2018 (11) TMI 948 - AT - Income Tax

TDS u/s 194J - professional fees - Held that - The nature of the transactions as explained by Ld. Sr. Counsel is not in dispute since similar facts have been noted by the Tribunal in earlier years. Upon perusal of impugned order, we find that first appellate authority has provided relief to the assessee by relying on the order of this Tribunal for AYs 2006-07 to 2009-10. Nothing on record suggests that the aforesaid order has ever been over-ruled or negated by the orders of any higher judicial authority. Further, following the same order, the appeal of the revenue has been dismissed by the Tribunal for subsequent AYs 2010-11 & 2011-12. Therefore, we find no reason to deviate from the same and inclined to confirm the impugned order. However, the same shall be subject to verification of the fact that similar treatment has been given to the aforesaid payments by AAEPL in its books of accounts and the stated payments have not been claimed as expenditure therein. The Ld. AO is directed to delete the additions after verifying the aforesaid fact, if found correct. The assessee is directed to provide documentary evidences to substantiate the same. Appeal dismissed.

Summary

Issues:
Appeal by revenue contesting deletion of addition of professional fees under section 194J for Assessment Year 2012-13.

Analysis:
The appeal by the revenue challenged the deletion of an addition of professional fees received by the assessee under section 194J for Assessment Year 2012-13. The Income Tax Officer had framed the assessment for the year, assessing the income of the assessee at ?81.19 Lacs after adjustments, as the assessee, a resident corporate entity engaged in building and development, did not reflect any income from business during the assessment. The AO noted receipts of ?155 Lacs from A.A. Estate Private Limited (AAEPL) as an advance amount against projects, which the assessee did not offer for tax, citing the Project Completion Method of Accounting. However, the AO concluded that the assessee was providing professional/technical services to AAEPL based on the agreement terms, treating the receipts as business income after allowing related expenditure.

The assessee appealed the AO's decision, and the CIT(A) deleted the additions, citing decisions from previous years where similar issues were resolved in favor of the assessee. The CIT(A) upheld the appellant's claim that the amount received was an advance and would be quantified upon project completion. The Tribunal also supported this decision, emphasizing that the assessee's remuneration was dependent on project completion, justifying the use of the project completion method of accounting. The revenue further appealed the decision.

During the subsequent appeal, the senior counsel for the assessee reiterated that the issue was previously decided in favor of the assessee for AYs 2006-07 to 2011-12. The nature of the transaction involved the assessee providing services related to property development under an agreement with AAEPL, where the assessee received adhoc payments as advances. The Tribunal, considering the consistent treatment of such payments by AAEPL and relying on previous orders, confirmed the CIT(A)'s decision to delete the additions, subject to verification of AAEPL's treatment of the payments in its accounts.

Ultimately, the Tribunal dismissed the revenue's appeal, maintaining the deletion of the addition of professional fees under section 194J for the assessment year in question. The decision was based on the consistent treatment of payments as advances, in line with previous rulings and the nature of the transaction between the assessee and AAEPL. The AO was directed to verify AAEPL's treatment of the payments before finalizing the deletion of the additions.