TaxTMI 
TaxTMI 
2013 (9) TMI 367
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.... part of the work of the JV and not on sub contract. (c) The learned CIT(A) ought to have considered the fact that the work can either be executed by the JV itself or through its constituents and in such circumstances, the member of the JV will not be a sub contractor to the JV and, therefore, the provisions of sec. 194C have no application. (d) The learned CIT(A) erred in confirming the addition made by the Assessing Officer of Rs. 11,40,865/- on the ground that there is a price variation. 3. The Revenue raised the following grounds of appeal: (a) The learned CIT(A) erred in law and on facts of the case. (b) The learned CIT(A) ought to have noticed that amendment made to section 40(a)(ia) by the Finance Act, 2010 is applicable to A.Y. 2010-11 and subsequent years and is not retrospective in nature. As such, the learned CIT(A) erred in directing not to disallow the expenditure since the payments were made before the due date for filing of return of income. (c) The learned CIT(A) should have recognised that the word 'payable' used in section 40(a)(ia) refers to payments which are paid as well ....
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....uld not be disallowed as per the existing provisions of sec. 40(a)(ia). In response, the assessee vide letter dated 3.11.2011 raised the following arguments: (a) The assessee is a JV Firm and if any payments are made to partners of the firm, the same are not covered by TDS as per the IT Act. (b) The assessee has not deducted TDS as per the payments made to the JV partner or as per the bills submitted by the JV partner. (c) At the time of filing quarterly return the assessee mentioned TDS deducted date as the date when the payments are received from the main contractor. (d) The assessee passed JVs in the month of March, 2009 for the total value of work done by the partners. (e) Even though, as per the provisions of the IT Act, the TDS provisions are not applicable, the assessee paid TDS on payments. 7. On a consideration of the above facts and arguments, however, the Assessing Officer found those unacceptable. He felt that the income had been offered in the status of an AOP and not a FIRM. Therefore, there was no relationship like 'Firm and Partner' between the assessee and the sub contractor.....
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....in the said case also TDS was to be deducted and deposited before 31st March. 9. The Assessing Officer further did not accept the assessee's claim that even though the TDS provisions were not applicable, it had paid TDS as a matter of abundant precaution. With regard to the TDS liability of the joint venture on the payments made towards sub contract expenditure of its members, the Assessing Officer noted that the gross contract receipts had been shows as 'revenue receipts' and the sub contract expenditure was debited, showing gross profit on such contract receipts. From the performance scope of the JV, the Assessing Officer concluded that the JV which had entered into a contract with the client was solely responsible for the execution of work and had in turn entered into a sub contract agreement with sub contractors. He noted that the sole agreement and variation clause of the agreement also specified that the JV agreement is the sole agreement and any variation was to be signed by both the parties with the approval of the client. He noted that the assessee had written to the sub contract, accepting their offer for sub contract work, showing that the assessee had sep....
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....against the assessee. On this issue the assessee is in appeal before us. 11. The CIT(A) observed that the Assessing Officer has himself stated that though the assessee deducted TDS on the payments of Rs. 6,96,32,308/- to the above stated 'sub contractors', the TDS so deducted was remitted to the Government account by 30.05.2009. Therefore, there was a violation of the provisions of sec. 40(a)(ia). However, since, admittedly, such remittance was made before the due date of filing of return of income, in the light of decision of the Hon'ble Calcutta High Court in the case. of CIT Vs. Virgin Creations (ITA No. 302 of 2011 dated 23.11.2011), such payment was in conformity with the provisions of sec. 40(a)(ia) also, and therefore, the payments in whose respect the said TDS was made could not have been disallowed. The Assessing Officer is, therefore, directed to verify the claim of payment of TDS on the payments of Rs. 6,96,32,308/- and if those are found as made before the due date of filing of return of income for the A.Y. 2009-10 by the assessee, no disallowance of expenditure relating to such TDS can be made. 12. The CIT(A) further observed that it is the claim of t....
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....d section 40(a)(ia) of the IT Act, 1961. The undisputed fact is that the assessee had shown the following income from contract receipts in its Profit and Loss A/c.: S. No. Name of the project Contract amount (Rs.) 1. Karur Project 5,96,08,031 2. Wajah Rd Project 3,79,41,387 3. Namakkal Project 58,75,328 Total 10,34,24,746 14. From the above gross receipts, the following sub contract expenses are debited in the Profit and Loss A/c. to arrive at the net income: S. No. Name of the project Contract amount (Rs.) 1. Karur Project 5,93,09,992 2. Wajah Rd Project 3,77,45,972 3. Namakkal Project 58,45,951 Total 10,29,01,915 15. Further, the assessee deducted the TDS on the amount of Rs. 6,96,32,308 before 18.2.2009 and that also was not deposited before 31st March, 2009. Being so, the expenditure claimed by the assessee was not allowed by the Assessing Officer. Before us the assessee made a claim that the it is not liable to deduct TDS u/s. 194C of the Act. As seen from the above table, the assessee credited the contract receipt to the Profit and Loss A/c. and al....
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....ndment to section 40(a)(ia) made by Finance Act, 2010 is with retrospective effect from 1st April 2010 extending the time limit for depositing of tax deducted at source in the case of one category of cases is neither aimed at removing any unintended hardship to the assessees nor it is curative or declaratory of the provisions of law and, therefore, it cannot be given retrospective effect. Being so, in view of this order of the Special Bench, we are inclined to hold that the amendment by Finance Act, 2010 to section 40(a)(ia) cannot be applied to the assessment year in dispute i.e., 2009-10. Accordingly, the issue raised in the Revenue appeal in Ground No. 2 is decided in favour of the Revenue and against the assessee. The order of the CIT(A) on this issue is reversed. 17. Coming to Ground No. 3 in Revenue appeal, the CIT(A) placed reliance on the order of the Tribunal Special Bench, Visakhapatnam in the case of M/s. Merilyn Shipping & Transports vs. ACIT, in I.T.A. No. 477/Viz/2008 order dated 29th March, 2012. This order of the Special Bench was suspended by the jurisdictional High Court for the time being. Being so, we remit this issue to the file of the Assessing Officer to d....