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TMI Blog2016 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to their work and for the coordination purposes one Lead party Persys SDN. BHD. Is nominated for coordination with DMRC. Therefore, it satisfies all the four conditions mentioned in para no 3 of the circular NO.7/2016. Ld. DR could not point out any clause of the agreement, which does not satisfy any of the above four conditions of the circular. Further by the circular stated above revenue has also reiterated salient features of what would constitute and AOP and held that if the above four conditions are satisfied than the consortium arrangement shall not be treated as an AOP but individual members will be taxed separately. Thus considering the terms and conditions between the parties are squarely falling within the conditions sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains from the execution of contract awarded by DMRC on the basis of a pre-bid agreement dated 17-12-2002 between M/s Persys SON BHD, Malaysia and Punj Llyod Ltd for common purpose, common action and joint and several responsibility for successful completion of the contract as borne out by clauses D of the preamble, para 4.1, and para 11.2 of pre bid JV agreement dated 17-12-2002. (iii) Whether on the facts and circumstances of the case the CIT (A) has erred in holding that there was no sharing of profit and loss, ignoring para 11.2 of the pre-bid JV agreement dated 17-12-2002 which clearly mentions that all the loss damages and liabilities arising out of the project would be borne by the party in proportion to their partici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Persys SON BHD, Malaysia and Punj Llyod Ltd for common purpose, common action and joint and several responsibility for successful completion of the contract as borne out by clause D of the preamble, para 4, and para 11.2 of pre bid JV agreement dated 17-12-2002. (vii) Whether on the facts and circumstances of the case, the CIT(A) has erred in reversing the finding of the AO that the assessee was an AOP ignoring that a Joint Venture Board was constituted to ensure smooth execution of the project and evaluation was not done by the DMRC separately in relation to each member but of the entity which was responsible for executing the contract awarded. (viii) Whether on the facts and circumstances of the case, the CIT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame. Therefore, the issue before ld. AO was whether the appellant was to be assessed in the capacity of an Association of Person (AOP) or the members of the AOP were assessable to tax separately in their individual capacity, on this issue, Ld. AO took a stand that the appellant is assessable in the capacity of an AOP . 4. On Appeal before CIT (A) he decided this issue in favour of the appellant holding that facts of the present case is similar to the facts of following cases namely:- a. Van OORD ACZ BV 248 ITR 399 (AAR b. Geo Consultants V DIT 304 ITR 283 c. Hyundai Rotem Co 323 ITR 277 (AAR) Based on the above three decision Ld. CIT (A) held that there was no intention between the parties to create a partnership hence the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. a separate entity for charging tax. The claim of taxpayers, on the other hand, is contrary to this view. This has led to tax disputes particularly in those cases where each member of the consortium, although jointly and severally liable to the contractee, has a clear distinction and role in scope of work, responsibilities and liabilities of the consortium members. 2. The term AOP has not been specifically defined in the Income-tax Act, 1961 ('Act') the issue as to what would constitute an AOP was considered by the Apex Court in some cases. Although certain guidelines were prescribed in this regard, the Court opined that there is no formula of universal application to conclusively decide the existence of an AOP and it would ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of a particular case, which need to be taken into consideration while taking a view in the matter. 5. It is further clarified that this Circular shall not be applicable in cases where all or some of the members of the consortium are Associated Enterprises within the meaning of section 92A of the Act in such cases, the Assessing Officer will decide whether an AOP is formed or not keeping in view the relevant provisions of the Act and judicial jurisprudence on this issue. 6. The above may be brought to the notice of all for necessary compliance. 7. We have noted that ld. CIT (A) has also passed the order considering all the above material issues determining whether the consortium is to be taxed as an AOP or Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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