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TMI Blog2012 (10) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by it and not just showing apportionment of receipts/payments and assets/liabilities between its members. 4. The learned Commissioner of Income-tax (Appeals) erred in failing to appreciate that the work contract orders issued to the assessee by the contractee were in its name and so also the payments were credited to the assessee's account. As such, re-allocation of these contracts among the members of the assessee amounts to sub-contracting. 5. The learned Commissioner of Income-tax (Appeals) erred in failing to appreciate that as the payments made by the assessee to members were clearly towards sub-contract, tax was deductible from such payments u/s 194C and in view of the assessee's failure to do so, the Assessing Officer was perfectly justified in applying the provisions of sec. 40(a)(ia) of the Income-tax Act, 1961. 6. The learned Commissioner of Income-tax (Appeals) erred in ignoring the fact that the assessee AOP was in full control of the contract and it was the responsibility of the assessee to submit the bills to and receive payments from MKVDC ltd. which in turn was passed on by the assessee to the coventurers. 7. The learned Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the outset of hearing, Ld. Authorised Representative pointed out that these cases are covered in favour of the assessee by ITAT, Pune Bench, in ITA.No.65/PN/2011 for A.Y. 2006-07 dated 22nd August 2012 in the case of ITO Vs. Gammon Progressive-JV, wherein vide paras 5 to 9 the Tribunal decided similar issue in favour of the assessee by dismissing the appeal of the Revenue, by observing as under: 5. After going through the above submissions and material on record, we find that the first issue is regarding status of the assessee. The Assessing Officer has mentioned the status as firm. However, in the explanation given, the assessee has made it clear that the status in which the returns was filed was that of an AOP. It was explained that in the returns of income since beginning till the A.Y. 2006-07, the status was mentioned as AOP only, i.e., when the returns were filed manually. However, from A.Y. 2007-08, when electronic filing had to be done, due to computer error the status appeared as firm on the ITR acknowledgement, whereas in the computation of total income, it was correctly mentioned as AOP. It was explained that I.T.Return Form No.5 was actually applicable for firms, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract apart from this disallowance u/s. 40(a)(ia) of the Act. The assessee vide its submissions dated 26.03.2010 and 06.09.2010, explained the difference between revenue sharing arrangement entered into by the joint venture vis-a-vis subcontract. It was explained on behalf of the assessee that in the case of sub-contract, there was a relationship of principal and agent whereas in the situation of revenue sharing, it was on a principal to principal basis. Further, in sub-contracting, the contractor retains his share of profit alongwith the TDS and only the balance is passed on to sub-contractor. But in joint venture, assessees did not retain any share in the revenue with it and has passed the entire gross revenue alongwith TDS apportioned for them. It was submitted that the Department has also issued tax apportionment certificates every year during the past eight years to enable the two members to claim the TDS credits in their respective cases. Even in the current assessment year, it was noticed that tax apportionment certificate was issued by the Department vide letter No.Pn/Wd.3(4)/TC/07-08 dated 26.11.2008 of the Assessing Officer in which the Assessing Officer has allowed ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment the stand of the assessee was that the method of apportionment of revenue to the members was not to take any undue benefit of losses incurred by them. Therefore, it was stated that there was no loss to the revenue as a result of this method adopted by the assessee of sharing the gross revenue by its members, which was taxed in their hands. However, this explanation of the assessee did not find favour from the Assessing Officer. The assessee has also raised the issue of consistency stating that the same method was being accepted by the Department in the past 8 to 10 years including A.Y. 2007-08 in which tax apportionment certificate was also being issued. It was contended that this aspect has not been considered in the assessment order u/s.143(3) for A.Y. 2007-08. On the principle of consistency, the Ld. Authorised Representative relied on the decision of Hon'ble Bombay High Court in the case of Gopal Purohit (2010) 228 CTR 582 (Bom.) and assessee also relied on the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT (1992) 193 ITR 321 (SC) wherein it was observed that strictly speaking the principle of res judicata does not apply to income t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as their separate, and neatly identified, work areas are concerned. A mere existence of an AOP cannot lead to taxability in the hands of the AOP unless the AOP receives monies in its own right. We have noted that Hon'ble Authority of Advance Rulings was in seisin of a materially identical situation in the case of Van Oord ACZ BV In Re(248 ITR 399) in which two contractors joined hands for carrying out neatly identified separate work which was a part of composite contract awarded to the AOP, but the taxability of income from such contract was held to be taxable in the hands of the respective contractors. While holding so Hon'ble Authority for Advance Ruling observed as follows: 7. So far as question Nos. 1 and 2 are concerned the parties have specifically ruled out constitution of any partnership between them. There is no sharing of profits or loss. They have specifically provided in the agreement that each party will bear its own loss and retain its profits as and when such profits or loss arise. Having regard to the agreement we are of the view that the applicant cannot be treated as a partnership which can only be created by an agreement. Nor can it be treated as a ..... 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