2017 (3) TMI 955 - AT - Income Tax

TDS u/s 194C - addition u/section 40(a)(ia) - Held that - CIT(A) has adjudicated on the issue of section 194C and the provisions relating to section 40(a)(ia) of the Act relying on various case laws as well as relying on various decisions of Tribunal. We have noticed that CIT(A) has not gone into the facts of the case and not verified the financial data and its relevance to TDS provisions and also as to who has executed the work. In our considered view, information filed by the assessee needs to be verified along with the books of account. Therefore, we deem it fit and proper to remit this matter back to the file of AO with a direction to verify the information submitted by the assessee along with the legal issues relating to payments made u/s 194C of the Act. Assessee may be given proper opportunity of being heard. Accordingly, grounds raised by the revenue are allowed for statistical purposes.

Summary

Issues:
1. Disallowance of payment made to a constituent under section 194C and 40(a)(ia) of the Income Tax Act.
2. Admissibility of cross-objections (CO) filed by the assessee against the order of the CIT(A).

Analysis:
Issue 1: The appeal by the revenue challenged the disallowance of a payment made to a constituent under sections 194C and 40(a)(ia) of the Income Tax Act. The assessee, a joint venture, argued that the payment was not covered by section 194C as the JV did not execute any work, and one of the constituents executed the project on a back-to-back basis. The CIT(A) relied on precedents and held in favor of the assessee, stating that section 194C was not applicable in this scenario. The revenue appealed this decision, questioning the applicability of section 194C and the payment made by the JV to its constituent for work execution. The case was remitted back to the AO for further verification and examination, giving the assessee an opportunity to be heard.

Issue 2: The assessee filed cross-objections (CO) against the CIT(A)'s order. The revenue objected to the CO, arguing that the CIT(A) had not adjudicated on certain grounds, making the CO not maintainable. The Tribunal considered the legal provisions and dismissed the CO. However, the Tribunal acknowledged the relevance of the CO and remitted the grounds raised in the CO back to the AO for verification and examination. Both the appeal of the revenue and the CO by the assessee were allowed for statistical purposes, emphasizing the need for further verification and examination by the AO.

In conclusion, the judgment addressed the disallowance of payment under sections 194C and 40(a)(ia) of the Income Tax Act, highlighting the importance of verifying information and legal issues relating to payments made by the JV. Additionally, the judgment clarified the admissibility of cross-objections and emphasized the need for thorough examination and verification by the assessing officer.