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Income Tax Officer, Ward 14 (5) , Hyderabad Versus M/s. Palavi-MRKV JV

2016 (7) TMI 172 - ITAT HYDERABAD

TDS u/s 194C - TDS liability - Joint Venture (JV) assessee has given the entire contract to its constituent member M/s. Pallavi Constructions. - Held that:- As per Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township P Ltd (2015 (9) TMI 79 - DELHI HIGH COURT ), once the payee had filed his return and offered the sum received to tax, no disallowance can be made u/s 40(a)(ia) and the assessee would not be treated as an assessee in default. Further the decision of in the case of .....

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ted:- 1-7-2016 - Shri B. Ramakotaiah, Accountant Member and Shri Partha Sarathi Chaudhuri, Judicial Member For Tnhe Revenue: Shri R.B. Naik, DR For The Assessee : Shri K.C. Devdas ORDER Per Shri Partha Sarathi Chaudhuri, J.M. This appeal is preferred by the Revenue against the order of the learned CIT (A)-IV Hyderabad dated 13.02.2015 for the relevant A.Y 2011-12. Grounds raised by the Revenue read as under: 1. The CIT (A) erred in holding that there is no obligation on assessee to deduct tax at .....

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ct tax at source u/s 194C of the Act and if not done, whether the assessee falls within the mischief u/s 40(a)(ia) of the Act. 3. Brief facts arising in this case are that the assessee joint venture filed its return of income for the A.Y 2011-12 in the status of AOP on 3.10.2011 admitting income at Rs. Nil. The return of income was processed u/s 143(1) and refund of ₹ 30,46,100 was issued. Subsequently the return was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were d .....

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act payments. The assessee contended that the TDS provisions u/s 194C are not applicable to the case of the assessee for the year under consideration as the duty of the joint venture was only bidding for the contract by filing the declaration and after bidding, the members of the AOP executed the contract and received the contract receipts and therefore, that there is no contract or sub-contract relationship existed in between the joint venture and its members. The learned AR of the assessee rel .....

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plicable to the facts of the present case. The AO observed that the assessee is having a direct relationship with the sub contract for execution of work as per contract agreement. Therefore, the assessee JV falls under the ambit of section 194C. Accordingly an amount of ₹ 8,74,39,340 was disallowed u/s 40(a)(ia) and added to the total income of the assessee. Before the learned CIT (A), the assessee submitted that it is an AOP which was only collective name for its members and the contract .....

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case of Hindustan Coca Cola Beverages Pvt Ltd (293 ITR 226) wherein it was held that no disallowance u/s 40(a)(ia) could be made in view of the fact that the tax has been paid by the constituent. It is the case of the assessee since the entire amount transferred to the constituent has already been paid to them, no amount remained payable as on 31.03.2011 and therefore, section 40(a)(ia) would not have any application based on the decision of the ITAT Visakhapatnam Special Bench decision in the .....

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arned AR not only reiterated the submissions placed before the first appellate authority but also brought our attention to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township Pvt. Ltd (2015) 377 ITR 635 (Del.) wherein the High Court has held that the insertion of the second proviso to section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from April 1, 2005, being the date from which sub-clause (ia) of section 40(a) wa .....

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is that as long as the payee or resident has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. The AR further relied on the decision of the Coordinate Bench Hyderabad in ITA Nos.323 to 336 and CO 29 to 42 of 2014 in the case of KCEL-MEIL (JV) Hyderabad dated 13.01.2014 wherein it was held by the Tribunal at Para 30 as under: 30. Keeping in .....

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held following two of the three decisions of the Tribunal, viz. of the Visakhapatnam Bench in the case of UAN Raju Constructions (supra) and of the Mumbai Bench in the case of SMC Ambika JV (supra), that there being no relationship of contractor and subcontractor between the assessee AOP joint venture and its constituent members, tax at source was not required to be deducted from the payments made by the assessee AOP to its members, as per the provisions of 5.194C(2), and consequently, there was .....

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