ACIT Vs Patel Engineering Limited (ITAT Mumbai)
ITAT Mumbai held that provisions of chapter XVII is not applicable since no work is performed by JV hence no TDS was allowable to be deducted. Accordingly, order of CIT(A) confirmed.
Facts- The assessee is a company and is engaged into the business of execution of civil contracts, construction of roads, toll-ways, bridges, railway tracks, hydroelectric power projects and other infrastructure projects. The assessee is also engaged in the business of real estate development.
During the course of a survey, it was seen that the assessee had defaulted in deducting tax at source on interest paid to AGE Patel Joint Venture (JV) in Financial Year (FY) 2016-17 on Mobilisation advance and Machinery advance. AO held that assessee has violated the provision of Section 194A and interest paid to AGE Patel JV, TDS was required to be deducted @10%. Thereafter, accordingly, the payment of Rs. 1,42,09,790/- was treated in 20 17-18 and likewise in A.Y.2018-19 of Rs.2,07,57,565/- including interest u/s.201(1)(A).
CIT (A) allowed assessee’s appeal following the CBDT Circular dated 22/09/2017 wherein payments to Corporations like IRCON, no tax is to be deducted at source. Being aggrieved, the present appeal is filed by the revenue.
