MADHAV HYTECH ECCI (JV),BANGALORE vs. ACIT, BANGALORE

B. In both the appeals the issues are common, therefore the same are taken up for disposal by a Composite Order. B.1 The assessee in its appeal raised the following grounds; “1 The order of the CIT(A) insofar as the it is prejudicial to the interests of assessee, is against law, weight of evidence and probabilities of the case.

3. The ld.CIT(A) ought to have recognized the position that internal agreements between JV partners would not fall within the mischief of provisions for TDS. Consequently, she ignored the reconciliation statements filed with regard to the mobilization advance and confirmed the addition of such advance u/s 40(a)(ia). She ought to have deleted the addition.

6. For the above grounds and such other grounds that may be urged at the time of hearing the assessee prays that the appeal be allowed.

B.2 In the second appeal in the assessee has raised almost the same grounds except the addition to the tune of Rs.1,07,51,630/- in ground no.4.

B.3 The Ld AR of the assessee contended that the Appellant Madhava Hytech ECCI (JV) had no income in the financial year under question as the same reflects from the Profit & loss balance A/c sheet. It was further argued that the amounts involved in the instant cases were in the nature of mobilization of advance only. But the learned AO, considered the same as income and added the same to the total income and the said orders of the AO were also being confirmed by the learned CIT(A). Its is also submitted by the Ld AR that actual turnover of the Appellant (Madhava Hytech Brahmaputhra(JV) ) was Rs. 428,09,363 after adjusting Mobilization Advance of Rs. 143,57,850/-.

Adjudication of this ground goes to the root of the case and shall be the outcome of the subsequent grounds. 2. GROUND NO.2, the assessee argued that the learned CIT (A) failed to appreciate that the provisions of sec.194C would be applicable only in the case of payer and not in case of payee.

We have given thoughtful consideration to the ground no.2 raised by the assessee and analyzed the sec.194C which reflects that the same is not applicable to the payee as individual, as the amount has been received by the assessee from the BBMP and further transferred to its sister concern for execution of work, therefore the assessee was not supposed to deduct TDS.

On the other hand, the learned DR objected on the submissions of the learned AR and relied upon the CIT (A)’s order.

We have given our thoughtful consideration to the arguments advanced by the parties as well as facts and circumstances of the case and specially orders passed by the authorities below , the amount which is treated and added by the learned AO and confirmed by the learned CIT(A) as income is untenable because the said amount was only mobilization advance and from the documents it clearly reflects that the same was adjusted at the final settlement of the bills. We are of the opinion, that the orders passed by the learned CIT(A) are contrary to the law therefore, the same are set aside and additions are deleted .

4-5. GROUNDS no. 4 and 5 are formal in nature hence does not require adjudication, however GROUND no.1 stands allowed as adjudicated on the aforesaid conclusions .

Consequently, both the appeals are inter-linked and hence allowed.

Order pronounced in the open court on 18-03-2016.