Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (11) TMI 118 - KARNATAKA HIGH COURT

2016 (11) TMI 118 - KARNATAKA HIGH COURT - TMI - TDS liability arises or not - nature of agreement - Contract v/s joint venture - Held that:- We cannot accept the submission of the learned counsel for the appellant-revenue for two- fold reason; one is that, there is enough material to show that the amount received of the contract was directly shared by the assessee and Sri Bapuji as per their proportionate share and the second is that: it was not a matter where the money/the amount realized of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctor. Further, additional aspect is that, when the respective share is received by the assessee, it has been shown as the income by the assessee in the return of income. Same is the situation for the respective share of Sri Bapuji who has shown its income of the amount received by it. Under these circumstances, it is not possible for us to agree with the submission of the learned counsel appearing for the appellant-revenue that the finding of the Tribunal that it was of joint venture between the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Construction Works (2008 (1) TMI 564 - KARNATAKA HIGH COURT). When the issue is already covered by the decision of this Court, it cannot be said that any substantial questions of law would arise for consideration. - ITA NOS.103-104/2011, ITA NOS.155-156/2011, ITA NO.343/2012, 70/2014, 71/2014 AND 233/2015 - Dated:- 31-8-2016 - Jayant Patel And S. N. Satyanarayana, JJ. For the Appellants : Sri. E I Sanmathi, Advocate For the Respondent : Sri Chythanya K.K, Advocate JUDGMENT Considering the facts .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ime of admission, the questions are differently framed but considering the facts and circumstances of the case, it appears to us that the above referred question would remain as common in all the matters and additionally one more question can to be formulated and the same is as to: whether considering the facts and circumstances of the case Section 40(a)(ia) of the Income Tax Act, can be made applicable or not ? 3. Hence all the group of appeals needs to be considered on the basis of the above r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee as well as by Sri Bapuji), the rest of the amount (amount of the contract minus the amount already shown in the return by the assessee) was disallowed and the same was added to the profit/income and the assessment order was passed. In the appeal before CIT (Appeals), it was held that the amount received by Sri Bapuji could not be assessed as the assesse s income and therefore the disallowance and the resultant addition in the income was deleted. In the appeal before the Tribunal in ITA .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

both the parties, it is observed that it is the assesee who has submitted the tender while it is Sri Bapuji who has deposited the requisite EMD. Both the parties have opened a joint Bank account even prior to entering into agreement. It is also evident that Sri Bapuji is authorized to operate the said account. From these facts, it is to be examined if it is diversion of income by overriding title or it is mere application of income. The learned Departmental Representative had submitted that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bligations no doubt there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obligated to apply out of his income and an amount which by the nature of obligation cannot be said to be a part of the income of the assessee. Where, by the obligation, income is diverted before reached the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

octrine of diversion of income by overriding title, the first and foremost condition to be satisfied is the nature of the assessee s obligation, whether by the obligation, the income is diverted before it reaches the assessee, or whether the income is required to be applied to discharge an obligation after such income reaches the assessee. In the case before us, we find that the agreement is entered into by the parties even before the contract is awarded and the receipt can be appropriated by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent between the assessee and Sri Bapuji shows that he is entitled to all the benefits of the contract but no obligation of the contract are fastened on to him. Thus, the obligation of the contract are still with the assessee and therefore, it cannot be said that the assessee was only lending his name whereas in the letter and spirit the contract is to be executed and the receipts enjoyed by Sri Bapuji. Therefore, as the contract, assessee is entitled to receive the contract receipts and it is th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

act. The agreement between the assessee and Sri Bapuji is prior to the award of the contract and both of them have opened a joint account to enable Sri Bapuji to appropriate the receipts. Thus it can be seen that it is more in the nature of a joint venture and is not a sub-contract. In such a case, the assessee would not be liable to deduct tax at source. As this angle of the issue has not been looked into by the authorities below, we deem it fit and proper to remand this issue to the file of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Engineering & Construction Works Vs. JCIT (Asst) in ITA Nos.283 & 284/Bang/2002 Dt. 15.11.2002 wherein considering the disallowance under section 40(3) of the Income Tax Act, 1961, it was held that the payment made to sub-contractors have not been claimed as a revenue expenditure and the appellant is merely acting as a conduit for channelizing the contract amount received from the Govt. departments to the sub- contractors, who have actually spent the amounts and therefore such payments d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ereafter and the fact that entire TDS has been deducted from his payment proves that the contention of the assessee that it is not showing the receipts and not claiming the payment is not correct. As regards the decision relied upon by the assesseee, he submitted that it relates to disallowance u/s 40A(3) whereas the issue before us is with regard to disallowance u/s 40a(ia) and therefore, the said decision is not applicable to the facts of the case before us. 9. Having heard both the parties, w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deducted in computing the income chargeable under the head profits & gains of business or profession . (a) ……………………….. (ia) any interest commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub- contractor, being resident for carrying out any work including supply of labour for carrying out any work on which tax is deduct .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it is provided that no deduction shall be allowed in respect of expenditure specified therein. The common feature of both the provisions is that the expenditure specified in the respective provisions shall not be allowed as a deduction unless the assessee satisfies the condition specified therein. Thus, it can be sent hat any expenditure to be allowed as a deduction has to be claimed as such, but in a case where no such claim is made by an assessee, there cannot be any disallowance as held by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d the appeals of the Revenue were dismissed. Under the circumstances, the rest of the appeals for the different assessment year are preferred by the Revenue before this Court. 6. We have heard Mr.E.I.Sanmathi, learned Counsel appearing for the appellants-Revenue and Mr.Chythanya K.K., learned Counsel appearing for the respondent-assessee in all the appeals. 7. As such, the matters can be examined in light of question no.1. The Tribunal, after appreciation of the evidence has found that the agree .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ill not upset the finding of fact unless, such finding of fact is perverse or is contrary to the material on record or based on conjectures and surmises. 8. The learned counsel for the appellant-revenue has not been able to show any material on the basis of which the finding of fact so concluded by the Tribunal that it was in the nature of joint venture was contrary to the material on record. He only contended that, on appreciation of the evidence, the Tribunal ought not to have concluded that i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntract was apportioned as the income of the assessee and thereafter, the portion of it or a major portion was paid by the assessee to Sri Bapuji. When after receipt of the contract amount, the shares are identified and taken by both the parties of the joint venture, it cannot be said as a sub-contract. There is no material brought to our notice by the learned counsel for the appellant-revenue that there was any contract entered into by the assessee to assign the work to Bapuji as sub-contractor. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssee and Sri Bapuji was contrary to the material or based on conjectures and surmises. 10. The aforesaid is coupled with the aspects that, upsetting a finding of fact after appreciation and re- appreciation is outside the scope of judicial scrutiny in exercise of appellate power of this Court. 11. In view of the above, question no.(1) needs to be answered in negative against the revenue and in favour of the assessee. 12. On the second question, since provisions of Section 40a(i)(a) is already re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version