Assistant Commissioner of Income-Tax Central Circle-2(1), Nagpur V. M/s. Zaidun Leeng SDN-Artefect Project (JV), Nagpur

ITA 50/NAG/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84679 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 14-02-2012
• Court: TRIBUNAL
• Department Lawyers: MAYANK PRIYADARSHI
• Keywords: Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER .ITA NO. 50/NAG/2012 ( AY: 2008 - 2009 ) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2(1), NAGPUR. / VS. M/S. ZAIDUN LEENG SDN ARTEFECT (JV), 1 ST FLOOR, BHIWAPURKAR CHAMBERS, BHANTOLI, NAGPUR 440012. ./ PAN: AAAAZ 0129 L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MAYANK PRIYADARSHI, CIT - DR / RESPONDENTBY : SHRI K.P. DEWANI / DATE OF HEARING : 08 .09.2014 / DATE OF PRONOUNCEMENT : 10 .09.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 14.2.2012 IS AGAINST THE ORDER OF THE CIT (A) - I, NAGPUR DATED 2.11.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN ALLOWING RELIEF BY DELETING THE ADDITION OF RS. 12,79,07,583/ - MADE TO MEMBERS OF AOP UNDER SECTION 40(BA) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE USED DIFFERENT NOMENCLATURES FOR THE PAYMENTS MADE TO THE MEMBERS OF AOP SO AS TO AVOID THE DISALLOWANCE UNDER SECTION 40(BA) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) FAILED TO APPRECIATE THE FACT THAT THE AMOUNTS OF RS. 12,79,07,583/ - BEING CONSULTANCY CHARGES PAID ARE COVERED UNDER THE WORD REMUNERATION WHICH IS MENTIONED IN SECTION 40(BA) OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) FAILED TO APPRECIATE THE FACTS THAT THE JV AGREEMENT CLEARLY SPELT OUT THE ROLE OF THE MEMBERS WHICH IS IN LINE WITH THE EXISTING BUSINESS OF THE MEMBER COMPANY AND S UCH THE PAYMENTS MADE ARE CLEARLY COVERED BY THE PROVISIONS OF SECTION 40(BA) OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) FAILED TO NOTICE THAT THE ASSESSEE OMITTED TO DISCLOSE THESE SUMS AS RECEIPTS AND HENC E THE CIT (A) SHOULD HAVE UPHELD THE ADDITIONS. 2 3. AT THE VERY OUTSET, SHRI K.P. DEWANI, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS AND MENTIONED THAT THE ISSUE RAISED IN THE ABOVE GROUNDS RELATES TO THE INTERPRETATION OF THE PROVISIONS OF SECTION 40(BA) OF THE ACT. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE CIT (A) GRANTED RELIEF TO THE ASSESSEE RELYING ON THE ORDERS OF HER PREDECESSOR IN THE ASSESSEES OWN CASE FOR THE AYS 2004 - 05 TO 2006 - 07. PARA 6 OF THE CIT (A)S ORDE R IS RELEVANT IN THIS REGARD WHICH READS AS UNDER: 6. VIDE THE SAID ORDERS CIT (A) - I, HAS DELETED THE ADDITION MADE ON ACCOUNT PAYMENTS MADE TO M/S. ARTEFACT PROJECT AND M/S. ZAIDDUN LEENG SDN BHD. AS THE FACTS ARE IDENTICAL FOR THE YEAR UNDER APPEAL, TH E ADDITION MADE ON ACCOUNT OF PROVISIONS OF SECTION 40(BA) ARE HEREBY DELETED FOR THE ELABORATE REASONS RECORDED IN THE ORDERS OF MY LD PREDECESSOR VIDE ORDER NO.CIT(A) - I/565/08 - 09 DATED 5.5.2009 FOR AY 2006 - 07, ORDER NO.CIT(A) - I/283/09 - 10, DATED 11.6.2010 FOR AY 2004 - 05 AND ORDER NO. CIT (A) - I/284/09 - 10 OF 11.6.2010 FOR AY 2005 - 06. THESE GROUNDS ARE HEREBY ALLOWED. 4. HE MENTIONED THAT THE SAID ORDERS OF THE CIT (A) FOR EARLIER ASSESSMENT YEARS WAS THE SUBJECT MATTER BEFORE THE TRIBUNAL AND THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT (A) IN ASSESSEES OWN CASE VIDE ITA NO.177/NAG/2009 (AY 2006 - 07), DATED 18.10.2012 . IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO PAGE 1 OF THE PAPER BOOK AND MENTIONED THAT GROUND NO.1 IS THE QUESTION BEFORE THE TRIBUNAL AND THE SAME WAS ADJUDICATED VIDE PARA 7 TO 9 OF THE SAID TRIBUNALS ORDER DATED 18.10.2011 AND THE SAME ARE RELEVANT HERE WHICH REA D AS UNDER: 7. IT IS NOT DISPUTED THAT THE PAYMENT HAS B EEN PAID BY THE ASSESSEE TO THE CONSTITUENTS OF THE JOINT VENTURE ON ACCOUNT OF THE WORK EXECUTED BY THEM. IN OUR OPINION, PROVISION OF SECTION 40(BA) CANNOT BE APPLIED TO THIS PAYMENT. THIS PAYMENT CANNOT BE REGARDED TO BE THE INTEREST OR THE REMUNERATI ON PAID BY THE ASSES S EE TO THE MEMBER OF THE ASSOCIATION . THE DECISION AS RELATED TO THE PROVISION OF SECTION 40(B), IN OUR OPINION ARE EQUALLY APPLICABLE IN RESPECT OF THE PROVISION U/S 40(BA) FOR INTERPRETING WHETHER THE PAYMENT MADE FOR EXECUTING THE W ORK IS THE PAYMENT MADE FOR SALARY OR REMUNERATION. THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DHARTI FILMS 191 ITR 261 (MUM) IS BINDING ON US. 8. THE LD DR EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT BROUGHT TO OUR KNOWLEDGE ANY DECISION TAKING A CONTRARY VIEW. IN VIEW OF THIS FACT, WE ARE OF THE OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT (A) AND THIS IS NOT A CASE WHICH WARRANT OUR INTERFERENCE AS THE CIT (A), IN OU R OPINION HAS RIGHTLY DELETED THE ADDITION MADE IN THE CASE OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED . 5. ABOVE PARAS CONFIRMS THE DECISION OF THE CIT (A) AND IT IS THE FINDING OF THE TRIBUNAL THAT THE PROVISIONS OF SECTION 40(BA) CANNOT BE APPLIED TO THE IMPUGNED PAYMENTS I.E., INTEREST OR REIMBURSEMENT PAID BY THE ASSESSEE TO THE MEMBER OF THE JV . ACCORDINGLY, THE CONCLUSION OF THE CIT (A) IS CONFIRMED. 3 6. LD COUNSEL ALSO BROUGHT OUR ATTENTION TO PAG E 13 OF THE PAPER BOOK, WHEREIN COPY OF THE ORDER OF THE TRIBUNAL IS PLACED AT FOR THE AYS 2004 - 05 AND 2005 - 06, DATED 18.10.2012 AND THE TRIBUNAL DECIDED THE SIMILAR ISSUES AGAINST THE REVENUE FOLLOWING THE ORDER OF THE ITAT FOR THE AY 2006 - 07 (SUPRA). CO NSIDERING THE SAME AND FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT THE GROUNDS RAISED BY THE REVENUE STAND DISMISSED . 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 10TH SEPTEMBER, 2014. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; 10 /09/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , ,NAGPUR/ DR, ITAT, NAGPUR. 6. / GUARD FILE . //TRUE COPY// / BY ORDER, (SR. PRIVATE SECRETARY) ITAT, NAGPUR