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TMI Blog2018 (7) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of the ld. AO for determination of income of the assessee JV in the light of the aforesaid circular dated 07.03.2016. We make it clear that all the connected factual and legal issues are left open and the assessee is at liberty to adduce fresh evidences, if any, before the ld. AO in support of its contentions. Accordingly, grounds raised by the assessee and revenue are allowed for statistical purposes. - I.T.A Nos. 2355,2356,2357/Kol/2013, I.T.A Nos. 1959,1960 & 1961/Kol/2013 And I.T.A No. 739/Kol/2014 - - - Dated:- 29-6-2018 - Shri S.S. Godara, JM And Shri M. Balaganesh, AM For The Assessee : Shri J.P. Khaitan, Sr. Advocate And Shri Pratyush Jhunjhunwala, Advocate For The Department : Shri Md. Usman, CIT DR Shri S. Dasgupta, Addl. CIT (DR) ORDER Per Bench: 1. These cross appeals of the assessee as well as Revenue for the Asst Years 2006-07, 2007-08 2008-09 respectively are directed against the common orders of the Learned Commissioner of Income Tax (Appeals) XX, Kolkata [in short the ld CITA] in Appeal No. 90/CIT(A)-XX/Wd-34(1)/2008-09/Kol, 195/CIT(A)-XX/Wd-34(1)/2009- 10/Kol and 238/CIT(A)-XX/Wd-34(1)/2010-11/Kol respectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments, BBJ and GIL together did fulfill the required pre-qualification eligibility criteria. Accordingly, BBJ and GIL formed a project-specific Joint Venture, by entering into a Joint Venture Agreement dated 29th November, 2004, for submitting pre-qualification bid for the said project. The assessee JV was pre-qualified by RVNL for submission of the financial bid, vide RVNL s letter dated 15th July, 2004 addressed to the assessee. The joint Financial Bid of ₹ 121,29,05,652/- for the project submitted by the assessee JV was accepted by RVNL vide their Letter of Acceptance dated 15th March, 2005 and thereupon the Project stood awarded to the assessee JV. The assessee JV then entered into a detailed contract agreement with RVNL on 14th June, 2005 (hereinafter referred to as the contract) for execution of the said Project. The relationship between RVNL and the assessee JV is that of Employer and Contractor. The JV is limited to the performance of the Contract for the purpose of achieving the execution of the contract received from RVNL. 3. The assessee furnished its Return of Income for the assessment year 2006-07 on 31.10.2006 declaring a Total income of Rs. NIL and claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income and expenditure account. Accordingly he rejected the books of accounts u/s 145(3) and resorted to estimate the gross profit and net profit of the assessee. The ld. AO ascertained the gross receipts of the assessee JV as per the cash system of accounting followed by it at ₹ 29,99,19,779/-. He observed that the assessee had not deducted tax at source on the payments made to different sub-contractors or to the members of the JV. Accordingly, the payments made to the members of the JV are liable for disallowance made u/s 40(a)(ia) of the Act. The ld. AO considering all the aforesaid facts resorted to estimate the net profit of the assessee JV at 10% of the gross receipts and accordingly determined the net profit at ₹ 2,99,91,978/- and assessed the assessee in the capacity of AOP. 5. The Ld. CIT(A) observed that the action of the ld. AO in ascertaining the gross receipts of the assessee at ₹ 29.99 crores was incorrect in view of the fact that the said figure included the advance portion also which would be taken as income in the subsequent year. He observed that in order to avoid double taxation of the same receipt, it would be just and fair to consider t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 07.03.2016 which is reproduced hereunder for the sake of convenience. Circular No.7/2016 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North Block, New Delhi, the th of March, 2016 Subject: Clarification regarding taxability of consortium members- reg.- A consortium. of contractors is often formed to implement large infrastructure projects, particularly in Engineering, Procurement and Construction ('EPC') contracts and Turnkey Projects. The tax authorities, in many cases have taken a position that such a consortium constitutes an Association of Persons ('AOP') Le. 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 cert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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