TMI Blog2000 (9) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign nationals. The control and management of the affairs of the company is situated wholly outside India. 2. In the year 1996, Chennai Port Trust floated a tender for the Breakwater Construction of Ennore Port, the contract known as Ennore Coal Port Project-ECPP/C4. VOACZ possesses technical knowledge and capabilities to perform a part of the work. It participated in the said contract in joint venture with an Indian company known as Hindustan Construction Company Ltd. (HCC). The purpose of the agreement as stated in cl. 1.1 is that VOACZ and H.C.C. would associate themselves in an unincorporated joint venture in the form of consortium, the sole object of which was to fulfil the obligations of the contract. Art. 23 defines the relationship of the parties as The relationship of the parties shall be that of an unincorporated association formed for the purposes of collaborating in respect of the Contract. Each of the parties expressly agrees that it is not their intention through the joint venture to carry on business in common with the other parties with a view to profit and that it is their intention to utilise the joint venture safely for the better co-operation of their rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be constructed, to depths between-15 and 16m CD; (iii) replacement of dredged material with sand dredged from a marine borrow area, including compaction of sand; (iv) dumping and placing rock of various grades, supplied by Madras Port Trust to a rock stock-pile area within the port site, in the breakwaters using waterborne and land based equipment; (v) casting (in mass concrete) and placing on the breakwaters Accropode armour units upto 15 tonnes in weight (vi) casting (in mass and reinforced concrete) an access road on the area of the breakwaters; (vii) dreding and disposal offshore of loose sand and soft to medium stiff clay material to a depth of 15m CD beneath part of the area in which a Coal Wharf is to be constructed by others; (viii) construction of slope protection on filled and dredged slopes to depths of 15m CD within the Port basin using rock supplied by Madras Port Trust to a rock stockpile area within the Port site; (ix) provision and maintenance of site officers for the Engineer. 5. The applicant opened a temporary project office in India to execute their part of work and obtained permission from Reserve Bank of India, Chennai, to open a proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod, though the assets are required to be kept or remain idle, though ready for use, during the execution of the contract ? (6) Whether writing off of obsolete assets shall be allowed as deduction ? (7) Will the applicant get credit for the tax deducted at source if any, in the year of completion of contract when full profits, if taxable, will be offered for tax under s. 199 , without treating the tax deducted earlier as liable to tax as income received under s. 198. (8) Without prejudice to the above whether on the facts and in the circumstances, the rationale behind the provisions of s. 44AB would be applicable in the case of the applicant and a sum equal to ten per cent of the contract amount as and when paid shall be deemed to be the profits and gains chargeable under the head Profits and gains of business or profession ? (9) Without prejudice to the above, whether on the facts and in the circumstances the amount of taxable profit could be determined by AAR at a fixed percentage of the gross receipts based on applicant's past profitability statements and other relevant factors, either assessable in the year of completion of the contract or year-wise ? 7. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of work independent from that of HCC. There is no control or connection between the work done by the applicant and HCC. On the facts as stated hereinabove, the applicant and HCC cannot be treated as an AOP 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. 9. In view of the answer given to question No. 1, the second question has become academic and need not be answered at all. 10. Question Nos. 3 to 9 raise issues which have been discussed and substantially answered in the case of N.V. Jan De Nul, In re (ARR No. 427 of 1998) : 1999 236 ITR 489 (AAR). Dredgers, boats, equipment, computers and other plant and machinery deployed by the applicant for the first time in India and on which no depreciation has been actually allowed under the IT Act, 1961, will prima facie be entitled to depreciation allowance. However, it is not necessary to answer this question and the other questions raised separately and independently. The crucial question raised is question No. 8. On similar facts, the case of N.V. Jan De Nul (supra) was examined by this authority at length. This Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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