TMI Blog2011 (7) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... en them. Also, the other case referred by Assessee, DATTA DIGAMBAR SAHAKARI KAMGAR SANSTHA LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [ 2000 (9) TMI 250 - ITAT PUNE] is taken into consideration. In view of our specific finding that there is no contract or subcontract has existed in between the assessee and its JV partners and following the above judicial precedents, the learned CIT(A) was not justified in invoking section 194C(2) to the assessee's case. We, therefore, set aside the order passed by the CIT(A) and appeal filed by the assessee is allowed. - ITA No. 7698/M/2010 - - - Dated:- 29-7-2011 - P.M. JAGTAP, ACCOUNTANT MEMBER AND V. DURGA RAO, JUDICIAL MEMBER For the Petitioner : Hari S. Raheja For the Respondent : B. Jaya Kumar ORDER V. DURGA RAO: This appeal by the assessee is directed against the order dated 30- 07-2010 of CIT(A)-I, Thane for the assessment year 2007-08. 2. The assessee is an AOP (Association of Persons). The AOP has two partners, namely, M/s SMC Infrastructure Pvt Ltd., a company incorporated under the Companies Act, 1956 and M/s Ambika Enterprises, a proprietary firm. The partners of the AOP for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfrastructure Pvt Ltd., 51% and M/s Ambika Enterprises 49%. The joint venture partners have executed the work as per the agreed proportion and it was submitted that there is no contract or sub-contract between the assessee and its joint venture partiners and sec. 194C has no application to the assessee and AOP is not liable to deduct TDS on payment to the joint venture partners. 5. However, the Assessing Office had not agreed with the submissions of the assessee and observed that the AOP was a contractor and subcontracted the work to the joint venture partners made payment to them. As per section 194(c)(2), the assessee has to deduct TDS and no such TDS has been deducted, accordingly by invoking sec. 40(a)(iv) of Income Tax Act, 1961, the AO disallowed the expenses to the extent of ₹ 2,00,097,075/-. 6. On being aggrieved, the assessee carried matter in appeal before the Ld. CIT (A) and it was submitted before the Ld. CIT (A) that the JV partners namely M/s SMC Infrastructure Pvt Ltd. and M/s Ambika Enterprises entered into a joint venture for the purpose of work from TMC, both the parties came together and created a AOP i.e., SMC - Ambika JV, the assessee, submit tender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee AOP and its JV partners namely M/s SMT Infrastructure and M/s Ambika Enterprises are two different entities, therefore, the assessee has subcontracted the work to the two JV partners and sec. 194C(2) squarely applies to the assessee's case. The cases relied on by the learned counsel for the assessee is distinguishable on the facts. 9. We have heard both the sides, perused the record and gone through the orders of the authorities below. The assessee is a AOP (Association of Persons), M/s SMC Infrastructure Pvt Ltd. and M/s Ambuja Enterprises are members of the AOP. As per the agreement between the members of the AOP, the AOP will bid for rates for Thane Municipal Corporation. The members will share the expenses as well as the receipts on execution of the project at 51% and 49% respectively. The year under consideration the assessee filed NIL return of income. In the profit and loss account the assessee has filed the contract receipt from Thane Municipal Corporation for ₹ 2,00,097,075/-, and debited the same towards expenses of JV partners declaring the profit at Rs. NIL. The AOP did not carry any work itself. The work carried by the AOP JV partners, M/s SMC Infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. On an application to direct reference: Held, dismissing the application, that once a finding had been recorded that there was no contract between the assessee ad its sister concerns, there would be no applicability of section 194C(2). 11. We find that the facts of the present case are similar to the above case and in the above case, the Hon'ble PandH Court held that there is no contract between the assessee and its sister concern and sec. 194C(2) has no application. The case in the hand also no contract or sub-contract relationship as existed between the assessee its JV partners, therefore, section 194C(2) has no application. 12. In the case of Ambuja Darla Kashlog Mangu Transport Co-op. Society(supra) the relevant portion from the order of the Hon'ble Himachal Pradesh High Court is extracted hereunder: The main contention of the Revenue is that the since the assessee has a separate juristic identity and each of the truck operators who are members of the assessee have separate juristic identity they are covered within the sum to the meaning of sec. 194C(2). It is urged on behalf of the Revenue that since the assessee being a person is paying a sum to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orking of the society seen it is apparent that the societies have entered into a contract behalf of the members. The society is nothing but a collective name for the members and the contract entered by the society is for the benefit the constituent members and there is no contract between the society and the members. For the foregoing reasons we are of the considered view that sec. 194C(2) of the Act is not attracted and the assessee society(s) is not liable to deduct tax at source on account of payments made to the truck owners who are also members of the society. 13. In the above case, the Hon'ble Himachal Pradesh High Court has held that the society is nothing but collective name for the members. The contract entered by the society is for the benefit of the constituent members and there is no contract between its members and society, hence, sec. 194C(2) has no application. In the present case, the assessee is a AOP of its partners M/s SMC Infrastructure Pvt Ltd. and M/s Ambika Enterprises and the role of the AOP is only to secure the contract for the benefit of the members. There was no contract or sub-contract in between them. 14. In the case of Datta Digamber ..... X X X X Extracts X X X X X X X X Extracts X X X X
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