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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI ANIL CHATURVEDI, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the Revenue emanates from the order of Ld. Commissioner of Income Tax(Appeals)-3, Pune dated 28.10.2016 for the assessment year 2013-14 as per the grounds of appeal on record.
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The issue involved in the present appeal by Department is with regard to non deduction of TDS u/s.194C of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) in respect of payments made by assessee joint venture to its members.
The brief facts of the case are that the assessee is an AOP engaged in the activity of civil contractors. The return of income for the year under consideration was filed by the assessee on 31.08.2013 declaring total income at Rs. Nil. The Assessing Officer on verification observed that the assessee AOP was formed to submit a joint bid for construction and was in receipt of Rs.7,24,07,696/- as contract charges. The contract charges received were further distributed to its members M/s. Shraddha Energy and Infraprojects Pvt. Ltd. and M/s. Indian Hume Pipe Co. Ld. for executing the work. On seeking explanation, the assessee relied on the judgments favouring its case and also decision of its own case for A.Y. 2009-10 decided in its favour by the Income Tax Appellate Tribunal (ITAT) vide order dated 28.11.2014. However, the same did not find favour with the Assessing Officer because the Department had not accepted the judgment of the jurisdictional ITAT and had further filed appeal before the Hon‟ble High Court against the Pune ITAT decision in assessee‟s own case on 27.04.2015. Further, the contention of the assessee that the payment made by AOP to its members cannot be disallowed u/s.40(a)(ia) of the Act and was also found to be not applicable to the assessee‟s case by the Assessing Officer. Thus, the payment of Rs.7,24,07,969/- paid by assessee AOP to its member was disallowed u/s.40(a)(ia) of the Act and added to the total income of the assessee.
The assessee filed detailed written submissions before the Ld. Commissioner of Income Tax (Appeals) which is on record. The Ld.
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Commissioner of Income Tax (Appeals) after considering the facts of the case, assessment order and the submissions of the assessee held and observed as follows:
“4.3 Decision : I have carefully considered the observations of the Assessing Officer in the assessment order as well as the contentions raised by the AR of the appellant during appellate proceedings. As has been pointed out by the appellant that the Hon’ble ITAT Bench has passed a combined order in its own case and other Joint Venture cases involving similar issue vide ITA Nos.942/943/944/PN/2013 on 28.11.2014. In this order the Hon’ble Bench analyzed the issue in the context of its own decision in ITO Vs. Swapnali RDS Joint Venture in ITA No.771/PN/2011. In that case, the facts of which are identical, the hon’ble Bench has held that there was no relationship of contractor and contractee between the joint venture and its partners and since contract receipts, assets, liabilities were apportioned between the members, therefore, taxability of the income has be considered in the hands of the members and not the joint venture. Since the Hon’ble Bench has already decided the matter in the appellant’s own case for A.Y.2009-10, which has also been followed by my predecessor while adjudicating the appeal in the appellant’s case for A.Ys. 2011-12 & 2012-13, therefore, here too it is held that the income has to be taxed in the hands of the members. 4.4 Reference is also invited to the High Court of Andhra Pradesh Judgment in the case of CIT Vs. Bhooratnam & Company reported at 262 CTR 405 (AP). The question addressed to the High Court was that whether the credit for TDS based on the certificates produced in the name of the joint venture and Directors is not in accordance with Rule 37BA under Income Tax Rules and credit could be denied holding that these do not relate to the assessee firm or company. The Hon’ble High Court after reviewing the evidences gave the following finding: “20. The Revenue cannot be allowed to retain tax deducted at source without credit being available to anybody. If the credit of tax is not allowed to the assessee and the joint venture has not filed a return of income then the credit of TDS cannot be taken by anybody. This is not in the spirit and intention of law. 21. Therefore, in our view the Assessing Officer erred in denying the benefit of the TDS mentioned in the TDS certificate filed by the assessee on the ground that the TDS certificate is issued in the name of the joint venture or a Director and not the assessee.” 4.5 The facts of the case of the appellant mirror the facts of the case before the Andhra Pradesh High Court. Thus, following that judgment and the Hon’ble Pune Bench decision in appellant’s own case vide order dated 28.11.2014 as discussed above, grounds of appeal No.1 to 5 are allowed.”
The Ld. Commissioner of Income Tax (Appeals) has granted relief to the assessee on the ground that matter in assessee‟s own case for A.Ys.2011-12 and 2012-13 were similar to assessment year 2009-10 and on the same
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issue, relief was provided to the assessee. This issue was placed at a favourable footing in respect of the assessee herein. The Ld. Commissioner of Income Tax (Appeals) even based his decision on the ruling of the Hon‟ble Andhra Pradesh High Court in the case of CIT Vs. Bhooratnam & Company reported in 262 CTR 405 (AP).
At the time of hearing, the Ld. AR of the assessee vehemently argued that the issue is squarely covered in favour of the assessee by the decision of Pune Bench of the Tribunal in assessee‟s own case in ITA No.2203/PUN/2014 for the assessment year 2011-12 and in ITA No.36/PUN/2016 for assessment year 2012-13.
Per contra, the Ld. DR contended that the case of the assessee is distinguishable in facts. Though principally, he agreed that the case is squarely covered in favour of the assessee by the decision of Pune Bench of the Tribunal in assessee‟s own cases (supra.) as hereinabove referred.
We have perused the case records and heard the rival contentions, gave considerable thought to the findings of the Co-ordinate Bench of the Tribunal, Pune in assessee‟s own case for assessment year 2012-13. We observe that the Tribunal has held and observed as follows:
“10.2 Respectfully following the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shraddha & Mahalaxmi Joint Venture and Others (supra), we are inclined to hold against the Revenue. We simultaneously find that the case of the assessee is fully supported by CBDT Circular No.07/2016 (supra) and judicial opinions expressed in the case of SMSL-UANRCL (JV) (supra) and Linde AG, Linde Engineering Division and Anr. (supra). 10.3 We also simultaneously take affirmative note of the argument on behalf of the assessee that rigours of section 40(a)(ia) are diluted in the facts of the case since the payee has admittedly filed its return of income disclosing the impugned receipts and income earned by it embedded in the receipt has been duly offered for taxation. In this view of the matter,
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the assessee Joint Venture cannot be treated as assessee in default in view of the decision of the Hon’ble Delhi High Court in the case of Ansal Land Mark Township (P.) Ltd. (supra) and the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shri Chandrakant J. Mandale (supra). Thus, seen from any angle, we find no infirmity in the order of the CIT(A). Accordingly, the appeal of the Revenue is dismissed.” 7. Both the sides are unanimous in stating that the issues involved in the present appeal are identical. Therefore, in the light of decision of co- ordinate Bench in assessee’s own case for the immediately preceding assessment years, the findings of Commissioner of Income Tax (Appeals) are upheld and appeal of the Revenue is dismissed.”
In this decision, the Co-ordinate Bench of the Tribunal, Pune has observed that the strictures of section 40(a)(ia) are diluted in the facts of the case since the payee has admittedly filed its return of income disclosing the impugned receipts and income earned by it embedded in the receipt has been duly offered for taxation. In this view of the matter, the assessee Joint Venture cannot be treated as assessee in default in view of the decision of the Hon‟ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P.) Ltd. reported in 377 ITR 635 (Del.) and the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shri Chandrakant J. Mandale , ITA No.1708/PN/2012 for the assessment year 2008-09 decided on 10.04.2015, the assesee joint venture cannot be treated as assessee „in default‟.
Reverting to the arguments put forth by the Ld. DR regarding distinguishable aspects of the case so far as the facts are concerned, we have perused the orders carefully in the earlier assessment years in assessee‟s own case and the facts are similar in its entirety. We, however, appreciate that on principle; the Ld. DR had fairly conceded that the issue is covered by the decision in assessee‟s own case.
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Therefore, respectfully, following the decision of the Co-ordinate Bench of the Tribunal, Pune for the assessment year 2012-13 as hereinabove referred to for this year also i.e. A.Y.2013-14, the relief provided by the Ld. Commissioner of Income Tax(Appeals) to the assessee is hereby sustained.
In the result, appeal of the Revenue is dismissed.
Order pronounced on 26th day of June, 2019.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 26th June, 2019. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(Appeals)-3, Pune. 4. The Pr.CIT-2, Pune. , आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ववभागीय प्रतततनधध ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
तनजी सधचव / Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune.
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Date 1 Draft dictated on 24.06.2019 Sr.PS/PS 2 Draft placed before author 24.06.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order