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TMI Blog2019 (12) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... s no involvement of such association of persons in the execution of the work as the entire work was executed by the members of the joint venture as agreed between them. Accordingly, the fees from the execution of the project work were shared between the members as per their understanding - HELD THAT:- Both, the Commissioner (Appeals) as well as the Tribunal, have found that the members of the joint venture have duly shown the income in their returns of income and have paid the tax thereon. The joint venture and the members of the joint venture are being taxed at the maximum marginal rate, and hence, no loss has been caused to the revenue. Moreover, the Tribunal as a matter of fact has found that the requirements of CBDT circular referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposing the following three questions, stated to be substantial questions of law:- "(A) Whether the Appellate Tribunal is right in law and on facts in deleting the addition of ₹ 8,72,76,300/- made by the Assessing Officer by adopting net profit ratio @ 11.59% of the gross receipts? (B) Whether the Appellate Tribunal is right in law and on facts in holding that the assessee, despite being an AOP, was correct to distribute business receipts directly among its constituents members without recording the same in its profit and loss account? (C) Whether the business receipt distributed by the assessee amongst its members is 'application of income' or 'diversion of income by overriding title'?" 3. The questions proposed in both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so-called participation ratio. The Assessing Officer was of the view that an association of persons is a 'person' and in terms of section 4 of the Act, income tax shall be charged on the total income of 'every person' and the expression includes inter alia, a firm and an association of persons or a body of individuals. He, accordingly, finalised the assessment under section 143(3) of the Act treating the assessee as an association of persons and making addition of ₹ 8,72,76,300/- for assessment year 2009- 10 by adopting the net profit ratio at 11.59% of the gross receipt and made an addition of ₹ 10,17,87,325/- for assessment year 2008-09. 7. Being aggrieved, the respondent-assessee preferred an appeal before the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not necessary that in all facts and circumstances, such association of persons should show positive income. The Commissioner (Appeals) further found that the assessee duly maintains books of accounts, gets its books audited and files return of income to discharge its statutory liability. It has also complied with the other provisions of deduction of TDS from subcontract transaction and paid the tax to the exchequer and that the Assessing Officer to this extent could not draw any adverse finding. The Commissioner (Appeals) was further of the view that in the absence of any defect in the books of the members of the association of persons or even in the books of the assessee, the Assessing Officer was not justified in rejecting the same unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... association of persons was formed only to secure the work and after that there was no involvement of such association of persons in the execution of the work as the entire work was executed by the members of the joint venture as agreed between them. Accordingly, the fees from the execution of the project work were shared between the members as per their understanding. The Tribunal further noted that the members of the joint venture have disclosed the entire income which was originally received by the assessee in their books of account and income tax returns. The returns of income of these members have been subject to the assessment framed under section 143(3) of the Act and hence, it could be inferred that there was no loss to the revenue o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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