INCOME-TAX OFFICER vs. M/S. SANDEEP JAGDHANE ASSOCIATES & VENKATKRISHNA J.V.,, PUNE

The Revenue in appeal has assailed the findings of Commissioner of Income Tax (Appeals) in deleting disallowance made by the Assessing Officer u/s. 40(a)(ia) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) on payments made by the assessee (AOP) to its constituent members without deducting tax at source.

Shri V.L. Jain appearing on behalf of the assessee/respondent submitted that the assessee (AOP) is a joint venture between M/s. Sandeep Jaghane & Associates and M/s. Venkata Krishna Construction (P) Ltd. The joint venture was formed by its two constituents to bid for contract for construction of Mhaisal Pump House Div.2. The entire contract work has been carried out by the constituents of the assessee (AOP). The entire contract receipts received by assessee from contract were shared by the two constituents of AOP in the ratio of 30% and 70%, respectively. During the course of scrutiny assessment proceedings, the Assessing Officer disallowed the amount paid by the assessee (AOP) amounting to Rs.19,16,85,340/- to its members without deduction of tax and hence made disallowance of the aforesaid amount u/s. 40(a)(ia) of the Act. The ld. AR pointed that similar disallowance was made in assessment year 2011-12. The Commissioner of Income Tax (Appeals) deleted the disallowance. The Revenue carried the matter in appeal before the Tribunal in ITA No. 744/PUN/2015. The Tribunal vide order dated 29-05-2017 after placing reliance on the decision of Co-ordinate Bench in the case of ITO Vs. Swapnali RDS Joint Venture in ITA No. 771/PN/2011 decided on 26-09-2012 upheld the order of Commissioner of Income Tax (Appeals) and dismissed the appeal of Revenue. In the assessment year under appeal, the Commissioner of Income Tax (Appeals) has granted relief to the assessee by following the decision of Tribunal in the case of ITO Vs. Swapnali RDS Joint Venture (supra). The ld. AR contended that the issue

Shri Navaljit Kapoor representing the Department fairly admitted that the issue raised in the appeal is similar to the one decided by the Tribunal in assessee’s own case in ITA No. 744/PUN/2015 for the assessment year 2011-12 (supra).

Both sides heard. Orders of the authorities below perused. The Revenue in appeal has raised 10 grounds. All the grounds are directed towards single issue of deleting disallowance u/s. 40(a)(ia) of the Act in respect of payments made by the assessee/AOP to its constituent members without deduction of tax at source.

We find that in assessment year 2011-12, similar disallowance u/s. 40(a)(ia) was made by the Assessing Officer. The matter travelled up to the Tribunal. In appeal filed by the Revenue, the Tribunal upheld the findings of Commissioner of Income Tax (Appeals) and dismissed the appeal of Revenue. The relevant extract of the findings of Tribunal on the issue are as under : “4. On hearing both the sides, we find the facts of the present case are closely associated with that of the decision of Pune Bench of the Tribunal in the case of ITO Vs. Swapnali RDS Joint Venture (Supra). We have also perused Para 4 of the order of the Assessing Officer in assessee’s own case for the A.Y. 2014-15. Relevant lines as per the said paragraph are extracted as under : “04. . . . . . . . . The AR of the assessee submitted that, in the profit and loss account of the assessee wherein complete receipts are in nature of contracts receipts, which are shared amongst the co- ventures viz., 1. Shri Sandeep Jagdhane and Associates and 2. Shri Venkatkrishna Construction Pvt. Ltd. Thus the income is taxed in the hands of the coventures and its results into the refund of TDS which is deducted.”

The Commissioner of Income Tax (Appeals) in the impugned order has granted relief to the assessee by following the earlier order of Commissioner of Income Tax (Appeals) in assessment year 2011-12 which in turn has followed the order of Tribunal in the case of ITO Vs. Swapnali RDS Joint Venture (supra). The ld. DR has not brought to our notice any decision contrary to the decision of Tribunal. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals). Accordingly, the same is upheld and the appeal of Revenue is dismissed.

In the result, the appeal of Revenue is dismissed.