Income Tax Appellate Tribunal - Hyderabad
Hindustan Ratna Jv, Hyd, Hyderabad vs Department Of Income Tax on 21 September, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD "A" 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. The ground raised by the revenue is common, in all the three appeals under consideration, which is as under:
"1. The ld. CIT(A) has failed to appreciate the fact that the assessee JV was liable to deduct tax at source u/s 194C(2) of the Income-tax Act, 1961 on payments made to its constituents and the IT Act does not distinguish between JV formed for the purpose of obtaining contracts and other JV.
3. We refer to the facts in AY 2008-09, to dispose of these appeals.
2ITA NOs. 241, 242 & 243/Hyd/2016 M/s Hindustan Ratna JV
4. Briefly the facts of the case are that the assessee is a 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 the purpose of procuring contracts from Government and other agencies on behalf of its constituents. The survey was conducted u/s 133A on 18/03/2010 to verify the adherence of TDS provisions by the assessee. During the scrutiny proceedings, it was noticed that the assessee had not deducted the TDS on the contract amounts paid to Joint Venture Constituents. The Assessing Officer accepted the contention of the assessee that the constituent companies (HES Infra Pvt. Ltd. and Ratna Infrastructure Projects Pvt. Ltd.) had shown the contract receipts in their books of account and the same had been offered for taxation. 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 (SC), 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/-.
5. In view of the failure on the part of the assessee for non- deduction of tax at source on the above payments, the Assessing Officer initiated penalty proceedings u/s 271C by issuing notice on 28/04/2011. After considering the submissions of the assessee, the Assessing Officer levied penalty u/s 271C of the Act of Rs. 30,04,860/- being the non-deduction of tax at source on contract amounts u/s 194C and audit fee u/s 194J of the Act.
6. 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. 241, 242 & 243/Hyd/2016 M/s Hindustan Ratna JV The Hon'ble ITAT, Hyderabad in 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. 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 the absence of orders under 201(1) and 201(1A), the question of levying penalty u/s 271C would not obviously arise.
7. Aggrieved, the revenue is in appeal before us.
8. Considered the submissions of both the parties and perused the material facts on record as well as the orders of revenue authorities. As observed by the CIT(A), against the order passed by the AO u/s 201(1) & 201(1A), when the assessee appealed before the CIT(A)-II, who passed the order in favour of the assessee. When the revenue appealed before the ITAT against the said order, the ITAT dismissed the revenue appeal by observing as under:
7. We have heard the arguments of both the parties and perused the record. 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".
7.1 As such, we do not find any infirmity in the order of the 4 ITA NOs. 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. The grounds raised by the revenue, which are common in all the years under consideration are dismissed."
As the quantum issue was dismissed by the coordinate bench of this Tribunal, the basis for levy of penalty does not arise and from the records, the penalty order u/s 271C was passed after the quantum appeal was dismissed. Hence, such penalty cannot withstand in the eye of law. Therefore, 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.
8. In the result, all the three appeals under consideration are dismissed.
Order pronounced in the 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) The CIT (A)- 8 , Hyderabad
4) The CIT(TDS), Hyderabad.
5) The 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 the JM/AM
second Member
4 Draft discussed/approved by second JM/AM
Member
5 Approved Draft comes to the Sr.P.S./P.S
Sr.P.S./PS
6. Kept for pronouncement on Sr. P.S./P.S.
7. File sent to the Bench Clerk Sr.P.S./P.S
8 Date on which file goes to the Head
Clerk
Date of Dispatch of order