Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2017 (10) TMI 530

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... r in the project of Northern Railway, which was reimbursable to them as per above contract entered with the main contractee to execute the project. The ld. CIT(A) has properly examined the details of employees assigned and cost incurred by both the Joint-Venture Members, i.e., GC and RITES and has clearly found that the amount actually incurred by them towards the manpower cost, was reimbursed to them by the assessee-AOP. Therefore, the ld. CIT(A) has rightly observed that it was not any payment made under any sub-contract, as imagined by the AO without any evidence on record. There is no good reason or evidence on record to hold that the expenditure incurred by the Assessee- AOP in the present fact situation would partake the character of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ,910/- to Manpower expenses GC and ₹ 1,22,12,327/- to Man Power Expenses Rites. The AO, therefore, observed that the above amounts have been paid to both the parties towards supply of manpower, but did not deduct tax at source as per provisions of section 194C of the Act. The assessee filed detailed reply before the AO, but the Assessing Officer rejected the same on the reasoning that the assessee made the payment under sub-contract to two parties for supply of manpower and thus, was liable to deduct tax at source as per provisions of section 194C(1); that the payment was not made directly by the assessee firm to the labour; that in the case of sub-contract, the element of profit must exist and therefore, the reply of assessee that th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... appellant-AOP and the two JV partners, namely, M/s. GeoConsult and M/s. RITES. The AO has also presumed that had there been no such sub-contract between the appellant-AOP and the two JV partners, the payment for labour would have been done by the appellant- AOP directly to the labour, rather than routing it through M/s. GeoConsult and M/s. RITES. The AO has further presumed that since there has to be a subcontract between the appellant-AOP and the two JV partners for supply of labour, there also has to be an element of profit embedded in the transaction, which can only be found out by scrutinizing the returns of the two JV partners. Since, I find that the very basis of the arguments put forth by the AO in his Remand Report, is based on pres .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... lt has been placed on record as additional evidence at page no. 13-22/PB-II. Similarly, details of employees assigned and cost incurred by M/s. RITES Ltd. is placed on record as additional evidence at page no. 23-116/PB-II. In the light of the above facts, it is abundantly clear that the money paid by the appellant-AOP to its JV members was actually a reimbursement of expenses with no element of profit therein. It was not a payment made under any sub-contract, which appears to be a mere figment of imagination of the AO. The appellant has relied upon the order of Hon'ble High Court of Himachal Pradesh in the case of CIT Vs. Ambuja Darla Kashlog Mangu Transport Co-op Society and Solan Distt Truck Operators Transport Co-Op Society, Bilaspu .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... n of addition is not justified as the assessee was legally obliged to deduct tax at source on the payments made to sub-contractors as per provisions of section 194C of the Act and the ld. CIT(A) was not justified in treating the impugned payments as reimbursement, observing that there was no profit element in the transactions. The ld. CIT(A) has ignored the finding of the AO that in case of sub-contract, there remains profit elements, which can be ascertained on scrutiny of the cases of the two parties to whom the impugned payment was made. He, therefore, urged for setting aside the impugned order and to restore the assessment order. 4. The ld. Authorized representative of the assessee, on the other hand, relied on the impugned order and .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... htly observed that it was not any payment made under any sub-contract, as imagined by the AO without any evidence on record. There is no good reason or evidence on record to hold that the expenditure incurred by the Assessee- AOP in the present fact situation would partake the character of income or profit, liable to tax deduction at source by the payer. For this proposition, the ld. CIT(A) has relied on several decisions in the cases of CIT vs. Ambuja Darla Kashlog Mangu Transport Co-op. Society Ors. (2010) 227 CTR 299 (HP) and CIT vs. Truck Operators Union, 339 ITR 532 (P H) and M/s. Hindustan Ratna JV vs. ITO, in ITA No. 372/Hyd/2013 dated 18.12.2013 of ITAT Hyderabad Bench, against which no counter decision is relied on behalf of the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates