2019 (8) TMI 169 - HC - Income Tax

Member of AOP - whether Deepali Design and Exhibits Pvt. Ltd. ( Deepali ) is in fact a member of the Association of Persons ( AOP ) under the name of Pico Deepali Overlays Consortium ? - Deepali was taxed separately by AO - HELD THAT - There were three members of the AOP. One was Deepali, the other was Pico Event Marketing India Pvt. Ltd. and the third was Pico Hong Kong Ltd. A perusal of the assessment order framed against the AOP shows that the value of the contract performed by the AOP was approximately ₹ 159 crores whereas the assessment was framed at ₹ 405 crores. It was the contention of Deepali before the ITAT that the income earned by it on the part of contract performed by it had in fact been offered by it for tax and an assessment had also been completed against it separately on that basis. Deepali accordingly submitted that on the face of it, the original assessment order itself would have to be revisited not only to determine whether in fact Deepali was still a member of the AOP and, therefore, liable to be proceeded against for the tax liability of the AOP and further on merits whether the assessment had to be of the AOP minus Deepali. As far as the impugned order of the ITAT is concerned, the Court is of the view that the remand of the matter by the ITAT to the AO could not be said to be unwarranted in the facts and circumstances of the case. The impugned order does not give rise to any substantial question of law which requires to be determined by this Court. No substantial question of law

Summary

Issues:
1. Appeal against ITAT order for AY 2011-12
2. Dispute over Deepali Design and Exhibits Pvt. Ltd. as member of AOP
3. Assessment order against AOP and separate assessment against Deepali
4. Arbitral Award dispute between AOP and Department of Sports
5. Attachment of payment on account of arbitral award

Analysis:
1. The High Court heard an appeal by the Revenue against an ITAT order for the Assessment Year 2011-12. The ITAT had remanded the matter to the Assessing Officer to determine if Deepali Design and Exhibits Pvt. Ltd. was a member of the Association of Persons under the name 'Pico Deepali Overlays Consortium.' The Revenue contended that there was sufficient evidence to conclude Deepali's membership in the AOP.

2. The ITAT's order revealed that the assessment against the AOP was done ex parte, with Deepali, Pico Event Marketing India Pvt. Ltd., and Pico Hong Kong Ltd. as members. Deepali argued that it had already offered its income for tax and had a separate assessment done. The ITAT noted the need to revisit the original assessment order to ascertain Deepali's status as an AOP member and whether the assessment should be of the AOP excluding Deepali.

3. The Revenue highlighted separate proceedings related to an Arbitral Award between the AOP and the Department of Sports, Ministry of Youth and Sports, regarding work for the Commonwealth Games 2010. The AOP claimed that since the ITAT set aside the assessment order, there was no outstanding liability. The Court was presented with an order attaching a payment on account of the arbitral award, but it refrained from expressing any view on the matter, leaving it to the Department to take appropriate action.

4. The Court found the ITAT's remand to the AO justified based on the case's circumstances. It concluded that the ITAT's order did not raise any substantial legal questions warranting determination by the Court. Therefore, the appeal was dismissed along with the pending application.