THE ITO, Hyderabad V. M/s Hindustan-Ratna J.V, Hyderabad

ITA 652/HYD/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7119 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-08-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M. & SMT. ASHA VIJAYARAGHAVAN, J.M. ITA NO. 652/HYD/2010 ASSESSMENT YEAR 2005-06 THE ITO, WARD 6(3), HYDERABAD VS M/S HINDUSTAN RATNA, J.V, HYDERABAD (PAN AAEFH 0901P) APPELLANT RESPONDENT APPELLANT BY : SHRI B.V. PRASAD REDDY RESPONDENT BY : NONE DATE OF HEARING : 15.11.2011 DATE OF PRONOUNCEMENT : 22.11.2011 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) IV, HYDERA BAD DATED 15.3.2010 AND IT PERTAINS TO THE ASSESSMENT Y EAR 2005-06. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN T HE BUSINESS OF EXECUTING CONTRACTS. FOR THE ASSESSMEN T YEAR 2005-06, THE ASSESSEE FILED ITS RETURN OF INCOME DE CLARING AN INCOME AT RS.66,676/-. THE ASSESSMENT WAS COMPL ETED U/S 143(3) OF THE IT ACT. THE ASSESSING OFFICER DI D NOT CONSIDER THE TDS AMOUNT AT RS.8,84,800/-. FURTHER, THE ASSESSING OFFICER DETERMINED THE STATUS OF THE ASSE SSEE AS AOP AS AGAINST THE STATUS OF A FIRM AS CLAIMED BY THE ASSESSEE. ITA NO.652/HYD/2010 M/S HINDUSTAN RATNA, JV, HYDERABAD 2 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A). 4. THE CIT(A) UPHELD THE STATUS AS DETERMINED BY T HE ASSESSING OFFICER AS AOP. ON THE ISSUE OF REJECTIO N OF CREDIT FOR TDS MADE BY THE ASSESSING OFFICER ON MOBILISATI ON ADVANCES U/S 199 OF THE ACT, THE CIT(A) DIRECTED TH E ASSESSING OFFICER TO VERIFY THE TDS MADE AND GIVE C REDIT FOR THE ASSESSMENT YEAR AFTER NECESSARY VERIFICATION. 5. AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US . 6. THE DR SHRI. B.V. PRASAD REDDY PLACED BEFORE US A COPY OF THE ORDER OF THE TRIBUNAL DATED IN ITA NO.99/HYD/2010 AND SUBMITTED THAT THE ISSUE HAS BEE N DECIDED IN FAVOUR OF THE DEPARTMENT WHEREIN THE TRI BUNAL HAD FOLLOWED THE 3 RD MEMBER DECISION OF THE CHANDIGARH BENCH IN THE CASE OF PRADEEP KUMAR DHEER (303 ITR 8 045) (CHANDIGARH). 7. AT THE TIME OF HEARING ON 15.11.2011, NONE APPE ARED ON BEHALF OF THE ASSESSEE. WE HEARD THE DEPARTMENT AL REPRESENTATIVE AND ALSO PERUSED THE MATERIALS AVAIL ABLE ON RECORD. WE FIND THAT THE CHANDIGARH BENCH OF THE T RIBUNAL HAS HELD AS FOLLOWS: 9. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISIO N OF THIS TRIBUNAL PROGRESSIVE CONSTRUCTION LTD. THIS TRIBUNAL AFTER CONSIDERING THE LANGUAGE OF SECTION 199 FOUND THAT NEXUS BETWEEN TDS AND THE CORRESPONDING INCOME ELEMENT WOULD REMAIN NOTIONAL. HOWEVER, THE AMENDMENT MADE BY THE PARLIAMENT BY FINANCE ACT, ITA NO.652/HYD/2010 M/S HINDUSTAN RATNA, JV, HYDERABAD 3 1987 WAS NOT TAKEN INTO CONSIDERATION BY THE BENCH WHILE DECIDING THE CASE IN PROGRESSIVE CONSTRUCTION LTD. THIS BENCH OF THE TRIBUNAL IN PROGRESSIVE CONSTRUCTION LTD., APPARENTLY FOLLOWED THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN TOYO ENGINEERI NG (I) LTD. HOWEVER, THE CHANDIGARH BENCH OF THIS TRIBUNAL AFTER CONSIDERING THE DECISION OF THE MUMB AI BENCH OF THIS TRIBUNAL IN TOYO ENGINEERING (I) LTD. FOUND THAT UNLESS INCOME IS OFFERED FOR TAXATION CR EDIT CANNOT BE GIVEN FOR THE TDS. AS RIGHTLY SUBMITTED BY THE LEARNED DR, THE DECISION OF THE THIRD MEMBER OF THIS TRIBUNAL WOULD HAVE MORE WEIGHTAGE THAN THE DIVISION BENCH OF THIS TRIBUNAL. IN OTHER WORDS, T HE MAJORITY OPINION EXPRESSED BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN PRADEEP KUMAR DHIR (SUPRA) WOULD HAVE A BINDING NATURE RATHER THAN THIS TRIBUNALS DECISION IN PROGRESSIVE CONSTRUCTION LTD. (SUPRA). EVEN OTHERWISE, AS FOUND BY THE TRIBUNAL IN PROGRESSIVE CONSTRUCTION LTD. (SUPRA) THE MAJORITY OPINION EXPRESSED BY THE CHANDIGARH BENCH WOULD PREVAIL. 10. THE LEARNED COUNSEL FOR THE ASSESSEE MADE AN ATTEMPT TO DISTINGUISH THE DECISION OF THE CHANDIGA RH BENCH OF THIS TRIBUNAL ON THE GROUND THAT THE ASSES SEE BEFORE THE CHANDIGARH BENCH WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. HOWEVER, IN THE CASE BEFORE US THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THIS ISSUE WAS ALSO CONSIDERED BY THE THIRD MEMBER IN CHANDIGARH BENCH OF THIS TRIBUNAL AND FOUND THAT METHOD OF ACCOUNTING HAS NOTHING TO DO IN GIVING CREDIT TO THE TDS. IN VIEW OF THE ABOVE OBSERVATION OF THE THIRD MEMBER AND THE MAJORITY ITA NO.652/HYD/2010 M/S HINDUSTAN RATNA, JV, HYDERABAD 4 DECISION OF THE CHANDIGARH BENCH OF THIS TRIBUNAL, WE FIND NO SUBSTANCE IN THE ARGUMENTS OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. MOREOV ER, ADMITTEDLY, THE ASSESSEE HAS NOT OFFERED THE CORRESPONDING INCOME FOR TAXATION AND THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ALSO. IN VIEW OF THE ABOVE DECISION, WE ARE UNABLE TO UPHOLD THE ORDER O F THE CIT(A) AND THE SAME IS SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER IS RESTORED. 11. IN THE RESULT, ALL THE THREE APPEALS OF THE R EVENUE ARE ALLOWED. 8. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL, WE ALLOW THE DEPARTMENT APPE AL. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT 22.11.2011 SD/- SD/- (CHANDRA POOJARI) ( ASHA VIJAYA R AGHAVAN ) ACCO UNTANT MEMBER JUDICIAL M EMBER DATED THE 22 ND NOV., 2011 COPY FORWARDED TO: 1. THE ITO, WARD 6(3), HYDERABAD 2. M/S HINDUSTAN RATNA JV, 8-2-293/A4/A/14, PLOT NO.39, BN REDDY COLONY, ROAD NO.14, BANJARA HILLS, HYDERABAD. 3. THE CIT(A)-IV 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/