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TMI Blog2017 (9) TMI 1830X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the assessee-AOP, is engaged in the business of construction of infrastructural project. The assessee filed return of income for AY 2009-10 declaring total income of Rs.NIL. The case was selected for scrutiny assessment. In the course of the scrutiny assessment, the AO noticed that assessee has shown total contract receipt of Rs. 5,93,77,921/- on which NIL profit has been declared. The AO found that joint-venture receipt received from the Principal has been divided between the members of AOP in the ratio of their respective participation shareholding. The assessee-AOP has been constituted through a joint-venture agreement dated 27/04/2007 entered into between its constituents JMC Project (India) Ltd. and Permanent Prestress Pvt.Ltd. (PPP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 68,81,901/- in the hands of the assessee-AOP. 3. Aggrieved by the aforesaid addition of estimated income, the assessee preferred appeal before the CIT(A). 4. The CIT(A) relied upon various judicial pronouncements and deleted the aforesaid addition. 5. Aggrieved, the Revenue is in appeal before the Tribunal. 6. The Ld.DR relied upon the order of the AO. 7. The Ld.AR Mr.M.K. Patel for the assessee, on the other hand, submitted that in the instant case, the consortium of joint-venture has been formed only to procure the contract work from the Municipal Corporation. By way of the joint venture agreement, the parties have only regulated the relationship qua the Principal viz. Bhopal Municipal Corporation. The Ld.AR adverted our atten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar facts and circumstances, the action of the AO was not found legally tenable. The incidence of tax on the contract receipt arises in the hands of one of its constituent namely JMC and not the Assessee herein. The Ld.AR referred to the decision of Hon'ble Supreme Court in the case of CIT vs. Rajdeep & PMCC Infrastructure Ltd. 73 Taxmann.com 256 (SC) where the SLP was dismissed against the favourable order of the Hon'ble Bombay High Court reported in 73 Taxmann.com 255 (Bom.). The Ld.AR next submitted that in view of the peculiar facts of the case, no income can be said to have accrued in the hands of the assessee-AOP. The Ld.AR thereafter referred a recent Circular of CBDT No.07/2016 dated 07/03/2016 in this regard. The Ld.AR submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of aforesaid plea of the assessee, we observe 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 identifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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