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2017 (12) TMI 190 - AT - Income TaxTDS u/s 194C - non deduction of tds on payments made to subcontractors - subcontract relationship between JV partners - Held that:- As per the agreement, all the costs, liability and bank guarantees will be arranged by only AMRCL and KCL will only be a facilitator in procuring the orders. As per our view, JV is only an arrangement between two entities on mutual agreement, JV can be any type depending upon the mutual agreements and object of such agreement. The JV can be run on similar to partnership basis or mere an entity to secure the orders or may be just to execute the work orders. In the given case, members of JV decided to form a JV only to secure the orders and execution of the orders will be done by one of the constituents of the JV. JV is formed for the benefit of the individual members and a business is carried on for the benefit of the businessman. Thus there is no subcontract relationship existed between JV partners. Accordingly, the work executed by the AMRCL is not in sub-contract. See Hindustan Ratna case[2015 (2) TMI 1257 - ITAT HYDERABAD]. Accordingly, ground raised by revenue is dismissed. Estimation of the profit of the business as well as disallowance u/s 40(ba) - disallowing all the administrative expenses - Held that:- As the assessee has not shown any profit in the business and the assessee being used as a Passover entity and set up only to secure the order, the AO has the option of disallowing all the administrative expenses, if any. Since the assessee has not shown any profit nor paid any remuneration to any of the members, the provisions of section 40(ba) will not be attracted. Coming to the execution of the contract awarded to the assessee, we have already adjudicated that it does not amount to sub-contract. The payment made to AMRCL will never be considered as remuneration, but, paid for execution of back to back work order. Assesse has already considered as revenue in case of AMRCL and offered for taxation. It shows that the full value of revenue is already offered for taxation, by following the golden rule that a source of income can be taxed only once. The source of income is a work contract given by the corporation and the same was offered to tax by AMRCL. Same source of income can never be subjected to tax twice, first by the assessee and followed by AMRCL. As far as revenue is concerned, that source is already taxed, in the hands of AMRCL, therefore, it need not be taxed again in the hands of assessee. - Decided in favour of assessee.
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