Loading judgment…
Facts
The assessee, a Real Estate Developer, entered into Joint Development Agreements with landowners. The Assessing Officer (AO) treated the assessee in default for not deducting TDS under Section 194IC on payments made under these agreements. The assessee contended that Section 194IC was not applicable and provided bank statements and financial extracts to support their claim.
Held
The Tribunal, considering the facts and interest of justice, decided not to go into the merits of the case. It remanded the matter back to the CIT(A) to reconsider the appeal after examining additional evidence from the assessee and a remand report from the AO.
Key Issues
Whether TDS was deductible under Section 194IC for payments made under Joint Development Agreements, and if the assessee could be treated as an assessee in default.
Sections Cited
147, 148, 143(3), 201(1), 201(1A), 194(IC), 1941C, 45(5A), 194(IA)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2018-19 Gokhale Constructions, Vs. DCIT (TDS), Pune. 2 1175/1, Nirmiti Eminence Mehendale, Garage Road, Pune- 411004. PAN : AAJFG9020D Appellant Respondent Assessee by : Smt. Deepa Khare Revenue by : Shri Ramnath P. Murkunde Date of hearing : 27.01.2025 Date of pronouncement : 25.04.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 16.10.2023 passed by Ld. CIT(A), Pune-11 [‘Ld. CIT(A)’] for the assessment year 2018-19.
The appellant has raised the following grounds of appeal :-
1. The ld CIT(A) erred in law and on facts in confirming the action of DCIT(TDS) in treating the assesse in default within the meaning of section 201(1) and 201(1A) of the Act for not deducting tax u/s 194(IC) in respect of payments made under various Joint Development agreements without appreciating that the provisions of Section 194(IC) were not applicable.
2. The ld CIT(A) erred in law and on facts in not appreciating that the liability to deduct tax at source u/s 194(IC) arises in respect of payments under the agreements referred to in Section 45(5A) which deems the consideration received or accruing only in the year of completion and therefore the liability to deduct would arise in the year of completion of project.
3. The ld CIT(A) erred in law and on facts in confirming the action of DCIT(TDS) in treating the assesse in default within the meaning of section 201(1) and 201(1A) of the Act for not deducting tax u/s 194(IC) in respect of payments made under the various Joint Development agreements without appreciating that provisions of Section 1941C were applicable to any sum by way of consideration within the meaning of the respective agreements and will not apply to amounts paid or credited before falling due or subject to specific conditions within the meaning of respective agreements.
4. Without prejudice to the above Grounds, the ld CIT(A) erred in law and on facts in not appreciating the fact that the AO has demanded TDS on those payments which were neither due nor paid during the AY 2018-19, even after producing the bank statements and extracts from the audited financial statements of the Appellant before him.
5. The ld CIT(A) erred in law and on facts in not appreciating that the respective payments or credits though made during the year were made subjective to specific conditions in the agreements and can be treated as paid or due only on the fulfillment of the respective conditions.
6. The ld CIT(A) erred in law and on facts in not appreciating that the meaning of specified agreements u/s 45(5A) would have to be seen with reference to the each of the recipient individual landowner's separately and not to all the co-owners collectively.
7. The ld CIT(A) erred in law and on facts in not appreciating that the liability to deduct tax under the joint development agreements is subject to debate of applicability of provisions of two sections i.e 194(IC) or 194(IA) and when two or more provisions are applicable, the interpretation as to applicability of provisions more beneficial to the assessee may be adopted.
8. Whether on facts and in circumstances, the benefit of proviso to Section 201(1) be given to the appellant for not treating him as "an assessee in default” on fulfillment of the conditions stated in the said proviso.
The appellant craves leave to add, alter, modify or substitute any ground of appeal
at the time of hearing.”
3. Facts of the case, in brief, are that the assessee is engaged in the business of Real Estate Development. Survey action u/s 133A of the IT Act was carried out on 16.03.2018 to check TDS compliance. During the survey proceeding, various Joint Development Agreements between the land owners and the assessee were found and were cross checked with books of accounts maintained in tally module on computer. After verification, it was found that the assessee was not complying with TDS provisions of section 194-IC of the IT Act as TDS @ 10% was not deducted on monetary consideration paid to the land owners as per the Joint Development Agreements for following projects:- (i) Project name: Swastishree (land owners names are Vidyadhar P. Dixit, Smt Kunda D. Dixit and Sh. Shridhar Pandurang Dixit). (ii) Project name: Sulabh Monali (land owner name: Shri Jayant S. Abhyankar, Shruti Shridhar Thakur, Mrs. Trupti Shailesh Kulkarni). (iii) Project Name: Shraddha (Land owner name: Sh. Ulhas Dattaray Bhave) 4. The DCIT (TDS), Pune issued the show cause notice to the appellant however the assessee did not attend the proceedings and the DCIT (TDS), Pune passed an order on 23.05.2018 determining liability amounting to Rs.1,06,55,182/- u/s 201(1) and interest u/s 201(1A) of the IT Act.
5. After considering the reply of the assessee, Ld. CIT(A) partly allowed the appeal filed by the assessee. It is this order against which the assessee is in appeal before this Tribunal.
Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) to the extent of upholding the order passed by the DCIT (TDS), Pune is unjustified. Ld. AR further submitted before the Bench that during the course of survey proceedings books of accounts maintained on tally module in computer were find wherein bank account was also maintained and wherein certain entries regarding payments to land owners were made and the DCIT (TDS), Pune has accepted those figures as correct and calculated the TDS liability on the basis of those figures. It was contended before the Bench that the entries made in the tally module bank account were not correct and therefore, the TDS liability determined was also not correct. In support of this contention, Ld. AR produced copy of HDFC Bank Account Statement which was also produced before Ld. CIT(A). Ld. AR submitted before the Bench that most of the land owners have themselves furnished their return of income wherein they have disclosed income on the basis of Joint Development Agreement with the assessee. Accordingly, it was submitted by Ld. AR that since the deductee/payee has already shown their income and paid income tax on such income the assessee should not be treated in default and no demand should be raised in his hands on the basis of non-deduction of TDS u/s 194IC of the IT Act on monetary consideration paid to land owners with regard to Joint Development Agreements. In this regard reliance was placed on first proviso to section 201(1) of the IT Act. Ld. AR also submitted that certain payments were paid in the financial year 2018-19 and the DCIT (TDS), Pune has wrongly imposed TDS during the period under consideration on such payments. Ld. AR produced two paper books wherein various documents such as copy of Joint Development Agreement, copy of land owners ledgers, copy of bank account statements through which payments was made to land owners, copy of challan already deposited by assessee regarding TDS payments, copy of Form 16A and copy of written submission furnished before Ld. CIT(A) and submitted that if one opportunity is provided to the assessee he will furnish the proof regarding payment of taxes by the deductees/payees. Accordingly, Ld. AR requested before the Bench to remand the matter back to the file of Ld. CIT(A) with a direction to provide one more opportunity to the assessee to furnish all the above relevant/additional documents in support of its claim.
7. Ld. DR appearing from the side of the Revenue supported the orders passed by the subordinate authorities and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record including two paper books furnished by the assessee. In this regard, we find that the sole grievance of the assessee is that he is not liable to deduct TDS u/s 194IC of the IT Act as determined by the Assessing Officer and also confirmed by Ld. CIT(A) to certain extent. It was also the contention of Ld. AR that if one opportunity is provided to the assessee to submit further evidences in support of its claim, in the light of first proviso to section 201(1) of the IT Act, he would be able to substantiate the grounds of appeal before Ld. CIT(A). Considering the totality of the facts of the case and the interest of justice, without going into the merits of the case, we deem it appropriate to remand the matter back to the file of Ld. CIT(A) with a direction to decide the appeal after considering the additional evidences, if any, furnished by the assessee before him as well as after calling remand report from the AO in this regard and then pass a speaking order as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby