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TMI Blog2020 (1) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... no question of disallowance made u/s. 40(a)(ia) of the Act Decided against revenue. - ITA No.1505/PUN/2017 - - - Dated:- 21-1-2020 - Shri Anil Chaturvedi, AM And Shri S.S. Viswanethra Ravi, JM For the Assessee : Shri Ulhas Kini For the Revenue : Shri Deepak Garg. ORDER PER ANIL CHATURVEDI, AM : 1. This appeal filed by the Revenue is emanating out of the order of Commissioner of Income Tax (A) 4, Pune dated 06.02.2017 for the assessment year 2013-14. 2. The relevant facts as culled out from the material on record are as under :- Assessee is a Joint Venture consisting of Subhash Projects Marketing Ltd., B.T. Patil Sons Belgaum Construction Pvt. Ltd., Belgaum and N.V. Kharote Construction Pvt. Ltd. It is stated to have been formed solely for the purpose of working of construction of Jihe Kathapur Lift Irrigation Scheme. Assessee electronically filed its return of income for A.Y. 2013-14 on 30.09.2013 declaring total income at Rs. Nil. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the issue in favour of the assessee. Aggrieved by the order Ld.CIT(A), Revenue is now before us. 4. Before us, Ld. D.R. supported the order of AO. Ld.A.R. on the other hand, at the outset, submitted that against the order of Ld.CIT(A), Revenue had preferred appeal for A.Y. 2012-13. The Coordinate Bench of the Tribunal vide order dated 15.11.2017 (in ITA No.148/PUN/2016) has dismissed the appeal of Revenue. He submitted that since the facts of the case for the year under consideration are identical to that of A.Y. 2012-13 in ITA No.148/PUN/2016 (supra) and following the order of Tribunal in A.Y. 2012-13, no interference to the order of Ld.CIT(A) is called for. He also placed on record the copy of the decision of Pune Bench of the Tribunal in ITA No.148/PUN/2016 (supra). 5. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to disallowance of payments made by the assessee to the member companies of Joint Venture u/s 40(a)(ia) of the Act. We find that identical issue arose in assessee s own case for A.Y. 2012-13 wherein the Co-ordinate Bench of the Tribunal followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ep the issue alive in other cases also, the similar addition is being made in this case also. The facts and circumstances arising in the present appeal are identical to the facts and circumstances of the case before the Tribunal in M/s. Swapnali RDS Joint Venture (supra), wherein it was held as under:- 2. At the outset of hearing, Ld. Authorised Representative pointed out that this case is covered in favour of the assessee by ITAT, Pune Bench, in ITA.No.65/PN/2011 for A.Y. 2006-07 in the case of ITO Vs. Gammon Progressive-JV, wherein vide paras 5 to 9 the Tribunal deciding similar issue in favour of the assessee by dismissing the appeal of the Revenue, has held 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 fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one to pass on the credit of TDS to the members on the basis of tax apportionment certificates who have accounted for the corresponding contract revenue in their respective returns. It was also submitted that 'Nil' income arising in the hands of the AOP is confirmed by the action of the Assessing Officer in not assessing any profit/income arising from the 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 visa- vis sub- contract. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s explained that tax rates in the case of domestic company and the AOP would be the same in this case. This was due to applicability of section 167B of the Act. The assessee also filed details of the returns of income of the two corporate entities being joint venture members, alongwith acknowledgements of their I.T. returns, which revealed that both of them had huge positive returned incomes every year. For this payment 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) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract revenue which is in violation of the Karnataka High Court decision reported in 197 ITR 321 (Kar.). This view is fortified by the decision of the ITAT Pune Bench in ITO vs. Rajdeep PMCC Infrastructure, wherein the Tribunal has observed as under: 6. We have noted that it is an admitted position that no work is carried out by the AOP, it has acted as a conduit between the MSRDC and the two persons constituting this AOP so far 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork independent from that of HCC. There is no control or connection between the work done by the applicant and HCC. 8. On the facts hereinabove, the applicant and HCC cannot be treated as an AOOP for the purpose of levy of income-tax. The applicant will be liable to be taxed as a separate and independent entity. The question No.1 is answered accordingly. 7. We are in considered agreement with the views so expressed by the Hon'ble Authority for Advance Ruling. We adopt the reasoning of the Hon'ble AAR and, respectfully following the same, approve the conclusion arrived at by the CIT(A) and decline to interfere in the matter. In view of the above discussion, we are not inclined to interfere in the finding of the CIT(A) who has directed the Assessing Officer to delete the addition. The same is upheld. 9. In the result, the appeal filed by the Revenue 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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