ITO, Ward-8(1), Hyd, Hyderabad V. MVVS - Allens (JV), Hyd, Hyderabad

ITA 696/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6038 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: S RAMA RAO
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 696/HYD/2016 AND C.O. NO. 47/HYD/2016 ASSESSMENT YEAR: 2011-12 INCOME-TAX OFFICER, WARD 8(1), HYDERABAD. VS. M/S MVVS ALIENS (JV), HYDERABAD. PAN AABAM 2712R (APPELLANT) (RESPONDENT/CROSS OBJECTOR) REVENUE BY : SHRI P. CHANDRASEKHAR ASSESSEE BY : SHRI S. RAMA RAO DATE OF HEARING : 13-03-2017 DATE OF PRONOUNCEMENT : 17-03-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS) - 9 (IN SHORT C IT(A) 9), HYDERABAD, DATED 11/01/2016 FOR AY 2011-12. THE ASS ESSEE ALSO FILED C.O. AGAINST THE VERY SAME ORDER OF THE CIT(A ). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A JOINT VENTURE OF SRI MVV SATYANARAYANA, AN INDIVIDUAL AND ALIENS DEV ELOPER PVT. LTD. THE JV ENTRUSTED THE ENTIRE WORK TO ONE OF THE CONS TITUENTS M/S ALIENS DEVELOPERS PVT. LTD. ASSESSEE FILED THE RETU RN OF INCOME FOR THE AY 2011-12 ON 30/09/2011 ADMITTING TOTAL INCOME OF RS. 35,000/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 1 43(2) OF THE INCOME-TAX ACT (IN SHORT THE ACT) WAS ISSUED ON 0 1/08/2012 AND THE SAME WAS SERVED ON THE ASSESSEE ON 02/08/2012. DURI NG THE COURSE 2 ITA NO. 696/H/16 & C.O. 47/H/16 M/S MVVS-ALIENS (JV) OF ASSESSMENT PROCEEDINGS, THE AO DISALLOWED THE EN TIRE PAYMENT MADE TO M/S ALIENS DEVELOPERS PVT. LTD. HOLDING TH AT SUCH PAYMENTS ARE COVERED U/S 194C OF THE ACT, FOR WHICH THE ASSE SSEE HAS FAILED TO DEDUCT TAX. APPLYING THE PROVISIONS OF SECTION 40(A )(IA) OF THE ACT, AN AMOUNT OF RS. 6,78,11,398/- WAS DISALLOWED AND ACCO RDINGLY BROUGHT THE ENTIRE PAYMENT TO TAX. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT(A). DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE SUBMITTED AS BELOW: A) THE CONSTITUENTS OF THE JV HAVE AGREED TO EXECUT E THE CONTRACT AND THIS SAID FACT IS MADE KNOWN TO THE GO VERNMENT AUTHORITIES AT THE TIME OF ENTERING INTO AGREEMENT; B) THE AGREEMENT BETWEEN THE JV AND THE CONSTITUENT S CANNOT BE TERMED AS A SUB CONTRACT AGREEMENT. THE PETITIONER FOR THIS PROPOSITION, RELIES ON THE FOLLOWING DECISIONS: (I) THE DECISION OF THE HON'BLE ITAT, HYDERABAD BEN CH-A IN THE CASE OF MADHUCON SINO HYDERO(JV) IN ITA NO. 646 & 701/HYD/2010. (II) TRANSSTORY (INDIA) LTD. VS ITO REPORTED IN 134 ITO 269 (VISAKHA) HYUNDAI ROTEM CO., KOREA/MITSUBISHI CO., JAPAN REPORTED IN 323 ITR 2377 (III) THE DECISION OF THE ITAT, HYDERABAD BENCH-A I N THE CASE OF SOMA ENTERPRISES LTD., IN ITA NO. 1116 & 1117/H/201 0. IN VIEW OF THE ABOVE, THE PROVISIONS OF SEC. 194C H AVE NO APPLICATION. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THA T THE AMOUNTS WERE PAID DURING THE PREVIOUS YEAR AND THE AMOUNTS DID NOT REMAIN PAYABLE AT THE END OF THE YEAR. THE PROVISIO NS OF SEC. 40(A)(IA) ARE APPLICABLE ONLY WHEN THE AMOUNT REMAI NS PAYABLE. IN THE CASE OF THE APPELLANT, FOR THE ASSESSMENT YE AR 2011-12, OUT OF THE SUB-CONTRACT AMOUNT OF RS. 6,78,11,398/- AN AMOUNT OF RS. 5,67,16,736/- WAS ALREADY PAID. THEREFORE, IN V IEW OF THE FOLLOWING DECISIONS, THE PROVISIONS OF SEC. 40(A)(I A) HAVE NO APPLICATION TO THE FACTS OF THE PETITIONER'S CASE. (I) THE DECISION OF THE VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT, RANGE-1, 3 ITA NO. 696/H/16 & C.O. 47/H/16 M/S MVVS-ALIENS (JV) VISAKHAPATNAM VIDE ORDER IN ITA NO. 477/VIZ/2008 DT . 29.03.2012 REPORTED IN 136 ITO 23 (II) THE DECISION OF THE HON'BLE ITA T, BANGALORE B ENCH-B IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1 , UDUPI VS ANANDA MARAKA/A REPORTED IN (2014) 48 TAXMANN.COM 4 02 (BNGALORE- TRI) 'IT IS FURTHER SUBMITTED THAT THE RECIPIENT I.E. AL IENS DEVELOPERS PVT. LTD. IS ASSESSED TO INCOME TAX. THEY ADMITTED THE AMOUNT AS THEIR RECEIPT AND FILED THEIR RETURNS OF INCOME. CO PIES OF THE RETURNS OF INCOME ARE SUBMITTED FOR KIND PERUSAL OF THE HON'BLE PRINCIPAL COMMISSIONER OF INCOME TAX. IN VIEW OF TH E AMENDMENT MADE TO THE PROVISIONS OF SE.40(A)(IA) OF THE IT ACT WHICH WAS HELD AS RETROSPECTIVE IN THE FOLLOWING CA SES, THE PROVISIONS OF SEC. 409(A)(IA) HAVE NO APPLICATION W HERE THE RECIPIENT ADMITTED THE SAME AS ITS INCOME. (I) THE DECISION OF THE HON'BLE ITAT, BANGALORE BEN CH-C IN THE CASE OF SRI G. SHANKAR, VS ASST. COMMISSIONER OF IN COME TAX , CIRCLE-1, BIJAPUR VIDE ORDER IN ITA NO. 1832/BANG/2 013 DATED 10.10.2014. (COPY SUBMITTED AT PAGE NOS. 18 TO 27 O F THE ANNEXURES). (II) THE DECISION OF THE HON'BLE ITA T, BANGALORE B ENCH-B IN THE CASE OF SRI SM ANAND VS ACIT, CIRCLE 1, BIJAPUR VID E ORDER IN ITA NO. 1831/BANG/2013 DATED 10.10.2014. (COPY SUBMITTE D AT PAGES NO. 28 TO 37 OF THE ANNEXURES).' 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) ADJUDICATED ON THE ISSUE OF SECTION 194C AND 40(A)( IA) AND EXAMINED THE LEGAL ISSUES INVOLVED IN THE APPEAL RELYING ON THE CASE LAWS SUBMITTED BY THE ASSESSEE. RELYING ON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO, WARD 1 4(3), HYDERABAD VS. M/S KCEL MEIL (JV), HYDERABAD AND 13 OTHERS, ORDER DATED 13/01/2014, THE CIT(A) HELD THAT PROVISIONS OF SECT ION 194(2) ARE NOT APPLICABLE WHEN THE JV HAS NOT EXECUTED ANY WORK AN D EITHER OF THE CONSTITUENTS ONLY EXECUTED THE PROJECT ON BACK TO B ACK BASIS. 5. AGGRIEVED WITH THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) IS CORRECT IN DELETING THE ADDITION OF R S. 6,78,46,398/- MADE TOWARDS DISALLOWANCE U/S. 40(A)(IA) OF THE INC OME TAX ACT, STATING THAT THE PROVISIONS OF SECTION 194(C) ARE N OT APPLICABLE TO 4 ITA NO. 696/H/16 & C.O. 47/H/16 M/S MVVS-ALIENS (JV) THE JOINT VENTURE WHEN THE JOINT VENTURE HAS NOT EX ECUTED ANY WORK AND EITHER OF THE CONSTITUENTS ONLY EXECUTED T HE WORK ON BACK TO BACK BASIS? (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) WAS RIGHT IN HOLDING THAT THE AMOUNT PAI D BY THE JOINT VENTURE TO ITS CONSTITUENT FOR EXECUTING THE WORK A WARDED TO THE JV AS PAYMENT NOT COVERED BY SECTION 194C? 6. THE ASSESSEE ALSO PREFERRED TO FILE CO AGAINST T HE ORDER OF THE CIT(A) AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) OUGHT TO HAVE CONSIDERED THE FACT THAT THE RECIPIENT OF THE AMOUNT ADMITTED THE RECEIPT AS ITS INCOME AND PAID TAXES A RISING THEREFROM. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DELETED THE ADDITION ALSO ON THE GROUND THAT T HE RECIPIENT IS TAXED ON THE ADMITTED AMOUNT PAID BY THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE RECIPIENT IS ONE OF THE CONSTITUENT OF JOINT VENTURE AND HENCE NO TDS AS RE QUIRED U/S 194C NEED BE MADE. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 7. LD. DR OBJECTED TO FILING OF C.O. BY THE ASSESSE E AGAINST THE ORDER OF THE CIT(A) ON THE GROUND THAT ON THE ISSUE S WHICH WERE NOT ADJUDICATED BY THE CIT(A), ASSESSEE CANNOT FILE A C .O. AGAINST SUCH ORDER, BUT, ASSESSEE CAN FILE APPEAL AGAINST THE OR DER OF CIT(A) INDPENDENTLY. HE CONTENDED THAT CIT(A) HAS NOT GONE INTO THE FACTS OF THE CASE, BUT, MERELY RELYING ON THE CASE LAWS SUBM ITTED BY THE ASSESSEE, ADJUDICATED THE ISSUE, WHICH IS NOT PROPE R. FOR THIS PROPOSITION, LD. DR RELIED ON THE DECISION OF THE I TAT, BANGALORE BENCH IN THE CASE OF DCIT VS. INDO AMERICAN HYBRID SEEDS INDIA (P) LTD., [2017] 183 TTJ (BANG) 474, WHEREIN THE COORDI NATE BENCH HAS HELD AS UNDER: 16. FROM A BARE PERUSAL OF THE ABOVE PROVISION, IT IS CLEAR THAT THE LEGISLATURE HAS CHOSEN TO USE THE EXPRESSION AG AINST SUCH ORDER OR ANY PART THEREOF WHICH MEANS THAT CROSS-OB JECTIONS CAN BE FILED WITH REFERENCE TO SAME GROUND OF APPEAL WH ICH IS ADVERSELY DECIDED AGAINST THE RESPONDENT IN APPEAL. IF THERE HAS 5 ITA NO. 696/H/16 & C.O. 47/H/16 M/S MVVS-ALIENS (JV) BEEN NO ADJUDICATION ON ANY OF THE GROUNDS OF APPEA L RAISED BEFORE THE CTT(A). THE CROSS-OBJECTIONS CANNOT BE F ILED ON SUCH A GROUND, THOUGH RAISED BUT NOT DECIDED SPECIFICALLY. IF THE ASSESSEE IS AGGRIEVED BY NON-ADJUDICATION PER SE, A SSESSEE CAN COME BEFORE THE TRIBUNAL ONLY BY WAY OF AN APPEAL O NLY. THUS, HAVING REGARD TO PLAIN PROVISIONS OF STATUTE, IN AB SENCE OF NON- ADJUDICATION OF GROUND BY THE CIT(A), ASSESSEE CAN COME ONLY BY WAY OF APPEAL BEFORE THE TRIBUNAL. NOT BY WAY OF CR OSS- OBJECTIONS. IN THE PRESENT CASE, THE CIT(A) HAD NOT ADJUDICATED THE GROUNDS RELATING TO VALIDITY OF THE REASSESSMEN T PROCEEDINGS FOR NON-FURNISHING OF REASONS AND MERITS OF THE ADD ITIONS INVOLVED. WE HOLD THAT THE CROSS OBJECTIONS ARE NOT MAINTAINABLE AND DISMISSED AS SUCH. 8. ON MERIT, LD. DR SUBMITTED THAT THE AO HAS SERVE D NOTICE ON THE ASSESSEE AND ASSESSEE HAS NOT SUBMITTED PROPER INFO RMATION BEFORE THE AO AND THEREFORE BASED ON THE INFORMATION AVAI LABLE ON RECORD, THE AO HAS COMPLETED THE ASSESSMENT. 9. LD. AR SUBMITTED THAT THE ASSESSEE HAS FILED C.O . ON 29/08/2016 AND AS PER THE AMENDED PROVISIONS OF SEC TION 253(4), WHICH WAS AMENDED ON 2012, AS PER WHICH, ASSESSEE C AN FILE C.O. FOR THE SUBMISSIONS WHICH WERE MADE BEFORE THE CIT(A) W HETHER CIT(A) PREFERS TO ADJUDICATE THE MATTER OR NOT, ASSESSEE C AN FILE CO ON THE ISSUES ALREADY RAISED BEFORE THE CIT(A). 9.1 LD. AR FURTHER SUBMITTED THAT ASSESSEE HAS FILE D RETURN OF INCOME AND FINANCIAL DATA AND ALL THE INFORMATION W AS ALREADY AVAILABLE ON RECORD TO COMPLETE THE ASSESSMENT. ALL THE RELEVANT INFORMATION WAS ALREADY SUBMITTED BEFORE THE AO. 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. WE HAVE NOTICED THAT CIT(A) HAS ADJUDICA TED ON THE ISSUE OF SECTION 194C AND THE PROVISIONS RELATING TO SECT ION 40(A)(IA) OF THE ACT RELYING ON VARIOUS CASE LAWS AS WELL AS RELYING ON VARIOUS DECISIONS OF TRIBUNAL. WE HAVE NOTICED THAT CIT(A) HAS NOT GONE INTO THE FACTS OF THE CASE AND NOT VERIFIED THE FINANCIA L DATA AND ITS RELEVANCE TO TDS PROVISIONS AND ALSO AS TO WHO HAS EXECUTED THE WORK. IN OUR CONSIDERED VIEW, INFORMATION FILED BY THE ASSESSEE 6 ITA NO. 696/H/16 & C.O. 47/H/16 M/S MVVS-ALIENS (JV) NEEDS TO BE VERIFIED ALONG WITH THE BOOKS OF ACCOUN T. THEREFORE, WE DEEM IT FIT AND PROPER TO REMIT THIS MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO VERIFY THE INFORMATION SUBMITTED BY TH E ASSESSEE ALONG WITH THE LEGAL ISSUES RELATING TO PAYMENTS MADE U/S 194C OF THE ACT. ASSESSEE MAY BE GIVEN PROPER OPPORTUNITY OF BEING H EARD. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE ALLO WED FOR STATISTICAL PURPOSES. 11. EVEN THE C.O. FILED BY THE ASSESSEE IS ALSO REL EVANT AND NEEDS VERIFICATION AT THE LEVEL OF AO AND, THEREFORE, THE GROUNDS RAISED IN CO ARE ALSO REMITTED BACK TO THE FILE OF THE AO FOR VERIFICATION/EXAMINATION. 12. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A ND THE CO BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 17 TH MARCH, 2017 KV COPY TO:- 1) ITO, WARD 8(1), ROOM NO. 606, 6 TH FLOOR, SIGNATURE TOWERS, OPP. BOTANICAL GARDENS, KONDAPUR, HYDERABAD 50 0 084. 2) M/S MVSS ALIENS (JV), SY. NO. 384, 385, SPACE STATION, TELLAPUR, HYDERABAD. 3) CIT(A) - 9, HYDERABAD 4 PR. CIT 2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE