2016 (7) TMI 172

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....61 from the payments made to its constituents. 2. The CIT (A) erred in deleting the disallowance made u/s 40(a)(ia) on the amounts paid to its constituents without deduction of tax at source as required u/s 194C of the I.T. Act, 1961. 3. Any other ground that may be urged at the time of hearing. 2. Ground No.3 is general in nature and hence no adjudication is needed. Ground Nos. 1 & 2 relates to whether the assessee is under an obligation to deduct tax at source u/s 194C of the Act and if not done, whether the assessee falls within the mischief u/s 40(a)(ia) of the Act. 3. Brief facts arising in this case are that the assessee joint venture filed its return of income for the A.Y 2011-12 in the status of AOP on 3.10.2011 admitting inc....

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....e of SMC Ambica JC in ITA No.7698/M/2010 dated 29.07.2011. 4. However, the AO did not accept the contention of the assessee as the provisions of section 194C according to the AO was clearly applicable to the facts of the present case. The AO observed that the assessee is having a direct relationship with the sub contract for execution of work as per contract agreement. Therefore, the assessee JV falls under the ambit of section 194C. Accordingly an amount of Rs. 8,74,39,340 was disallowed u/s 40(a)(ia) and added to the total income of the assessee. Before the learned CIT (A), the assessee submitted that it is an AOP which was only collective name for its members and the contract entered into by the AOP was only for the benefit of its memb....

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....first appellate authority but also brought our attention to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township Pvt. Ltd (2015) 377 ITR 635 (Del.) wherein the High Court has held that the insertion of the second proviso to section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from April 1, 2005, being the date from which sub-clause (ia) of section 40(a) was inserted by the Finance (No.2) Act, 2004. The first proviso to section 201(1) of the Act has been inserted to benefit the assessee. It also states that where a person fails to deduct tax at source on the sum paid to a resident or on the sum credit to the account of a resident, such person shall not be deemed t....

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....constituent members, tax at source was not required to be deducted from the payments made by the assessee AOP to its members, as per the provisions of 5.194C(2), and consequently, there was no question of treating the assessees as in default under 5.201(1). We therefore, uphold the impugned order of the learned CIT(A) and dismiss these appeals filed by the Revenue" 6. We have perused the facts and circumstances in the case, submissions put forth before us by the respective parties herein, the judicial decisions relied on and we arrive at our considered view that the case of the assessee is covered by various judicial decisions placed before us. As per the Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township P Ltd (....