DCIT,Central Circle - 7, Hyderabad V. M/s Indira Constructions Private Limited, Hyderabad

MA 88/HYD/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2050 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Diversion of income
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER MISC. APPLN. NO.88/HYD/2014 (IN ITA NO.1423/HYD/10) : ASSESSMENT YEAR 2007 - 08 DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 7, HYDERABAD V/S. M/S. INDIRA CONSTRUCTIONS (P) LTD. HYDERABAD ( PAN - AAACI 4452 M ) (APPLICANT) (RESPONDENT) APPLICANT BY : S HRI KIRAN KATTA DR RESPONDENT BY : SHRI A.V.RAGHURAM DATE OF HEARING 11 .0 7 .2014 DATE OF PRONOUNCEMENT 23.07.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: BY THIS MISCELLANEOUS APPLICATION, REVENUE SEEKS RECTIFICATION/RECALL OF THE CONSOLIDATED ORDER OF THIS TRIBUNAL DATED 11.10.2013 IN SO FAR AS IT RELATED TO ITS APPEAL, ITA NO.1423/HYD/2010 FOR ASSESSMENT YEAR 2007 - 08, ON THE GROUND THAT CERTAIN MISTAKES A PPARENT FROM RECORD HAVE CREPT INTO THE SAME. 2. LEARNED DEPARTMENTAL REPRESENTATIVE, REITERATING THE AVERMENTS MADE IN THE PRESENT APPLICATION, SUBMITTED THAT THE REVENUE IN THE ITS APPEAL, ITA NO.1423/HYD/2010, ORIGINALLY RAISED CERTAIN GROUNDS CONTES TING THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE OF OPERATION AND MAINTENANCE CHARGES PAID TO DEEP CORPORATION (P) LIMITED UNDER S.40(A)(IA) OF THE ACT MADE BY THE ASSESSING OFFICER, AND IN THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE TRIBU NAL, RAISED ADDITIONAL GROUNDS, VIDE LETTER IN F.NO.AAAC14452M/2007 - 08 DATED 29.11.2012, TO THE FOLLOWING EFFECT - MA NO.88/HYD/2014 (IN ITA NO .1423 /HYD/201 0) M/S. INDIRA CONSTRUCTIONS HYD ERABAD 2 (A) CIT(A) ERRED ON FACTS AND IN L A W IN GIVING A FIN D IN G THAT THERE IS DIVERSION BY OVERRIDING TITLE TO M/S. DEEP CORPORATION PVT. LIMITED, WHEREAS THE PAYMENTS HAVE A R ISEN FO R ASSESSEE FROM DIFFERENT ENTITIES WHICH AWARDED MAINTENANCE CONTR A CTS TO THE ASSESSEE AND THERE IS NO ME N TION OF ANY PAYMENT TO M/S. DEE P CORPORATION PVT. LIMI T ED IN SUCH CONTRACTS. (B) CIT(A) ERRED IN LAW HOLDIN G TH A T WITH REFERENCE TO PAYM E N T S MADE TO M/S. DEEP CORPO RA TION PVT. LIMI T ED, TDS NEED NOT BE DONE U/S. 194C AND DISALLOWANCE U/S. 40(A)(IA) IS NO T ATTRACTED ON PAYM E N T S OF R S .48, 33,805/ - MADE TO M/S. DEEP CORPORATION LIMI T ED. HOWEVER, IT IS SUBMITTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE TRIBUNAL WHILE DISPOSING OF THE APPEAL OF THE REVENUE, VIDE ORDER DATED 11.10.2013, HAS NOT DISPOSED OF THE ABOVE ADDITIONAL GROUND S, WHICH IS A MISTAKE APPARENT FROM RECORD, WARRANTING RECTIFICATION/RECALL. IN SUPPORT OF HAVING RAISED THE ABOVE ADDITIONAL GROUNDS, ON A QUERY FROM THE BENCH, A LETTER OF THE OFFICE OF THE DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD DATED 2 9.11.2012 HAS ALSO BEEN FILED BEFORE US. 3. IT IS FURTHER POINTED OUT THAT THE TRIBUNAL IN PARA 22 OF ITS ORDER WHILE DECIDING THE ISSUE OF DISALLOWANCE IN TERMS OF S.40A(IA) OF THE ACT, HAS REPRODUCED A PARA FROM THE ORDER OF THE CIT(A), WHICH HAS NO B EARING ON THE ISSUE IN DISPUTE BEFORE IT. THIS IS ALSO A MISTAKE APPARENT FROM RECORD, WHICH NEEDS RECTIFICATION. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE CONTRARY, OPPOSED THE SUBMISSIONS OF THE REVENUE WITH REGARD TO EITHER HAVING RAISED ANY AD DITIONAL GROUNDS, OR HAVING ARGUED ON THE BASIS OF CONTENTIONS RAISED IN THOSE GROUNDS. AS FOR THE OTHER MISTAKE POINTED OUT IN PARA 22 OF THE ORDER OF THE TRIBUNAL, THE LEARNED COUNSEL FOR THE ASSESSEE TOO SUBMITTED THAT THERE APPEARS SOME TYPOGRAPHICAL MISTAKE ON ACCOUNT OF REPRODUCTION OF AN INCORRECT PARA FROM THE ORDER OF THE CIT(A), AS THE PARA EXTRACTED HAS NO BEARING ON THE ISSUE INVOLVED IN THE APPEAL. MA NO.88/HYD/2014 (IN ITA NO .1423 /HYD/201 0) M/S. INDIRA CONSTRUCTIONS HYD ERABAD 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE TRIBUNAL DATED 11.10 .2013, IN THE LIGHT OF THE AVERMENTS MADE IN THE PRESENT APPLICATION. AS FOR THE CLAIM OF THE APPLICANT WITH REGARD TO RAISING OF THE ADDITIONAL GROUNDS, WE FIND THAT EVEN THOUGH COPY OF A LETTER DATED 29.11.2012 PURPORTING TO FILE SUCH ADDITIONAL GROUNDS HAS BEEN FURNISHED BEFORE US, WE ARE NOT CONVINCED WITH THE CONTENTION OF THE REVENUE OF HAVING RAISED SUCH ADDITIONAL GROUNDS. FIRSTLY, COPY OF THE SAID LETTER FURNISHED AS EVIDENCE OF THE CLAIM, DOES NOT BEAR ANY AUTHENTIC STAMP/SEAL WITH THE SIGNATURE OF THE RECIPIENT OF THE REGISTRY OF THIS TRIBUNAL, WITH WHOM IT MIGHT HAVE BEEN FILED, AND SECONDLY AND MORE IMPORTANTLY, IT DOES NOT CONTAIN THE ENCLOSURE, VIZ. THE ADDITIONAL GROUNDS SOUGHT TO BE RAISED. AS SUCH, THAT EVIDENCE FURNISHED CANNOT BE TAKEN AS CLINCHING TO SUPPORT THE VERSION OF THE APPLICANT. EVEN ON EXAMINING THE MATTER IN THE LIGHT OF THE ENTRIES MADE BY US DURING THE APPEAL HEARING, WE DO NOT FIND ANY ARGUMENTS HAVING BEEN MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, EITHER WITH REGAR D TO THE ADMISSION OF THE ADDITIONAL GROUNDS, OR ON THE MERITS THEREOF. THIS POSITION, ALSO CORROBORATED BY THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF THESE RECTIFICATION PROCEEDINGS, LEADS US TO CONCLUDE THAT THE CONTEN TION OF THE REVENUE OF HAVING RAISED ANY ADDITIONAL GROUNDS DURING THE COURSE OF APPEAL PROCEEDINGS BEFORE THE TRIBUNAL OR ANY MISTAKE IN THE ORDER OF THE TRIBUNAL DATED 11.10.2013 ON ACCOUNT OF NON - CONSIDERATION OF SUCH GROUNDS, IS DEVOID OF MERIT, AND HE NCE, THE SAME IS LIABLE TO BE REJECTED. WE DO SO ACCORDINGLY 6. AS FOR THE OTHER MISTAKE POINTED OUT WITH REGARD TO EXTRACTING OF AN INCORRECT PARA OF THE IMPUGNED ORDER OF THE CIT(A) IN PARA 22 OF THE ORDER OF THE TRIBUNAL DATED 11.10.2013, WE FIND M ERIT IN THE CONTENTION OF THE REVENUE. WE ACCORDINGLY, RECTIFY THE SAME BY SUBSTITUTING THE CORRECT PARA OF THE IMPUGNED ORDER OF THE CIT(A), WHICH IS PARA 7.2, IN PLACE OF PARA 5 EXTRACTED EARLIER. AFTER SUCH SUBSTITUTION AND CONSEQUENT MA NO.88/HYD/2014 (IN ITA NO .1423 /HYD/201 0) M/S. INDIRA CONSTRUCTIONS HYD ERABAD 4 RECTIFICATION, PAR AS 22 AND 23 OF THE ORDER OF THIS TRIBUNAL DATED 11.10.2013, SHOULD BE READ AS FOLLOWS 22. THE CIT(A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE AND HAS HELD, VIDE PARA 7.2 OF THE IMPUGNED ORDER, AS FOLLOWS - 7.2 FROM THE ABOVE, IT IS THUS SEEN THAT THE APPELLANT HAS TO SHARE 15% OF THE GROSS MAINTENANCE RECEIPTS COLLECTED DURING THE YEAR, WITH THE OWNER OF THE BUILDING I.E. DEEP CORPORATION PVT. LTD. AS PER SUCH STIPULATION, THE APPELLANT HAS TO PART WITH THAT PORTION OF THE GROSS COLLECTION WITH T HE OWNER OF THE COMPLEX. HAVING REGARD TO SUCH STIPULATION MADE IN THE AGREEMENT, I AGREE WITH THE SUBMISSION OF THE LD. A.R. THAT IT IS A CASE OF DIVERSION OF INCOME AT SOURCE. PARTING WITH THAT PROPORTION OF THE ANNUAL MAINTENANCE RECEIPTS WITH THE BUI LDING OWNER, IN MY VIEW, CANNOT BE TREATED AS EXPENDITURE IN THE HANDS OF THE APPELLANT. UNDER THE CIRCUMSTANCE, THE SAID DISALLOWANCE MADE BY THE AO INVOKING SEC. 40(A)(IA) OF THE ACT, IS NOT JUSTIFIED, AND HENCE THE SAME IS DELETED. 23. WE FIND THAT TH E ASSESSEE HAS TO SHARE 15% OF THE GROSS MAINTENANCE RECEIPTS COLLECTED DURING THE YEAR WITH THE OWNER OF THE BUILDING I.E. DEEP CORPORATION PVT. LTD AD TAKING INTO ACCOUNT THE STIPULATION MADE IN THE AGREEMENT IT IS A DIVERSION OF INCOME AT SOURCE AND NOT AN EXPENDITURE IN THE HANDS OF THE ASSESSEE. HENCE, WE CONFIRM THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SECTION 40A(IA) OF THE ACT, 1961. MA NO.88/HYD/2014 (IN ITA NO .1423 /HYD/201 0) M/S. INDIRA CONSTRUCTIONS HYD ERABAD 5 7. IN THE LIGHT OF THE ABOVE DISCUSSIO N, MISCELLANEOUS APPLICATION OF THE REVENUE IS PARTLY ACCEPTED, AND THE ORDER OF THE TRIBUNAL DATED 11.10.2013 IS RECTIFIED TO THE EXTENT INDICATED ABOVE. 8. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 23 RD JULY, 2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 23 RD JULY, 2014 COPY FORWARDED TO: 1. M/S. INDIRA CONSTRUCTIONS (P) LTD. (HYDERABAD) C/O. SHRI A.V. RAGHURAM, ADVOCATE, 610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 2 . DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) III HYDERABAD 4. COMMISSIONER OF INCOME - TAX II, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S