9911796707
TMI Blog2012 (10) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment made to the joint venture should be treated as a payment made to the foreign company and tax deducted at source on that basis? 2. The assessee-Chennai Port Trust floated a tender for the breakwater construction project at Ennore Port. The contract was awarded to a joint venture of Hindustan Construction Company Ltd., a company registered under the Companies Act in India and Van Oord ACZ BV (VOACZ) of Netherlands. In respect of the execution of the work, the assessee deducted tax under Section 195C of the Income Tax Act at the rate of 2%, treating the joint venture as an Association of Persons. The deduction in the above manner was made for the assessment years 1998-99, 1999-2000 and 2000-2001. 3. It is seen from the documents place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, it was entitled to claim credit of the proportionate share of the TDS made in the status of consortium. The original certificates, hence, would be filed along with the return of Hindustan Construction Company Limited who was entitled to 80% of the TDS. After claiming credit, the company had also remitted the balance tax. 5. While the matter stood thus, the assessee was stated to have been served with a show cause notice on 10.10.2000, taking the view that the deduction of tax under Section 194C on the payment made to the joint venture as though it was an AOP was incorrect. Hindustan Construction Company Ltd. being an Indian company, tax was to be deducted at the rate of 2% as per Section 194C. Considering the decision of the Advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the state of affairs in taking a decision that the status of the joint venture was to be taken in as an AOP for deduction at source as per Section 194C of the Income Tax Act. Even though the assessee was asked to deduct tax at the rate of 7.1%, it should have pursued the matter further before the same authority or before the higher administrative authority seeking clarification as to the correct rate at which tax had to be deducted at source. The Tribunal pointed out that the assessee was well aware that the contract work was awarded to a joint venture consisting of an Indian company and a foreign company and that the foreign company was a non-resident. Thus even though the contract payments were made through a joint venture account, it co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the original order, the present assessee sought for recalling of the order that there was a misrepresentation. The Advance Ruling Authority passed an order on 29.04.2009 and rejected the assessee's petition that the order passed by the Advance Ruling Authority could not be said to have been obtained by fraud or misrepresentation. It observed that the document brought on record by the Port Trust showed its stand that the joint venture consisting of HCC and VOA was an AOP, resident in India. It also pointed out that the foreign company filed a return of income for 1998-99 on 25.11.1998 as a non-resident company and for 1999-2000, on 29.12.2000. It also filed a return showing the status of the joint venture as an AOP on 02.11.1998 before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, making the status of the joint venture as Association of Persons. The claim for refund was made in the status of joint venture only and this was sought to be explained by the foreign company that it was done to avoid delay in getting its refund. The order of the Advance Ruling Authority thus clearly shows the conflicting and confused claims then persisting and absolutely, there was no action either from the foreign company, or for that matter, for the assessee herein, to approach the concerned authority for a ruling as to whether there should have been a TDS at all either under Section 194C or under Section 195 of the Income Tax Act. It was submitted that going by the understanding of the terms of the joint venture agreement between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest and had further undertook not to claim refund for the amount paid, the Supreme Court held that the orders passed under Section 201(1) and 201(1A) could not be upheld. Applying the decision of the Apex Court to the case on hand, which we had already narrated in the preceding paragraph, with the debate on the status of the assessee existing at least till 2000 and the assessee not having any information as regards the order passed by the Advance Ruling Authority, we have no hesitation in accepting the plea of the assessee that the assessee herein could not be declared as an assessee in default for the purpose of interest under Section 201(1A) of the Income Tax Act. It may be of relevance to note herein that the assessee had deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
