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A.C.I.T., Circle 24 (1) , New Delhi Versus Geoconsult-Rites NRT 1JV

2017 (10) TMI 530 - ITAT DELHI

Addition u/s 40(a)(ia) - obliged to deduct tax at source on the payments made to sub-contractors as per provisions of section 194C - CIT-A treating the impugned payments as reimbursement - nature of payment - Held that:- No justification to dislodge the findings reached by the ld. CIT(A) in the impugned order. It is not in dispute that both the parties to whom the impugned payment was made by assessee-AOP were the Joint Venture Members of the assessee-AOP. It is notable that as per clause 9.1 of .....

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ds 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 income or profit, liable to tax deduction at source by the payer - Decided against revenue - ITA No. 3851/Del. .....

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ddition of ₹ 2,65,14,237/- made on account of non-deduction of TDS u/s. 40(a)(ia) of the I.T. Act. 2. On the facts and in the circumstances of the case, the impugned order passed by the Ld. CIT(A) is perverse both in facts and law. 2. The brief facts of the case are that the assessee filed its return of income on 29.09.2009 declaring an income of ₹ 57,76,140/- which was processed u/s. 143(1). The case was selected for scrutiny and statutory notices were issued. On perusal of profit a .....

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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 .....

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he ld. CIT(A), filed a detailed submissions and additional evidences in the form of (a) copy of letter of acceptance dated 17.08.2007 and copy of contract agreement dated 22.04.2008 entered with Nortern Railways Administration, (b) details of employees assigned and cost incurred by GEoConsult ZT GmbH and (c) details of employees assigned and cost incurred by RITES Limited. The ld. CIT(A) called for remand report from the AO and after considering the detailed reply of assessee, remand report of A .....

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s, conjectures and surmises. The AO has presumed that there was a subcontract between the 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 subc .....

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4.5 First and foremost, the appellant is not a "firm" but an "AOP". M/s. GC and M/s. RITES entered into a "Joint Venture Agreement" (JVA) on 18.12.2007 for the formation of an AOP under the name GeoConsult-RITES NRT-1, specifying the mutual rights and obligations of both the parties. A copy of the said JVA is placed on record at page no. 34/PB-I. The JV entered into a contract with Northern Railway and the work to be executed under this contract included exploratory .....

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ts paid by each member of the JV-AOP were to be reimbursed by the appellant in terms of Schedule-II of the JVA. During the relevant A.Y. 2009-10, the appellant-AOP reimbursed expenditure aggregating to ₹ 2,65,14,237/- paid by the JV members for the purpose of execution of the project. The details of the employees assigned and cost incurred by M/s. GeoConsult has been placed on record as additional evidence at page no. 13-22/PB-II. Similarly, details of employees assigned and cost incurred .....

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mbuja Darla Kashlog Mangu Transport Co-op Society and Solan Distt Truck Operators Transport Co-Op Society, Bilaspur District Truck Operators Transport Coop Society Ltd. and Sirmour Truck Operators Union (2010) (227 CTR 299). The Id. AR has also relied upon the decision of Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Truck Operators Union, 339 ITR 532 and also the decision of Hon'ble ITAT, Hyderabad in the case of M/s. Hindustan Ratna JV Vs. ITO in ITA No. 372/Hyd/2013 dt. .....

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by the payee cannot partake the nature of income or profit in its hands and therefore, no tax is deductable at source in respect of payment or reimbursement of such an expenditure by the payer. In the light of the facts and circumstances of the case and the discussion narrated above, it is held that the payments made by the appellant AOP to its JV partners were reimbursement of expenses which were not hit by the provisions of Section 40(a)(ia) of the Act. Therefore, the disallowances made by th .....

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he 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 submitted that the impugned payment was clearly in the nature of re-imbursement to the Joint Venture Members for the cost in .....

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