9911796707
TMI Blog2019 (10) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.11.2018 for assessment years 2010-2011 2011-12, 2012-13 & 2013-14. 2. Since, the identical facts and issues are involved in these appeals, we proceed to dispose the same vide this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.1008/Chny/2017 for assessment year 2010-2011 are stated herein. 4. The Assessee raised the following grounds of appeal: ''1. The order of The Commissioner of Income Tax (Appeals) 2, Chennai dated 28.02.2017 in l.T.A.No.66/2015-16 for the Assessment Year 2010-11 is contrary to law, facts, and in the circumstances of the case. 2. Reopening the Assessment u/s 147 is not valid. 2.1 The CIT (A) is not justified in concluding that the re-opening of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able income. Hence the CIT (Appeals) ought to have accepted that sub section 2 of section 167B only will be applicable in the appellant's case. 3.4 The CIT (Appeals) has also failed to consider the submissions made by the Appellant with respect to the amounts transferred to the members of the AOP over the years, wherein also the determinate share of profits of the members of the AOP are clearly established. 4. The Appellant craves leave to file additional grounds/arguments at the time of hearing''. 5. The brief facts of the case are as under: The appellant namely Herve Pomerleau International CCL Joint Venture is a company formed by two parties namely Consolidated Construction Consortium Limited ( hereinafter called as CCCL) and M/s.H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties had come to conclusion that profit were shared among the partners and foreign company will be paid guaranteed profit share of 2% of final contract price and therefore held that tax should be levied under sub section (1) of Section 167B of the Act and accordingly levied tax vide order dated 25.03.2015 u/s.143(3) r.w.s.147 of the Act. 6. Being aggrieved, an appeal was preferred before the Ld.CIT(A) challenging the very validity of the initiation of reassessment proceedings on the ground that reassessment proceedings are prompted by mere change of opinion and there was no reason to disbelieve that tax escaped assessment and challenging the action of the Assessing Officer in levying taxes under sub section (1) of Section 167B of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined and therefore tax should be levied under sub section (2) of Section 167B of the Act. 9. On the other hand, the ld. CIT- Departmental Representative had vehemently contended that having regard to the clause of agreement entered between the parties, it cannot be said that profit sharing ratios of the members of the AOP are determined and tax should be levied only under sub section (1) of Section 167B of the Act. 10. We heard the rival submissions and perused the material on record. 11. Admittedly, assessee before us was assessed in the status of AOP. Provisions of Section 167 of the Act provides that in case where individual shares of the members of AOP is indeterminate tax should be charged on such AOP at maximum marginal rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of any member of the AOP is chargeable to tax at the rate which is higher than the maximum marginal rate, tax shall be levied on the total income of the AOP at such higher rate applicable to such members. In the present case, one of the member of AOP is an Non Resident i.e. HPI, a company registered in Canada and the income of this member is taxable at 42.23%. In order to determine the applicability of Section 167B(1) of the Act, it is essential to decide whether the shares of the members of the AOP are indeterminate or unknown. This issue can be decided that with reference to the terms of understanding the parties had. The parties had entered into long term agreement on 30.11.2007 which is placed at paper book page No.1. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an interest in the profits as profits, and implies a participation in the profits and losses. But in the present case, the member of the AOP i.e. HPL is entitled to 2% of the profit cost regardless of the fact whether AOP made profits or losses. This is only a charge against the profits of the assessee, AOP but not share in profits. Therefore, it cannot be said that the shares of the profit in AO of members is determinate or known. Thus on cumulative consideration of all clause the three agreement entered into it is crystal clear that shares members of AOP are indeterminate and unknown, therefore the provisions of sub section (1) to Section 167B of the Act are squarely applicable and we do not find any reason to interfere with the orders o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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