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TMI Blog2016 (9) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. In this view of the matter, the assessee Joint Venture cannot be treated as assessee in default in view of the decision of the Hon’ble Delhi High Court in the case of Ansal Land Mark Township (P.) Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT ) and the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shri Chandrakant J. Mandale (supra). Thus, seen from any angle, we find no infirmity in the order of the CIT(A). Accordingly, the appeal of the Revenue is dismissed. - ITA Nos.1957 & 1958/PN/2014 - - - Dated:- 29-7-2016 - SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri J. P. Chandrakar (CIT) For The Respondent : Shri Kishor Phadke ORDER PER PRADIP KUMAR KEDIA, AM : Both the captioned appeals filed by the Revenue are against the consolidated order of CIT(A)-II, Pune dated 28.08.2014 relating to assessment years 2010-11 and 2011-12 passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. Since both the appeals relate to the same assessee and involve a common issue, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar for Kura- Vadhada Gat Parisar Sinchan Yojana, Dist. Jalgaon. Relevant to assessment year 2010-11, the AOP has received gross contract receipts of ₹ 28,32,00,000/- on account of construction of dam. It is the case of the assessee Joint Venture that it did not execute any contract but is merely a conduit for obtaining work, receiving payments against work done by the individual constituents and distribution of amounts in their individual shares as per agreed ratio. Once, the work is allotted to the Joint Venture by the contractee namely Tapi Irrigation Development Corporation Ltd. (Govt. of Maharashtra undertaking), entire work is executed by Shraddha Energy and Infraprojects Pvt. Ltd. alone. No work has been executed by Prasad Company Pvt. Ltd.. Hence, Prasad Company Pvt. Ltd. is not entitled for any profit or responsible for any loss. The transactions for the entire work are duly recorded in the books of Shraddha Energy and Infraprojects Pvt. Ltd. and Joint Venture is not concerned with any activity of the execution of the work. Gross receipts are received by the Joint Venture which are deposited in the bank account opened in the name of Joint Venture. Thereafter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the facts in ITO v/s Swapnali RDS Joint Venture, ITA no.771/PN./2011, order dated 26th September 2012 which has been taken cognizance of by the Assessing Officer in assessment order passed in the case. However, the Ld. Departmental Representative (DR) for the Revenue steadfastly argued that it was the AOP which was responsible for the losses and damages etc. qua the contractee and thus the income is required to be assessed in correct hands which is AOP and cannot be devolved to the constituents member as per their some internal understanding. He, therefore, vehemently submitted that the order of CIT(A) requires to be reversed and order of the Assessing Officer is required to be restored. 8. The Ld. Authorized Representative (AR) for the assessee, on the other hand, drew support for his claim by the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shraddha Mahalaxmi Joint Venture and Others in ITA No.942/PN/2013 and Others, order dated 28.11.2014, wherein the Tribunal in identical facts after considering several decisions on the issue has decided points in issue in favour of the assessee. 8.1 The Ld. AR also relied upon the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said payment was to be distributed in the agreed ratio between the two members of the AOP for carrying out the work. The true ratio in the instant case is 1:0. Such assignments of the work to the members as per the Memorandum of Understanding agreed upon is not equivalent to subcontract per se and thus the assessee AOP was not liable to deduct tax at source out of the amount distributed amongst the members of the AOP in the agreed ratio of respective share. The Assessing Officer, while deciding the chargeability of income in the hands of the assessee did observe that in the case of M/s Swapnali RDS Joint Venture (supra), similar addition under section 40(a)(ia) has been made for the assessment year 2008-09 which has been deleted by the Pune Bench of the Tribunal. However, the Department has not accepted the order of the Tribunal and to keep the issue alive, the amount paid by the AOP to its member without deduction of tax is disallowed and added back to the total income of the assessee in terms of section 40(a)(ia) of the Act. We notice that in the identical facts and circumstances, the Coordinate Bench of the Tribunal in the case of ITO vs. Shraddha Mahalaxmi Joint Venture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, AOPs and BOIs. Therefore, this error might have occurred. The assessee has also filed computation of total income alongwith acknowledgements from A.Y. 2002-03 to A.Y. 2006-07 in which the status was regularly shown as AOP and even in the application form for allotment of PAN it was shown as AOP. The CIT(A) noticed from the record that status was shown as AOP. However, it was not very much relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subcontractor. 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 apportionment of entire TDS of ₹ 9,26,588/- during the year to M/s.Gammon India Ltd., since entire work during the year was carried out by it. Similarly, there has been apportionment to either of the two companies or to both the companies in the earlier years also by the Assessing Officer for enabling them to claim TDS in respective cases. The assessee, vide its submission dated 22.04.2010, fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 tax proceedings since each assessment year was a separate unit in itself and what is decided in one year may not apply in the following year. It was further contended that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds 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 an AOP. In order to constitute an AOP there will have to be common purpose or common action and the object of the association must be to produce income jointly. It is not enough that the persons receive the income jointly. In the instant case, each of the two parties has agreed to bear its own loss or retain its own profit separately. Both have agreed to execute the job together fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is dismissed. 3. Nothing contrary was brought to our knowledge on behalf of Revenue. 4. Facts being similar, so following same reasoning we are not inclined to interfere with the finding of the CIT(A) who has rightly held that there is no question of disallowance made u/s. 40(a)(ia) of the Act. Same is upheld. 11. Since the facts are, mutatis mutandis, identical to the facts and issue decided by the Tribunal in M/s. Swapnali RDS Joint Venture (supra), therefore, following the parity of reasoning, we uphold the order of the CIT(A). Consequently, the grounds of appeal raised by the Revenue are dismissed. 10.2 Respectfully following the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shraddha Mahalaxmi Joint Venture and Others (supra), we are inclined to hold against the Revenue. We simultaneously find that the case of the assessee is fully supported by CBDT Circular No.07/2016 (supra) and judicial opinions expressed in the case of SMSL-UANRCL (JV) (supra) and Linde AG, Linde Engineering Division and Anr. (supra). 10.3 We also simultaneously take affirmative note of the argument on behalf of the assessee that rigours of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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