TaxTMI 
TaxTMI 
2025 (4) TMI 1661
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....nfracon Pvt. Ltd. and M/s. M.S. Khurana Engineering Ltd. under the name of DRAIPAL-MSKEL and is engaged in the business of execution of construction contracts. National Highway Authority of India [for short NHAI] awarded to a Chinese company M/s. Longjian Road & Bridge Ltd. [hereinafter referred as Main Contractor] to execute work of Rehabilitation and Upgrading of Bhiladi-Jetpur Road Section of NH-8B. The appellant was awarded part of the contract as a Sub-contractor to the Main Contractor (namely Longjian Road & Bridge Ltd.) which was awarded for laying the road in a particular section of Bhiladi-Jetpur Road section NH8B, Km. 52.50 to 117.00. The Running Account Bills were presented to NHAI under the signature of 'Longjian' as Contractor and the assessee as sub-contractor. 2.1. For the asst. year 2007-08, the assessee filed its Return of Income on 07.09.2007 claiming NIL income after claiming deduction of Rs.2,42,98,174/- under section 80IA[4] of the Act. The AO issued a show cause to the assessee asking why should the claim made u/s.80IA(4) of the Act not be disallowed in view of Explanation inserted to section 80IA by Finance Act 2009 w.r.e.f. 1.4.2000. On appellant'....
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....r and the assessee as sub-contractor. Thus the appellant was indeed given a works contract by Longjian Road & Bridge Ltd. Company and is thus covered by the Explanation inserted vide Finance (No.2) Act, 2009 to the provisions of section 80IA (which appear after section 801A(13) with retrospective effect from 1.4.2000 which reads as under: "Explanation- For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1)." According to this Explanation a person awarded a works contract by anybody including state and central government is not eligible for deduction 80IA(4), therefore the disallowance made by the AO of Rs.2,42,98,174 is upheld. 3.1. Regarding the next issue namely disallowance made u/s. 40(a)(ia) of Rs. 18,23,203. The assessee submitted that it had paid financial charges to SREI Pvt. Ltd. on which it was not liable to deduct TDS. Assessee further stated that where recip....
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....ubmissions at length and perused the materials available on record including the Paper Books and Case laws compilation filed by both parties. The undisputed facts are that, the assessee is a Joint Venture between Dinesh Chandra R. Agrawal Infracon Pvt. Ltd. and M.S. Khurana Engineering Ltd. (DRAIPAL-MSKEL) formed as per Agreement dated 26.11.2005. As per the terms of the Agreement the Joint Venture was formed to execute the works as a sub-contractor of "Longjian Road and Bridge Limited Company", the relevant part of the Joint Venture Agreement are extracted hereunder:- "WHEREAS (A) The work of Rehabilitation and Upgrading of Bhiladi-Jetpur Road Section of NH-8B (km 52.50 to k. 117.00) Contract Package II has been awarded by NHAI to Longjian Road and Bridge Limited Company (hereinafter referred to as Longjian). (B) The Longjian have shown their intend to sub contract a part of the contract package, extending from Km. 97 to Km 117 (Jetpur). (C) The parties DRAIPL and MSKEL hereto resolve to form a Joint Venture (hereinafter referred to as JV) to obtain Sub-Contract (To be officially approved by NHAI) of the work of Rehabilitation and Upgrading of B....
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....s entered into by way of Sub-Contract Agreement dated 02-03-2006. The appellant claims though it has been described as "Sub-Contractor" but the nomenclature does not decide the issue, since the appellant received payment directly from NHAI with appropriate TDS. Thus, substance of a transaction/Agreement is to be seen and not merely the Form thereof. On said principle, the appellant placed reliance on the following judgements: (i) Panbari Tea Co. Ltd. (1965) 57 ITR 422 (SC); (ii) Rajiv Kalia (2011) 8 ITR (T) 741 (Delhi Trib); (iii) Mangal Keshav Securities Ltd. (2017) 46 ITR (T) 458 (Mum Trib); (iv) Harmuny Entertainment (P.) Ltd. (2023) 157 taxmann.com 547 (Kol Trib). (v) Kanhaiya Lal Moti Lal (1969) 72 ITR 507 (Allahabad HC); (vi) Maharaja Shri Umed Mills (1984) 148 ITR 72 A (Raj. HC) (vii) Motors & General Stores (P.) Ltd. (1967) 66 ITR 692 (SC). In substance and in practice, it is the appellant who carried out the scope of work assigned and transferred to it, duly so approved by NHAI and not by the Main Contractor/Longjian. It is relevant to note that Main Contractor did not develop the same stretch of road. 5.....
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....e necessary enquiry and pass order in accordance with law by giving proper opportunity of hearing to the assessee 7. Since the assessment is set aside to the file of Jurisdictional Assessing Officer, the second ground namely disallowance u/s. 40(a)(ia) is also set aside to the file of JAO and pass order in accordance with the provisions of law by giving proper opportunity of hearing to the assessee 8. In the result, the appeal filed by the Assessee in ITA No. 2449/Ahd/2010 is allowed for statistical purpose. ITA No. 249/Ahd/2012 for A.Y. 2008-09 9. The Grounds of Appeal raised by the Assessee reads as under: 1.1 The Ld. Commissioner of Income Tax (Appeals) -XV, Ahmedabad erred in sustaining the disallowance of Rs.4,44,75,687/- on account of deduction claimed u/s. 80-IA (4) of the Act. 1.2 The Ld. Commissioner of Income Tax (Appeals) XV, Ahmedabad failed to appreciate that the Appellant was awarded the contract for infrastructure facility by NHAI and further that it was a developer of the same. 2. The Ld. Commissioner of Income Tax (Appeals) -XV, Ahmedabad erred in sustaining the disallowance of Rs.30,43,116/- u/s. 40(a)(ia) for alleged non-ded....
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....ayments to contractors and sub-contractors; insurance commission; payments to non-resident sportsman/sports associations; payments in respect of deposits under National Savings Scheme; payments on account of repurchase or units by Mutual Fund or Unit Trust of India; commission, remuneration or prize on sale of lottery tickets; [rent] [fees for professional or technical services; income in respect of units; ] other sums under section 195; income of foreign companies referred to in section 196A(2); income from units referred to in section 196B; income from foreign currency bonds or shares of an Indian company referred to in section 196C: income of Foreign Institutional Investors from securities referred to in section 196D] Name and address of the person deducting tax TDS circle where Annual Return under section 206 is to be delivered Name and address of the person to whom payment made or in whose account it is credited National Highways Authority of India 301-304, Krishna-Con-Arch-1, Plot No .- 9, Near Kotecha Chowk, University Road, Rajkot - 360 007 (Gujarat). TAX DEDUCTION A/C NO. OF THE DEDUCTOR RKTP 00172 E Assessing Officer (TDS). Rajkot NATURE OF PAYMENT M/s. DRAIPL-MSKEL....