B T Patil & Mahalaxmi v. Principal Commissioner Of Income Tax And Another

Date of Judgment 13.03.2017 in ITA No.100001/2016& ITA No.100011/2017 B T Patil & Mahalaxmi Vs.Principal Commissioner of Income Tax and another IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCHDATED THIS THE 13 DAY OF MARCH, 2017 PRESENT THE HON’BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE Dr. JUSTICE H. B. PRABHAKARA SASTRY ITA. No.100001/2016 & ITA No.100011/201/ BETWEEN: BT PATIL & MAHALAXMIJOINT VENTURE4112, PATSON HOUSEP B ROAD, BELGAUM - 590 003 _ APPELLAN (BY SRI: ARAVIND D KULKARNI, ADV AND" 1)PRINCIPAL COMMISSIONER OF INCOME TAXINCOME TAX OFFICES, FEROX KHIMJIBHAICOMMERCIAL COMPLEX, DR.AMBEDKAR ROADBELGAUM - 590 OOL 2 ASSESSING OFFICER WARD-1(3)INCOME TAX OFFICES, FEROX KHIMJIBHAICOMMERCIAL COMPLEX, DR.AMBEDKAR ROADBELGAUM - 590 OOL RESPONDENTS THESE APPEALS ARE FILED UNDER SECTION 2J60OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE Date of Judgment 13.03.2017 in ITA No.100001/2016& ITA No.100011/2017 B T Patil & Mahalaxmi Vs.Principal Commissioner of Income Tax and another THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE;ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSEDBY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI IN ITANO.166 AND 16/7/PANAJI/2015 DATED 25.08.2015 ANDIRECT THE RESPONDENT NO.Z2 NOT TO PROCEED WITASSESSMENT PROCEEDINGS IN PURSUANCE OF THEORDER OF INCOME TAX APPELLATE TRIBUNAL, PANAJI INITA NO.166 AND 16/7/PANAJI/2015 DATED 25.08.201TILL THE DISPOSAL OF THIS APPEAL, IN THE INTERESTOF JUSTICE AND EQUITY. THESE APPEALS COMING ON FOR ADMISSION THISDAY,Dr, VINEETKOTHARL,JsDELIVEREDTHEFOLLOWING: JU DGMEN Ti Mr.Aravind D Kulkarni, Adv. for appellant. 1.Tnese appeals nave been filed by the assesseeunder Section 260A of the Income Tax Act, 1961, CIT Act’for snort) purportedly raising a substantial question of lawarising from the order of the learned Income Tax AppellateTribunal dated25.08.7015 2.Para 7 of the order of Tribunal is reproducedbelow for ready reference: "A perusal of the post-bid MOU furtherShows that there is an undertaking between B T Patil & Mahalaxmi Vs.Principal Commissioner of Income Tax and another the members of the Joint Venture In clause(11) that “the members shall be responsible tomaintain or cause to maintain proper books ofaccounts in respect of business in the J V andsame shall be closed at the end of everyfinancial year.” We are sure that the Assesseemust be maintaining some books of accountsfrom which the profits would be discernable.Here, what further comes to our mind is, if theAssessee is being treated as a Joint Ventureand as an Association of Persons, then, theapportionment of the work between’ thmembers of the Joint Venture would become @sub-contract. In any case, this has not beenlooked into by the AO. In the decision reliedupon by the Id. AR in the case of Shraddha &Mahalaxmi Joint Venture referred to supra it isalso explained tnat the TDS was credited to tnemembers on the basis of tax apportionmentcertificateandtheyhave|accountedthecorrespondingcontractrevenue|Intheinrespective returns but in the present case, theAssessee has not been able to show us anysuch apportionment certificates. A perusal ofthe assessment order in the present case B T Patil & Mahalaxmi Vs.Principal Commissioner of Income Tax and another B T Patil & Mahalaxmi Vs.Principal Commissioner of Income Tax and another snows thet the AO has estimated the income ofthe Assessee at 8% of the contract receipts.He has arrived at the turnover from thecontract receipts. This is not permissible.|Further, the Assessee in his grounds of appealNas also raised tne ground that the Assesseewould be entitled to deduction u/s 80IA of theAct. This has also not been considered by theAO. Before the Id. CIT(A) the Assessee hasspecifically contended that the Assessee is nota contractor but developer of infrastructurefacility as envisaged u/s 80IA(4)(i) of the Act.In these circumstances,|we ere of the viewthat the assessment needs to be reqone bythe AO after granting the Assessee opportunityof peing neard. _Tne Assessee would be atliberty to make_ all claim, even in respect ofthe claim of deduction u/s 80IA and the AOshall consider the issues afresh. In the result,|the assessment orders passed by the AO areset aside in its entirety in respect of tnequantum of assessment and all issues are leftopen before the AO.” Date of Judgment 13.03.2017 in ITA No.100001/2016& ITA No.100011/2017 B T Patil & Mahalaxmi Vs.Principal Commissioner of Income Tax and another3.Learned Counsel for the appellant-assesseehas submitted before us that in view of the later CircularNo.7/2016 (F.No.225/2/2016/ITA.I1), dated QO7.03.2016tnougn the matter has been remanded back to the learnedassessing authority, tne finding given in para 6 by thelearned Income Tax Appellate Tribunal that the assessee inquestion will be assessed as ‘association of person as henas entered into a joint venture, whereas, certainguidelines in CBDT Circular dated 07.03.3016 which wasissued after the order of learned Tribunal was passed on25.08.2015 operates otherwise. 4.We find from the aforesaid para 7/7 that tentire matter has been remitted back by the learnedTribunal to the assessing authority for considering all theissues afresh and the assessee has been given liberty tomake all claims. Since the Circular was issued after theorder of learned Tribunal, the assessee would obviouslyhave the liberty to rely upon the same _ before tassessing authority and irrespective of any observations Date of Judgment 13.03.2017 in ITA No.100001/2016 & ITA No.100011/2017 B T Patil & Mahalaxmi Vs.Principal Commissioner of Income Tax and another made by the learned Tribunal in this regard, the assessingauthority will be free and will have to consider all theissues afresn in accordance witn aforesaid para 7 of thelearned Tribunal, including the effect of Circular dated07.03.2016 on the case of tne assessee. 5 We do not find any substantial question of lawarising in these appeals, which may require our furtherconsideration under Section 260A of the IT Act. 6.These appeals filed by the assessee aretherefore dismissed with the aforesaid observations. Sd/- JUDGE Sd/- JUDGE