2021 (5) TMI 583 - AT - Income Tax

TDS u/s 194C - payment made by the AOP to its members - HELD THAT - We notice that on identical facts and circumstances, the Co-ordinate Bench of the Tribunal in the case of ITO Vs. Shraddha Mahalaxmi Joint Venture and others i 2014 (12) TMI 347 - ITAT PUNE after making reference to the several judicial precedents including the case Swapnil RDS Joint Venture, 2014 (12) TMI 320 - ITAT PUNE has provided relief to the assessee on this issue - Decided against revenue.

Summary

Issues Involved:
1. Applicability of Section 194C for TDS on contract receipts transferred to members of a Joint Venture.
2. Taxability of income in the hands of the Joint Venture vs. its members.
3. Consistency in judicial decisions and reliance on previous judgments.

Detailed Analysis:

Issue 1: Applicability of Section 194C for TDS on Contract Receipts Transferred to Members of a Joint Venture
The Revenue contended that the provisions of Section 194C were applicable as the work contract order was issued in the name of the assessee (Joint Venture), and the re-allocation of the contract between the members amounted to sub-contracting. The Assessing Officer disallowed the amount paid to M/s. Shraddha Energy & Infraprojects Pvt. Ltd. under Section 40(a)(ia) of the Income Tax Act, 1961, due to non-deduction of TDS.

The assessee argued that similar issues had been raised in previous assessment years (2009-10, 2011-12, and 2012-13) and were decided in their favor by the CIT(A)-II, Pune, following the decision of the Pune Bench of the Tribunal in the case of Swapnil RDS Joint Venture. The CIT(A) observed that there was no contractor and contractee relationship between the Joint Venture and its members, as the contract receipts, assets, and liabilities were apportioned between the members. Hence, the taxability of the income had to be considered in the hands of the members, not the Joint Venture.

Issue 2: Taxability of Income in the Hands of the Joint Venture vs. its Members
The Revenue argued that the Joint Venture was in full control of the contract, responsible for its completion, submitting bills, receiving payments, and making payments to its members towards sub-contract on which tax was deductible under Section 194C. The CIT(A) held that income should be taxed in the hands of the members, and disallowance should not be made in the hands of the Joint Venture under Section 40(a)(ia) of the Act.

The Tribunal upheld the CIT(A)'s decision, noting that the Pune Bench of the Tribunal in the case of ITO Vs. Swapnil RDS Joint Venture had provided relief to the assessee on this issue. The Tribunal also referenced CBDT Circular No. 07/2016 and judicial opinions in similar cases, supporting the view that the Joint Venture could not be treated as an assessee in default if the payee had filed its return of income and disclosed the receipts.

Issue 3: Consistency in Judicial Decisions and Reliance on Previous Judgments
The Tribunal emphasized the importance of consistency in judicial decisions, especially when the facts and circumstances were identical. The decision in the case of ITO Vs. Shraddha & Mahalaxmi Joint Venture was followed, where it was held that there was no relationship of contractor and sub-contractor between the Joint Venture and its members. The revenue-sharing arrangement did not equate to a sub-contract, and thus, the provisions of Section 194C were not applicable.

The Tribunal dismissed the Revenue's appeal, affirming that the CIT(A)'s order was consistent with previous judicial decisions and supported by relevant CBDT circulars and judicial opinions. The Tribunal also noted that the Revenue could appeal to a higher forum if they found any anomaly in the appreciation of facts by the Tribunal.

Conclusion:
The appeal by the Revenue was dismissed, and the Tribunal upheld the CIT(A)'s decision that income should be taxed in the hands of the members of the Joint Venture, and disallowance under Section 40(a)(ia) should not be made in the hands of the Joint Venture. The Tribunal emphasized the importance of consistency in judicial decisions and reliance on previous judgments in similar cases.