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2016 (4) TMI 569 - ITAT HYDERABAD

2016 (4) TMI 569 - ITAT HYDERABAD - TMI - TDS credit to the assessee - CIT(A) allowed the claim - Held that:- CIT(A) by considering Income Tax (8th Amendment) Rules, 2011, observed that in the case of the assessee, the payment for work contract was made to the assessee by Bangalore Metro Railway Corporation(deductee); the assessee recorded the receipts of ₹ 69,97,50,697 in its books as its turnover; that what is relevant for purposes of S.199 and Rule 37B(2)(i) is whether the contract rece .....

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RCL to execute the works does not take away the fact that the contract receipts constitute its turnover and the income therefrom was assessable in the hands of the assessee. It is also observed by the learned CIT(A) that it is irrelevant whether the project resulted in a profit for the assessee or whether the assessee chose to sub-contract it to IVRCL on a no-margin basis. With these observations and also by following the decision of the jurisdictional High Court in the case of CIT V/s. Bhooratn .....

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vendra Rao ORDER Per V.Durga Rao, Judicial Member : These appeals filed by the Revenue are directed against similar but separate orders of the Commissioner of Incometax( Appeals)-3, Hyderabad, both dated 19.12.2014, for the assessment year 2011-12. Since a common issue is involved in both these appeals concerning two assessees, who are partners of a joint venture, these appeals are being disposed of by this common order for the sake of convenience. 2. The only common issue involved in these appe .....

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) Company Ltd. (CR 18G) for the purpose of participating in two tenders of Bangalore Metro Railway Corporation Ltd. for ₹ 92.5 crores and ₹ 71.52 crores respectively. On being awarded these contracts, the members of the consortium entered into internal MOUs (dated 30.9.2008 and 30.10.2008) under which it was agreed that compensation fee of 2% of the project value could be paid to CR18G and that IVRCL would be fully responsible for execution of the projects and perform and complete th .....

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ork and the entire project has been given to IVRCL on back to back basis; that income offered by the assessee was only the compensation fee paid to one of the members of the consortium; and that no income had been offered out of contract receipts, as no work has been executed by the assessee. For these reasons and by relying on Rule 37BA(2)(i) of the IT Rules, the claim of the assessee for TDS credit was rejected by the Assessing Officer. 6. On appeal, the learned CIT(A) directed the Assessing O .....

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tion (3) of Section 199, the CBDT may, for the purpose of giving credit in respect of tax deducted at source or' paid in terms of the provisions of Chapter XVII of the Act, make such rules as may be necessary, including the rules for the purpose of giving credit to a person other than those referred to in sub section (1) and sub section (2) and also the assessment year for which such credit may be given 8. Rule 37BA of the Rules framed under Section 199(3) of the Act (introduced with effect .....

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he income-tax authority or the person authorised by such authority. (2) (i) If the income on which tax has been deducted a source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person in cases where- (a) the income of the deductee is included in the total income. of another person under the provisions of section 60, section 61, section 64, section 93 or section 94; (b) the income of a deductee being an association of .....

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the income is assessable in their hands in the same proportion as their ownership of the asset: Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in re .....

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(ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of - (i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the p .....

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ducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee" 10. This amendment has done away with the specified four clauses in the pre-amended Rule 37BA which restricted the benefit of the rule only in four specified situations. It has thus widened the scope of the rule 37 BA thereby enabling the credit of taxes to the actual p .....

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. The appellant recorded the receipts of ₹ 69,97,5O,617 in its books as its turnover. What is relevant for the purpose of sec.199 and rule 37BA is whether the contract receipt formed part of the income computation of the appellant. The fact that the contract receipts were credited to the P&L a/c shows that it was. 13. There is no requirement in the Act that the appellant should execute the works itself. Indeed, it is not possible for any person, leave alone a legal entity like a consor .....

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is regard to the decision in the case of CIT v Bhooratnam & Co. [2013] 357 ITR 396 (AP). In this case, the assessee had entered into a JV agreement for the purposes of preparing and submitting a tender. The Assessing Officer refused to give credit for TDS on the ground that some of the certificates belonged to the JV and some other certificates were in the names of directors and did not relate to the assessee-firm/company. The ITAT accepted the contention of the assessee that the income incl .....

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s of the JV and not the constituent member. However, the ratio of the above decisions applies to the appellant: credit for TDS has to be given to the appellant since the payments on which TDS had been made had been taken into account while assessing the income of the appellant. 7. Being aggrieved, Revenue carried the matter in appeal before us. 8. But for the amounts involved, factual background involved in the other appeal concerning CR18G IVRCL JV, is the same, and the TDS involved for which c .....

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