TMI Blog2014 (4) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... dent by : Shri P.L. Pathade ORDER PER R.K. PANDA, AM : This appeal filed by the Revenue is directed against the order dated 12-11-2012 of the CIT(A)-II, Pune relating to Assessment Year 2009-10. 2. Facts of the case, in brief, are that the assessee is a joint venture between progressive Construction Ltd. and Srinivasa Construction Ltd. and the returns have been filed in the status of AOP since the A.Y. 2001- 02 at Rs. NIL income every year. This was because the contract Revenue was directly apportioned between the two corporate entities, i.e. members of the joint venture and there was no receipt/expenditure and no profit and loss account in the case of the assessee. During the course of assessment proceedings the Assessing Officer observed that in the return the assessee had claimed the status as firm and the deed of partnership was also filed. As per the partnership deed Progressive Srinivasa joint venture was a partnership between Progressive Construction Ltd. and Srinivasa Construction Ltd. The assessee has shown NIL profit in the Contract account by showing distribution of contract account receipt of ₹ 57,06,737/- to Srinivasa Construction Ltd. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account and as such reallocation of these contracts among the members of the assessee would amount to sub contracting. 2. The learned Commissioner of Income-tax (Appeals) erred in not appreciating that the assessee Joint Venture was in full control of the contract, responsible for its completion, submitting bills, receiving payments and making those payments to its members towards sub contract on which tax was deductible u/s.194C. 3. The learned Commissioner of Income-tax (Appeals) erred in not considering that if the share of profit is determined in the Joint Venture Agreement, then it cannot be anything but AOP and where the charge is on the income of the AOP, in such status, the Assessing Officer has no choice but to tax it irrespective of the fact as to whether such share of profit has been offered to tax or taxed in the hands of members or not. Reliance is placed on decision of Hon.Supreme Court in the case of Ch.Achaiah (1996) 218 ITR 239 and on the ruling of AAR in the case of Geoconsultant ST GMBH in 304 ITR 283. 4. The Ld. Counsel for the assessee at the outset referring to the decision of the Tribunal in the case of ITO Vs. M/s. Gammon Progressive JV vide ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, it was not very much relevant for the purpose of applicability of provisions of section 194C since TDS provisions are applicable to all entities except individuals and HUF having gross receipts or turnover from business or profession below the prescribed limit. 6. It was further explained on behalf of the assessee that joint venture as such does not execute any contract work but were merely formed for obtaining contract work and for receiving the payment, which was immediately distributed in the ratio of the share of the work done. The actual share in the joint venture of the total work allocated was 60% for M/s.Gammon India Ltd. and 40% for M/s.Progressive Contraction Ltd. In this background it was explained that the contract account and the Balance Sheet of the joint venture reveals nothing but apportionment of contract receipts, assets and liabilities between the members. There was no expenditure booked in the contract account nor any Profit and Loss Account prepared for the purpose since there did not arise any profit or loss to the assessee per se. The Joint venture transferred not only the gross revenue but also the corresponding TDS to its members in the ratio of thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission dated 22.04.2010, furnished the details which revealed that gross revenue from this contract receipts by joint venture was accounted for in case of either or both of the two companies who were members of the joint venture in all assessment years 2001-02 to 2008-09. It was further explained by the assessee that revenue sharing was not exactly 60:40 in each year since it depends on the relative work done in the particular year. Having explained the difference between cases of contract/sub-contract, in the background of clauses of the agreement, the assessee relied on the decision of Hon'ble Himachal Pradesh High Court in the case of CIT vs. Ambuja Darla Kashlog Mangu Transport Cooperative Society (2009) 227 CTR 299 (HP). 7. In the background of the tax apportionment certificates issued by the Assessing Officer, it was stated on behalf of the assessee that the Assessing Officer has marked copy of this certificate to the members of the joint venture as well as to their respective Assessing Officers, which shows that the Assessing Officer has applied his mind and consciously accepted the fact that the joint venture AOP was for the distribution of receipts amongst its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order, it would not be at all appropriate to allow the position to be changed in a subsequent year. It was also contended that Hon'ble Kerala High Court in the case of Manjunath Motor Service and Canara Public Conveyances, 197 ITR 321 (Kar.) observed that method adopted by the Assessing Officer would result in double taxation of the same income since gross receipts distributed amongst the two joint venture partners was included as receipts in their respective cases and the joint venture partners had also utilised the TDS credits on the basis of apportionment certificate issued by the Assessing Officer. In view of the above discussion, CIT(A) was justified in holding that in absence of any contract or sub-contract work by joint venture to its member companies, provisions of section 194C were not applicable for the purpose of TDS. The two corporate entities forming joint venture were already being assessed since A.Y. 2000-01 onwards on their respective shares and TDS apportionment certificates were also issued by the Assessing Officer every year for these eight years including the current assessment year to enable them to claim the same in their own cases. Moreover, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e job together for better co-operation in their relationship with the Chennai Port Trust. The intention was not to carry out any business in common, only a part of the job will be done by VOACZ according to its technical skill and capability. The other part of the contract will be executed by HCC. The total value of the contract was ₹ 2,62,01,03,120. the applicant's share of work was valued at ₹ 44,52,78,920 (17 per cent of total value). The association with the HCC was not with the object of earning this income but for co ordination in executing the contract so that HCC could also make its own profit. HHC's work and income arising therefrom was quite separate and independent of the applicant's work and income. If the cost incurred by the HCC or the applicant was more than their income, each party will have to bear its loss without any adjustment from the other party. The association of the petitioner company with HCC was undoubtedly for mutual benefit but such association will not make them a single assessable unit and liable to tax as an AOP. For example, a building contractor may associate with a plumber and an electrician to execute a building project. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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