2011 (1) TMI 1391 - AT - Income Tax

Summary

Issues Involved:
The issue involves the apportionment of Tax Deducted at Source (TDS) between members of a joint venture company based on a TDS certificate issued by the Assessing Officer.

Summary:

The appeal by the Revenue for assessment year 2006-07 was directed against the order of the CIT(A), Guntur dated 15.4.2010. The grounds of appeal raised by the Revenue questioned the apportionment of TDS between members of a joint venture company, contending that there is no provision in law for such apportionment. The Revenue argued that the direction of the CIT(A) to allow proportionate TDS to the assessee as a member of the joint venture company was erroneous in law.

The learned DR supported the Assessing Officer's decision, emphasizing that the TDS certificate was issued in the name of the joint venture company, and there is no legal provision for dividing the TDS amount among the members. On the other hand, the counsel for the assessee argued that since the assessee had claimed its 60% share in the TDS amount in the filed return of income, it was entitled to credit for 60% of the TDS amount. The counsel cited a previous decision by the Hyderabad Tribunal in favor of the assessee.

Upon careful consideration, it was noted that the assessee, a partnership firm engaged in civil contract works, had claimed credit for 60% of the TDS amount based on the TDS certificate issued by the joint venture company's Assessing Officer. The Tribunal found that as per section 199 of the Income-tax Act, 1961, the credit for TDS should be given to the person whose receipts are subject to tax. Therefore, the proportionate credit of the TDS amount should be allowed to individual constituents based on their respective share ratio in the joint venture agreement. Citing a previous decision in the assessee's favor for a different assessment year, the Tribunal confirmed the order of the CIT(A) and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the decision to allow the assessee credit for the TDS amount based on their share ratio in the joint venture agreement.