TMI Blog2016 (5) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... d the facts of Kiran Infra s being lead partner. In these circumstances it cannot be assumed that department taxed the income in wrong hand. The concept of accrual of income is considered in the case of E. D. Sassoon Co. Vs CIT[ 1954 (5) TMI 2 - SUPREME COURT] wherein it was held that what was sought to be taxed must be income. As per the harmonious reading of JV agreement, respective obligation, the project income was accruable to said Kiran Infra. Since the income was already taxed in the hands of Kiran Infra there is no occasion to hold that it accrued to the assessee so as to tax it again. Thus the action of the AO to tax the assessee on the income already taxed in the hands of M/s Kiran Infra tantamount to double addition which is not permissible in law. The petition U/s 264 was filed by M/s Kiran Infra on 04.03.2011 before CIT-II, Jaipur to avoid the hardship proposed by the department in taxing the assessee again. The approach of the department is incomprehensible as on one hand it accepted the assessment in the hands of Kiran Infra, then it desired to tax assessee as a logical consequence Kiran Infra approached under a statutory provision of law to revise the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gla JV i.e. assessee is an AOP, consisting of following three members/ participant companies namely: (1) M/s Kiran Infra Engg. Ltd., B-141, Road No. 9D, V.K.I.A., Jaipur; (2) M/s Tirupati Plastomatics Pvt. Ltd., B-141A, Road No. 9D, V.K.I.A., Jaipur and; (3) M/s Mangla Ispat (Jaipur) Ltd., B-234, Road No. 9, V.K.I.A., Jaipur. They formed a Joint Venture (JV) for making a bid of the supply and installation of signaling and telecommunication equipments in connection with the work invited by Rail Vikas Nigam Ltd. for conversion of meter gauge single line to broad gauge railway line of Rewari Ringus Phulera Ajmer Section (294.57) in terms of the joint venture agreement dated 04.07.2006. 4.1 It was agreed between the JV members that, the responsibility of the execution of the said work in respect of project administration, financial and other documentation work will be the sole responsibility of the lead partner of the JV i.e. M/s Kiran Infra Engg. Ltd. (hereinafter referred to as KIEL) which will accordingly discharge its agreed obligations diligently. The contract receipts, profits there from and TDS thereon was to b. Since the gross contract receipts and the net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently it awaited for its disposal. Since it was rejected it was left with no other option but to file an appeal before the Ld. CIT(A) belatedly. Appeal was allowed by the Ld. CIT(A) holding that department cannot tax an income twice which is against the fundamental principles of income tax, equity and justice, consequently the additions made by Ld. AO in the hands of assessee were deleted. 5. Aggrieved against the order of the Ld. CIT(A), the revenue is in appeal before us. 6. Ld. DR adverting to the first additional ground contends that the first appeal filed by the assessee was belated and ld. CIT(A) has not expressly condoned the delay, therefore, the matter should be set aside back to the file of ld. CIT(A) for passing appropriate order for condonation of delay. 7. Apropos second additional ground it is contended that the appeal was not maintainable as the issue was already decided u/s 264 although in the hands of other assessee, nevertheless the assessee is debarred from filing an appeal on the same issue. Reliance is placed on: Jaskaran 366 ITR 158 (P H) Orissa rural 343 ITR 316 (Orissa) 233 ITR 381 (Delhi) 8. Ld. Counsel for the assessee on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue is dismissed. 11. Apropos second additional ground also we find merit in the contentions of ld. Counsel for the assessee that 264 order was passed not in the case of impugned assessee but on the petition of lead partner KIEL, therefore, the technical bar raised by revenue may be applicable in the case of lead partner KIEL but byu no stretch of imagination in the hands of the assessee before us. The case laws cited by ld. DR are not at all applicable to the facts of the present case. Consequently this additional ground raised by revenue is also dismissed. 12. Adverting to merits of the case ld. DR relied on the order of ld. AO and contends that the right income should be assessed in the right hands. The income of the JV in the hands of lead partner KIEL was not a correct offer but the return was voluntarily filed, therefore, it was assessed in its hands. Since the revenue considers that the income is assessable in the hands of this assessee, the acceptance of income in the hands of KIEL is no bar to tax the income again in the right hands i.e. assessee in question. 13. In Ld. Counsel for the assessee contends that the ld. CIT(A) by a detailed order has considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome was therefore applicable in the case of the assessee as it had not earned any income chargeable to tax. Moreover the other partners of joint venture namely M/s Tirupati Plastomatics Pvt Ltd had supplied goods worth ₹ 80,65,615/- to M/s Kiran Infra Engineering Ltd which were ultimately consumed in the project. The other partner namely M/s Mangla Ispat had supplied steel for the project but their material was rejected since it did not conform to the standards laid down by the Indian Railways. Therefore the entire receipts of ₹ 52,29,54,166/- (including the receipts of ₹ 17,37,17,953/- taxed in the hands of assessee) were disclosed in the books of account of M/s Kiran Infra Engineering Ltd and profit of ₹ 3,13,68,010/- (including the profit of ₹ 1,04,00,661/- taxed in the hands of assessee) was offered to tax in the return of income filed by M/s Kiran Infra Engineering Ltd. Thus the action of the AO to take the receipts of ₹ 17,37,17,953/- once again in the hands of appellant and bringing to tax the profit of ₹ 1,04,00,661/-, tantamounted to double addition which was not permissible in law. To escape the double taxation, M/s Kiran Infra En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by M/s KIEL only, in the return of income filed by it, copy of the return of income, computation of income, Profit Loss Account, details of contract receipts and bank account of M/s Kiran Tirupati Mangla JV have been placed on paper book. Further the copy of the work order awarded and the memorandum of understanding for JV participation are on record. (3) The contract as awarded by M/s Rail Vikas Nigam Ltd. was executed in sum and substance by M/s Kiran Infra Engg. Ltd. being a lead party to the joint venture and have also discharged the obligations of the project by utilizing its own funds and resources and had also provided the administrative and other necessary support as was required from time to time and had thus claimed the entire receipts from the execution of the project work as its gross receipts and the income arises thereon have been offered for tax by M/s Kiran Infra Engg. Ltd. thereby leaving no income in the hands of the joint venture and this fact is never disputed by Ld. AO. Since there was no profit whatsoever in the hands of the appellant joint venture therefore, no return was filed by it. (4) A careful reading of the Memorandum Of Understanding (MOU) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. The Ld. CIT(A) after making analysis of entire facts has rightly concluded that the income being already accrued declared by one of the constituents of JV, same income could not be assessed in the hands of this assessee. 15.1 The concept of accrual was considered in E. D. Sassoon Co. v. CIT, (1954) 26 ITR 27 (SC) and it was held: What is sought to be taxed must be income and it cannot be taxed unless it has arrived at a stage when it can be called income . In this case no income whatsoever has arisen to the assessee JV as the project was admittedly executed by lead partner M/s Kiran Infra Engg. Ltd. and entire receipts from such execution have been offered by it and accepted by the department. Consequently the ratio of E. D. Sassoon case on real income coupled with settled principle of not taxing the same income twice is fully applicable to the case of assessee. 15.2 Thus all the receipts related to work as well as profit earned there from belonged to M/s. Kiran Infra Engg. Ltd. which have been duly accounted in the book of accounts of M/s. Kiran Infra Engg. Ltd. without any qualification of auditors. This has been accepted and income taxed by the department which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession does not lose its natural connotation. It has to be construed as comprehending only such things which are income according to the natural import of the term. It is the income which has really accrued or arisen to the assessee that is taxable. Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation. When in reality there is neither accrual nor receipt of income by the assessee, even though an entry to that effect might in certain circumstances have been made in the books of account, it would not constitute income for the purpose of levy of tax. A rebate obtained by the purchaser or remission of debt by a creditor would not result in the creation of income in the hands of the purchaser or debtor. It is contended that, Ld. CIT(A) after taking into consideration all the facts and circumstances of the case and due appreciation of law, has passed a well reasoned order which meets the ends of law and principles of justice and need not be interfered with, the order of Ld. CIT(A) may be upheld. Further Reliance is further placed on the following case laws: (i) 57 ITR 521 (1965) Poona Electric Supply Co. L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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