPARTMENTAL APPEAL ON IDENTICAL FACTS. THE RELEVANT PORTION OF THE SAID ORDER IS EXTRACTED HEREUNDER:- 2. AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT ISSUE INVOLVED IN ALL THESE APPEALS IS NOT ONLY COVERED IN ASSESSE ES CASES BY JURISDICTIONAL HIGH COURT, BUT SLPS FILED BY THE DEPARTMENT HAS AL SO BEEN DISMISSED AND THIS FACT HAS ALSO BEEN MENTIONED BY LD. CIT(A) IN HIS ORDER. THEREFORE, ORDER OF CIT(A) ON THE ISSUES RAISED IN THESE APPEA LS ARE LIABLE TO BE CONFIRMED, WHICH MAY BE CONFIRMED AND APPEALS OF TH E REVENUE BE DISMISSED. 3. LD. DR STRONGLY RELIED UPON THE ORDER OF THE ASSESS ING OFFICER AND PLEADED FOR SETTING ASIDE THE ORDER OF THE CIT(A) AND RESTO RING THAT OF THE ASSESSING OFFICER WITHOUT COMMENTING ON THE PRECEDENTS RELIED UPON BY LD. CIT(A). I.T.A .NO.-2691 & 2692/DEL/2012 5 4. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE MA TERIAL ON RECORD, WE FIND THAT THE ISSUE RAISED IN THESE APPEAL HAVE BEEN DEC IDED BY THE CIT(A) IN VIEW OF JURISDICTIONAL HIGH COURT DECISION IN THE C ASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2004-05 & 05-06, WHEREIN SLP FILED BY THE DEPARTMENT HAS ALSO BEEN DISMISSED, WHICH TOO WAS CONSIDERED B Y THE CIT(A). SINCE ISSUE IS SETTLED IN FAVOUR OF THE ASSESSEE, THEREFO RE, APPEALS OF THE REVENUE ARE NOT TENABLE WHICH ARE DISMISSED WHILE UPHOLDING THE ORDER OF THE CIT(A). 5. AS A RESULT, ALL THE APPEALS FILED BY THE DEPARTMEN T ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 3.4. CONSIDERING THE SAME, THE SR. DR FAIRLY CONCED ED THAT AS FAR AS THE ORDER OF THE TRIBUNAL FOR 2006-07 TO 2008-09 ASSESSMENT YEAR S IS CONCERNED, THE ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL AND THE SAID POSITI ON THOUGH BEING DIFFERENT FROM 2004-05 ASSESSMENT YEAR IS COVERED IN 2006-07 ASSES SMENT YEAR TO 2008-09 ASSESSMENT YEAR AGAINST THE REVENUE HOWEVER RELIANC E WAS PLACED UPON THE ASSESSMENT ORDER. 4. THE LD. AR RELIES UPON THE ORDER OF THE CO-ORDIN ATE BENCH AND THE PAST HISTORY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE PECULIAR FACTS A ND CIRCUMSTANCES OF THE CASE IN THE ABSENCE OF ANY DISTINCTION ON FACT OR LAW, WE R ESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH DISMISSED THE DEPARTMENTAL AP PEALS. THE SAID ORDER WAS ANNOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE PARTIES. 6. IN THE RESULT THE DEPARTMENTAL APPEALS ARE DISMI SSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 7 TH OF FEBRUARY 2014. SD/- SD/- (J.S.REDDY) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:- 07/02 /2014 *AMIT KUMAR* I.T.A .NO.-2691 & 2692/DEL/2012 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI