TMI Blog2014 (2) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... at source. Where Joint Venture is formed only for the purpose of obtaining contracts and specific portions of the contract are to be completed by individual constituents independently, then it cannot be a case of the Joint Venture giving works contract to the constituents - the profit of the project in such a case should be assessed in the hands of the individual constituents and not in the hands of the consortium AOP - The entire work was executed by the constituents and the Joint Venture has paid the entire contract receipts received by it from the contractee to the constituents without retaining any portion of the profit by whatever name it may be called - the matter remitted back to the AO for fresh adjudication – Decided in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Projects Pvt. Ltd. The Assessing Officer on examining the records of the assessee noticed that the assessee is not deducting tax at source on the advances paid to its constituents Sino Hydro Corporation and Madhucon Projects Pvt. Ltd. and TDS is deducted when the bills are submitted by Madhucon Projects Pvt. Ltd. However, in the case of Sino Hydro Corporation which is a foreign company no TDS is deducted on the payments made to it. The Assessing Officer felt that as per the provisions contained under section 194C of the Act, the assessee shall deduct tax at source at the time of payment in cash or by issue of cheque. The assessee having not deducted tax at source as per the provisons of section 194C, the Assessing Officer, therefore, pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The CIT(A) following the aforecited decision of the ITAT, Hyderabad Bench had allowed the appeal of the assessee by holding as under : "5.1. Respectfully following the decision of the Hon ble Jurisdictional Tribunal in the appellant s own case for the A.Y. 2006-07, (though the order was delivered in respect of the disallowance made u/s. 40(a)(ia), the decision is applicable to the provisions of section 201(1) r.w.s. 194C of the Act), it is held that there is no liability on the JV to deduct tax at source from the payments made to the constituent members. Therefore, the demand raised u/s. 201(1) of Rs.38,99,142/- and interest charged u/s. 201(1A) of Rs.28,46,373/- is ordered to be deleted. However, the A.O. is directed to forward the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them, it was also agreed that each party shall be solely responsible for the performance of its scope of work and shall bear all technical, commercial and facing risk involved in performing its scope of work. It was also agreed that none of the party shall assign its rights and obligations to any other party without written consent of other party. It is evidently clear that the joint venture and the consortium was formed only with an object to bid contract. Once the project or contract is awarded to the joint venture or the consortium, it is to be executed by its constituents or the joint ventures in a ratio agreed upon by the parties. The assessee was entitled to execute the major agreed portion of total work awarded to the joint venture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hyderabad tribunal has held in the case of ACIT v M/s Pardhana Construction Co in ITA No 1046/Hyd/2010 dated 7.01.2011 (for the AY 2006-07) and in the case of M/s Soma Enterprises v DCIT in ITA No 1116/Hyd/2010 dated 15.06.2011 have held that if the constituent has offered income from the JV, then credit must be given to the TDS made by the client, even though the TDS certificates may be in the name of the AOP. This clearly shows that the proof its from the JV are to be offered by the respective constituents and the constituents shall be entitled to the TDS credit deducted by the client, even if such TDS certificates are in the name of the AOP. In the circumstances there is no question of AOP granting works contract to the constituents, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med only for the purpose of obtaining contracts and specific portions of the contract are to be completed by individual constituents independently, then it cannot be a case of the Joint Venture giving works contract to the constituents. The Tribunal has further held the profit of the project in such a case should be assessed in the hands of the individual constituents and not in the hands of the consortium AOP. There cannot be two opinion about the aforecited ratio laid down by the Coordinate Bench in assessee s own case and we respectfully agree with the same. However, the assessee has also to prove that the Joint Venture has not executed the work and also not retained any profit. The entire work was executed by the constituents and the Jo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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