TMI Blog2017 (9) TMI 1830X X X X Extracts X X X X X X X X Extracts X X X X ..... ion - HELD THAT:- Various clauses of the SA (supplementary agreement) are suggestive of the fact that it is the constituent-JMC indeed who is solely responsible for execution of the entire project. It is the JMC who is under obligation to bring in all resources, finances and all other services required for the execution of the project in exclusion to the other so-called partner of the joint venture. Noticeably, it is also specified by way of clause-4 of the SA that JMC shall be solely responsible for all the losses and profits. Thus, as mutually understood, one of the constituents alone has domain over the financial rewards and risks associated to the JV. The other partner of JV stands identified of all contractual obligations by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been assessed in the hands of constituent, the assessment of same receipts in the hands of AOP will cease to exist - Decided against revenue - I.T.A. No.2503/Ahd/2012 (Assessment Year : 2009-10) - - - Dated:- 6-9-2017 - Shri Pradip Kumar Kedia, Accountant Member Shri Mahavir Prasad, Judicial Member Appellant by: Shri Mudit Nagpal, Sr.DR Respondent by: Shri M.K. Patel, AR ORDER Pradip Kumar Kedia, In the captioned appeal, the Revenue has assailed the action of the Commissioner of Income Tax(Appeals)-XV, Ahmedabad [CIT(A) in short] dated 08/08/2012 for the Assessment Year (AY) 2009-10 in deleting the addition of ₹ 68,81,901/- by the Assessing Officer (AO) in the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct receipts in the status of AOP on the premise that contract was entered by the joint-venture. It was noted by the AO that the joint venture has received the consideration and then wrongly parted with the same in favour of its constituents. The AO thus held that assessment of the income arising from aforesaid contract receipts ought to have been done in the hands of the AOP who is the right person for taxation purposes. The AO noted that the contract was awarded to the JV (AOP) and the work was carried out by JMC Projects (India) Ltd. or the other JV member only on behalf of the JV. It is the JV which is liable for the non-performance or lack of performance qua the principal. Having noted these facts, the AO proceeded to estimate net profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship between its constituents viz. JMC and PPPL. This agreement is only a work sharing arrangement to meet contractual agreement with its client. It is the supplementary agreement which defines the inter se relationship of constituents. It was submitted that as per the supplementary agreement between the joint venture members, JMC has indemnified the other member (PPPL) for any and all contractual obligations arising execution for the project. It was submitted that other clauses of the supplementary agreement clearly spells out that it is the JMC which bears the risk of scope of its work and the control over the project lies with JMC. In such circumstances, the CIT(A) has rightly treated the joint venture as not an assessable entity for tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes an AOP and thus a separate entity for incidence of taxation. The assessee, on the other hand, claims that the joint-venture agreement has been merely entered for the purposes of bidding for the project for which the tender was invited by the principal i.e. Bhopal Municipal Corporation. It is the case of the assessee that by virtue of supplementary agreement dated 08/02/2008 between JMC and PPPL (other jointventure member) their correct relationship has been defined. It was also pleaded that from supplementary deed between constituents, it can be clearly inferred that the main joint-venture agreement dated 27/04/2007 for bidding purposes is only a symbolic document and does not represent an AOP or partnership between assessee and PPPL. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the recent CBDT Circular No.7/2016 dated 07/03/2016, the assessee herein has rightly not been treated as an AOP for taxation purposes. We find that the CIT(A) has rightly held that income from the contract awarded by the principal cannot be said to have been accrued in the hands of the appellant AOP notwithstanding JV document executed for bidding and thus the appellant herein is not liable for income estimated on the contract awarded. We find no infirmity in the conclusion drawn by the CIT(A). 10. However, in the same vain, a liberty is granted to AO to call for necessary records from the Assessee-AOP herein to satisfy itself that the contract receipts in question and income thereon has suffered taxation in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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