TMI Blog2021 (5) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case, the Ld. CIT(A) erred in holding that in absence of any contract or sub-contract work by the Joint Venture to its members, provisions of Section 194C were not applicable for the purpose of TDS, without appreciating the fact that the work contract order was issued in the name of the assessee (JV) and re-allocation of the contract between the members of the JV would amount to sub-contracting. 3. On the facts and circumstances of the case, the Ld. CIT(A) 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. 4. On the facts and circumstances of the case, the Ld. CIT(A) erred in not taxing profit in the hands of the Joint Venture irrespective of such profit was offered to tax in the hands of members. Reliance is placed on decision of Hon'ble Supreme Court in the case of Ch. Atchaiah (1996) 218 ITR 239 (SC) and on the ruling of Hon'ble AAR in the case of Geoconsult ZT GmbH in [2008] 304 ITR 283 (AAR). 5. The appellant prays to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to keep the issue alive the Assessing Officer rejected the submissions of the assesse and confirmed the disallowance. Since the assesse has not deducted TDS on the work allocated to its constituent, the entire amount paid to M/s. Shraddha Energy Infraprojects Pvt. Ltd. amounting to ₹ 37,05,95,378/- was disallowed u/s.40(a)(ia) of the Act. 4. The Ld. CIT(Appeal) on this issue at Para 5.3 of his order observed that the Pune Bench of the Tribunal in the case of ITO Vs. Swapnil RDS Joint Venture (supra.) in which case the facts are identical, the Co-ordinate Bench of the Tribunal had held that there was no relationship of contractor and contractee between the joint venture and its partners and since contract receipts, assets, liabilities were apportioned between the members, therefore, taxability of the income has to be considered in the hands of the members and not the joint venture. This decision was followed by the Ld. CIT(Appeal) in deciding assessee s own case for assessment years 2010-11 2011-12 against which the Revenue had preferred an appeal before the Co-Ordinate Bench of the Tribunal and the Pune Bench of the Tribunal in its decision dated 29.07.2016 has held a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard the rival contentions. We have also analyzed the facts and circumstances in this case and judicial pronouncements placed on record. The Assessing Officer while deciding the chargeability of income in the hands of the assesse, had observed that in the case of Swapnil RDS Joint Venture (supra.), same addition u/s.40(a)(ia) of the Act has been made which was deleted by the Pune Bench of the Tribunal. However, the Department has not accepted the order of the Tribunal and had preferred an appeal before the Hon ble High Court of Mumbai and that further the Assessing Officer, to keep issue alive, had held that payment made by the AOP to its members were disallowed and added to the total income of the assesse in terms of u/s.40(a)(ia) of the Act. 8.1 We notice that on identical facts and circumstances, the Co-ordinate Bench of the Tribunal in the case of ITO Vs. Shraddha Mahalaxmi Joint Venture and others in ITA No.942/PUN/2013 order dated 28.11.2014 after making reference to the several judicial precedents including the case Swapnil RDS Joint Venture, ITA No.771/PN/2011 (supra) has provided relief to the assesse on this issue. The relevant findings of the Co-ordinate Bench in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the first issue is regarding status of the assessee. The Assessing Officer has mentioned the status as firm. However, in the explanation given, the assessee has made it clear that the status in which the returns was filed was that of an AOP. It was explained that in the returns of income since beginning till the A.Y. 2006-07, the status was mentioned as AOP only, i.e., when the returns were filed manually. However, from A.Y. 2007-08, when electronic filing had to be done, due to computer error the status appeared as firm on the ITR acknowledgement, whereas in the computation of total income, it was correctly mentioned as AOP. It was explained that I.T.Return Form No.5 was actually applicable for firms, AOPs and BOIs. Therefore, this error might have occurred. The assessee has also filed computation of total income alongwith acknowledgements from A.Y. 2002-03 to A.Y. 2006-07 in which the status was regularly shown as AOP and even in the application form for allotment of PAN it was shown as AOP. The CIT(A) noticed from the record that status was shown as AOP. However, it was not very much relevant for the purpose of applicability of provisions of section 194C since TDS prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontracting, the contractor retains his share of profit alongwith the TDS and only the balance is passed on to subcontractor. But in joint venture, assessees did not retain any share in the revenue with it and has passed the entire gross revenue alongwith TDS apportioned for them. It was submitted that the Department has also issued tax apportionment certificates every year during the past eight years to enable the two members to claim the TDS credits in their respective cases. Even in the current assessment year, it was noticed that tax apportionment certificate was issued by the Department vide letter No.Pn/Wd.3(4)/TC/07-08 dated 26.11.2008 of the Assessing Officer in which the Assessing Officer has allowed apportionment of entire TDS of ₹ 9,26,588/- during the year to M/s.Gammon India Ltd., since entire work during the year was carried out by it. Similarly, there has been apportionment to either of the two companies or to both the companies in the earlier years also by the Assessing Officer for enabling them to claim TDS in respective cases. The assessee, vide its submission dated 22.04.2010, furnished the details which revealed that gross revenue from this contract receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f consistency stating that the same method was being accepted by the Department in the past 8 to 10 years including A.Y. 2007-08 in which tax apportionment certificate was also being issued. It was contended that this aspect has not been considered in the assessment order u/s.143(3) for A.Y. 2007-08. On the principle of consistency, the Ld. Authorised Representative relied on the decision of Hon'ble Bombay High Court in the case of Gopal Purohit (2010) 228 CTR 582 (Bom.) and assessee also relied on the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT (1992) 193 ITR 321 (SC) wherein it was observed that strictly speaking the principle of res judicata does not apply to income tax proceedings since each assessment year was a separate unit in itself and what is decided in one year may not apply in the following year. It was further contended that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract awarded to the AOP, but the taxability of income from such contract was held to be taxable in the hands of the respective contractors. While holding so Hon'ble Authority for Advance Ruling observed as follows: 7. So far as question Nos. 1 and 2 are concerned the parties have specifically ruled out constitution of any partnership between them. There is no sharing of profits or loss. They have specifically provided in the agreement that each party will bear its own loss and retain its profits as and when such profits or loss arise. Having regard to the agreement we are of the view that the applicant cannot be treated as a partnership which can only be created by an agreement. Nor can it be treated as an AOP. In order to constitute an AOP there will have to be common purpose or common action and the object of the association must be to produce income jointly. It is not enough that the persons receive the income jointly. In the instant case, each of the two parties has agreed to bear its own loss or retain its own profit separately. Both have agreed to execute the job together for better co-operation in their relationship with the Chennai Port Trust. The intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Facts being similar, so following same reasoning we are not inclined to interfere with the finding of the CIT(A) who has rightly held that there is no question of disallowance made u/s. 40(a)(ia) of the Act. Same is upheld. 11. Since the facts are, mutatis mutandis, identical to the facts and issue decided by the Tribunal in M/s. Swapnali RDS Joint Venture (supra), therefore, following the parity of reasoning, we uphold the order of the CIT(A). Consequently, the grounds of appeal raised by the Revenue are dismissed. 10.2 Respectfully following the decision of the Co-ordinate Bench of the Tribunal in the case of ITO vs. Shraddha Mahalaxmi Joint Venture and Others (supra), we are inclined to hold against the Revenue. We simultaneously find that the case of the assessee is fully supported by CBDT Circular No.07/2016 (supra) and judicial opinions expressed in the case of SMSL-UANRCL (JV) (supra) and Linde AG, Linde Engineering Division and Anr. (supra). 10.3 We also simultaneously take affirmative note of the argument on behalf of the assessee that rigours of section 40(a)(ia) are diluted in the facts of the case since the payee has admittedly filed its return ..... X X X X Extracts X X X X X X X X Extracts X X X X
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