Dy. Commissioner of Income Tax (TDS), Circle – 1(1), Hyderabad v. M/s Hindustan Ratna JV
[Citation -2016-LL-0921-66]

Citation 2016-LL-0921-66
Appellant Name Dy. Commissioner of Income Tax (TDS), Circle – 1(1), Hyderabad
Respondent Name M/s Hindustan Ratna JV
Court ITAT-Hyderabad
Relevant Act Income-tax
Date of Order 21/09/2016
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags collection and recovery of tax • deduction of tax at source • quantum appeal • audit fee
Bot Summary: Keeping in view, the Hon ble Supreme Court s decision in the case of M/s Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT, 293 ITR 226, the Assessing Officer passed the assessment order by raising a demand of Rs. 3,472/- u/s 201(1) for non deduction of tax on audit fee of Rs. 33,708/- and interest u/s 201(1A) of Rs. 1180/- on audit fee, interest on regular bills Rs. 6,44,186/- and interest on mobilisation advances paid Rs. 3,20,786/-. On appeal, the CIT(A) observed that the CIT(A)-II, Hyderabad vide order dt.10.09.2013 has decided the issue in respect of order u/s, 201(1) 201(1A) for the AY 2008-09 in favour of the assessee 3 ITA NOs. 513, 514 515 for the AYs 2008-09, 2009-10 and 2010-11 had upheld the order of the CIT(A)-II, Hyderabad and dismissed the Departmental appeal filed. The order u/s.271C was passed on 31/03/2014 after receipt of the above said order of CIT(A)-II, Hyderabad and ITAT. 6.1 In view of the above, the CIT(A) held that the issue relating to quantum has been adjudicated by the CIT(A)-II, Hyderabad and ITAT, Hyderabad in favour of the assessee, the basis for levy of penalty does not lie. In assessee s own case for AY 2009-10 vide order dated 18/12/2013 in ITA No. 372/Hyd/2013, the coordinate bench of Jurisdictional Tribunal, held as follows: There is no sub-contract between JV and the constituents and since the JV has been formed only to procure contract works from the Government and the contract is being executed by the constituent partners in their sharing ratio 60:40 as per the terms of Partnership Deed, it cannot be said that the JV is a contractor and its constituents are sub- contractors. 241, 242 243/Hyd/2016 M/s Hindustan Ratna JV CIT(A) in directing the Assessing Officer to delete interest charged u/s 201(1A) on the ground that there is no liability on the JV to deduct tax at source from the payments made to the constituent members and accordingly, the order of the CIT(A) is hereby confirmed. We do not find any infirmity in the orders of the CIT(A) in cancelling the penalty levied by the AO u/s 271C of the Act, and the same is here by upheld dismissing the grounds raised by the revenue in all the appeals under consideration.


IN INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA Nos. 241, 242 & 243/HYD/2016 Assessment Years : 2008-09, 2009-10 and 2010-11 Dy. Commissioner of Income Tax (TDS), Appellant Circle 1(1), Hyderabad. Vs. M/s Hindustan Ratna JV, Respondent Hyderabad. PAN AAEFH0901P Appellant by : Shri A. Sitarama Rao Respondent by : Shri A. Srinivas Date of hearing : 22/08/2016 & 23/08/2016 Date of Pronouncement : 21/09/2016 ORDER PER S. RIFAUR RAHMAN, A.M.: These appeals filed by Revenue are directed against separate order of CIT(A)-8, Hyderabad, all, dated 16/12/2015, for assessment years 2008-09, 2009-10 and 2010-11. 2. ground raised by revenue is common, in all three appeals under consideration, which is as under: 1. ld. CIT(A) has failed to appreciate fact that assessee JV was liable to deduct tax at source u/s 194C(2) of Income-tax Act, 1961 on payments made to its constituents and IT Act does not distinguish between JV formed for purpose of obtaining contracts and other JV. 3. We refer to facts in AY 2008-09, to dispose of these appeals. 2 ITA NOs. 241, 242 & 243/Hyd/2016 M/s Hindustan Ratna JV 4. Briefly facts of case are that assessee is Joint Venture formed by two partnership firms namely M/s HES Infra Pvt. Ltd. and M/s Ratna Infrastructure Projects Pvt. Ltd. It is formed for purpose of procuring contracts from Government and other agencies on behalf of its constituents. survey was conducted u/s 133A on 18/03/2010 to verify adherence of TDS provisions by assessee. During scrutiny proceedings, it was noticed that assessee had not deducted TDS on contract amounts paid to Joint Venture Constituents. Assessing Officer accepted contention of assessee that constituent companies (HES Infra Pvt. Ltd. and Ratna Infrastructure Projects Pvt. Ltd.) had shown contract receipts in their books of account and same had been offered for taxation. Keeping in view, Hon ble Supreme Court s decision in case of M/s Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT, 293 ITR 226 (SC), Assessing Officer passed assessment order by raising demand of Rs. 3,472/- u/s 201(1) for non deduction of tax on audit fee of Rs. 33,708/- and interest u/s 201(1A) of Rs. 1180/- on audit fee, interest on regular bills Rs. 6,44,186/- and interest on mobilisation advances paid Rs. 3,20,786/-. 5. In view of failure on part of assessee for non- deduction of tax at source on above payments, Assessing Officer initiated penalty proceedings u/s 271C by issuing notice on 28/04/2011. After considering submissions of assessee, Assessing Officer levied penalty u/s 271C of Act of Rs. 30,04,860/- being non-deduction of tax at source on contract amounts u/s 194C and audit fee u/s 194J of Act. 6. On appeal, CIT(A) observed that CIT(A)-II, Hyderabad vide order dt.10.09.2013 has decided issue in respect of order u/s, 201(1) & 201(1A) for AY 2008-09 in favour of assessee 3 ITA NOs. 241, 242 & 243/Hyd/2016 M/s Hindustan Ratna JV Hon'ble ITAT, Hyderabad in ITA Nos. 513, 514 & 515 for AYs 2008-09, 2009-10 and 2010-11 had upheld order of CIT(A)-II, Hyderabad and dismissed Departmental appeal filed. order u/s.271C was passed on 31/03/2014 after receipt of above said order of CIT(A)-II, Hyderabad and ITAT. 6.1 In view of above, CIT(A) held that issue relating to quantum has been adjudicated by CIT(A)-II, Hyderabad and ITAT, Hyderabad in favour of assessee, basis for levy of penalty does not lie. Chapter XVII-B deals with collection and recovery of tax deduction of sources. Sections 201(1) and 201(1A) are part of Chapter XVII-B. He concluded that in absence of orders under 201(1) and 201(1A), question of levying penalty u/s 271C would not obviously arise. 7. Aggrieved, revenue is in appeal before us. 8. Considered submissions of both parties and perused material facts on record as well as orders of revenue authorities. As observed by CIT(A), against order passed by AO u/s 201(1) & 201(1A), when assessee appealed before CIT(A)-II, who passed order in favour of assessee. When revenue appealed before ITAT against said order, ITAT dismissed revenue appeal by observing as under: 7. We have heard arguments of both parties and perused record. In assessee s own case for AY 2009-10 vide order dated 18/12/2013 in ITA No. 372/Hyd/2013, coordinate bench of Jurisdictional Tribunal, held as follows: There is no sub-contract between JV and constituents and since JV has been formed only to procure contract works from Government and contract is being executed by constituent partners in their sharing ratio 60:40 as per terms of Partnership Deed, it cannot be said that JV is contractor and its constituents are sub- contractors . 7.1 As such, we do not find any infirmity in order of 4 ITA NOs. 241, 242 & 243/Hyd/2016 M/s Hindustan Ratna JV CIT(A) in directing Assessing Officer to delete interest charged u/s 201(1A) on ground that there is no liability on JV to deduct tax at source from payments made to constituent members and accordingly, order of CIT(A) is hereby confirmed. grounds raised by revenue, which are common in all years under consideration are dismissed. As quantum issue was dismissed by coordinate bench of this Tribunal, basis for levy of penalty does not arise and from records, penalty order u/s 271C was passed after quantum appeal was dismissed. Hence, such penalty cannot withstand in eye of law. Therefore, we do not find any infirmity in orders of CIT(A) in cancelling penalty levied by AO u/s 271C of Act, and same is here by upheld dismissing grounds raised by revenue in all appeals under consideration. 8. In result, all three appeals under consideration are dismissed. Order pronounced in open Court on 21 st September, 2016. Sd/- Sd/- (D. MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 21 st September, 2016 kv Copy to:- 1)ACIT (TDS), Circle 1(1), Hyderabad. 2)M/s Hindustan Ratna JV, Plot No. 39, 8-2-293/A4/A14, BN Reddy Colony, Road No. 14, Banjara Hills, Hyderabad 3) CIT (A)- 8 , Hyderabad 4) CIT(TDS), Hyderabad. 5) Departmental Representative, I.T.A.T., Hyderabad. 5 ITA NOs. 241, 242 & 243/Hyd/2016 M/s Hindustan Ratna JV S.No. Description Date Intls 1. Draft dictated on Sr.P.S./P.S 2. Draft placed before author Sr.P.S/PS 3 Draft proposed & placed before JM/AM second Member 4 Draft discussed/approved by second JM/AM Member 5 Approved Draft comes to Sr.P.S./P.S Sr.P.S./PS 6. Kept for pronouncement on Sr. P.S./P.S. 7. File sent to Bench Clerk Sr.P.S./P.S 8 Date on which file goes to Head Clerk Date of Dispatch of order Dy. Commissioner of Income Tax (TDS), Circle 1(1), Hyderabad v. M/s Hindustan Ratna JV
Report Error