Income-tax Officer,, v. Prardhana & Avinash Construction Joint Venture,, Pune

ITA 1628/PUN/2014 | 2010-2011
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 162824514 RSA 2014
Assessee PAN AAAAS8320E
Bench Pune
Appeal Number ITA 1628/PUN/2014
Duration Of Justice 2 year(s) 1 month(s) 3 day(s)
Appellant Income-tax Officer,,
Respondent Prardhana & Avinash Construction Joint Venture,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-09-2016
Assessment Year 2010-2011
Appeal Filed On 27-08-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH PUN E !'!! # $ % BEFORE SHRI R.K. PANDA AM AND SHRI VIKAS AWASTHY JM / ITA NO. 1626/PN/2014 $& ' !(' / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER WARD 3(4) PUNE ....... / APPELLANT )& / V/S. SOMA SSKC JOINT VENTURE HEIGHTS 3 SIDDIVINAYAK SOCIETY KARVE ROAD PUNE-411038 PAN : AAAAS8320E / RESPONDENT / ITA NO. 1627/PN/2014 $& ' !(' / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER WARD 3(4) PUNE ....... / APPELLANT )& / V/S. GAMMON PROGRESSIVE JOINT VENTURE SOMA HEIGHTS 3 SIDDIVINAYAK SOCIETY KARVE ROAD PUNE-411038 PAN : AAAAG1428R / RESPONDENT 2 ITA NOS. 1626 1627 & 1628/PN/2014 / ITA NO. 1628/PN/2014 $& ' !(' / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER WARD 3(4) PUNE ....... / APPELLANT )& / V/S. PRARDHANA & AVINASH CONSTRUCTION JOINT VENTURE 759/34 BHOSALE PAVILION BHANDARKAR ROAD PUNE-411004 PAN : AAHFA5826D / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI SUHAS KULKARNI / DATE OF HEARING : 28-09-2016 / DATE OF PRONOUNCEMENT : 30-09-2016 * / ORDER PER VIKAS AWASTHY JM : THESE THREE APPEALS BY THE REVENUE ARE AGAINST THE OR DERS OF COMMISSIONER OF INCOME TAX (APPEALS)-II PUNE FOR THE ASSE SSMENT YEAR 2010-11 IN CASE OF THREE DIFFERENT ASSESSEES. ALL THE IMPU GNED ORDERS ARE DATED 30-04-2014. SINCE THE ISSUE RAISED IN ALL THE THREE APPEALS IS IDENTICAL THE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED BY THIS COMMON ORDER. 3 ITA NOS. 1626 1627 & 1628/PN/2014 2. FOR THE SAKE OF CONVENIENCE ONLY THE GROUNDS RAISED BY THE REVENUE IN APPEAL ITA NO. 1626/PN/2014 ARE REPRODUCED HERE-IN- BELOW: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) I S CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE . 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN HOLDING THAT NO INCOME ATTRIBUTABLE ON CONTRACT REC EIPTS COULD BE TAXED IN THE STATUS OF THE AOP . 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN IGNORING THAT THE ASSESSEE BEING A SEPARATE ENTITY U/S 2(31) OF THE INCOME-TAX ACT 1961 AND HAVING A PERMANENT ACCOUNT NUMBE R SHOULD HAVE PREPARED ITS OWN PROFIT & LOSS ACCOUNT AS WELL AS THE BALANCE SHEET REFLECTING THE FULL TRANSACTIONS UNDERTAKEN B Y IT AND NOT JUST SHOWING APPORTIONMENT OF RECEIPTS / PAYMENTS AND AS SETS / LIABILITIES BETWEEN MEMBERS AND THAT THE FAILURE TO PREPARE OWN P & L ACCOUNT AND BALANCE SHEET COULD NOT BY ITSELF ABSOLVE THE A SSESSEE OF LIABILITY TO TAX ON THE INCOME ATTRIBUTABLE TO ITS CONTRACT RECE I PTS . 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FA I LING TO APPRECIATE THAT THE WORK CONTRACT ORDERS IS SUED TO THE ASSESSEE BY THE CONTRACTEE WERE IN ITS NAME AND SO ALSO THE PAYMENTS WERE CREDITED TO THE ASSESSEE ' S ACCOUNT . AS SUCH RE-ALLOCATION OF THESE CONTRACTS AMONG THE MEMBERS OF THE ASSESSEE AMOUNTS TO SUB- CONTRACTING . 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN FAILING TO APPRECIATE THAT AS THE PAYMENTS MADE BY THE ASSESSE E TO MEMBERS WERE CLEARLY TOWARDS SUB-CONTRACT TAX WAS DEDUCTIBLE FR OM SUCH PAYMENTS U/S. 194C AND IN VIEW OF THE ASSESSEE ' S FAILURE TO DO SO THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED IN APPLYING THE PRO VISIONS OF SEC . 40(A)(IA) OF THE INCOME-TAX ACT 1961 . 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN I GNOR I NG THE FACT THAT THE ASSESSEE AOP WAS IN FULL CONTR OL OF THE CONTRACT AND I T WAS THE RESPONSIBILITY OF THE ASSESSEE TO SUBMIT THE BILLS TO AND RECEIVE PAYMENTS FROM THE CONTRACTEE WHICH IN TURN WAS PASSED ON BY THE ASSESSEE TO THE CO - VENTURERS . 7. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN NOT CONSIDERING THE LANDMARK JUDGMENT OF THE HON ' BLE SUPREME COURT IN THE 4 ITA NOS. 1626 1627 & 1628/PN/2014 CASE OF CH. ACHAIAH (1996) 218 ITR 239 WHEREIN IT W AS HELD THAT IF THE SHARE OF PROFIT IS DETERMINED IN THE JOINT VENTURE AGREEMENT IT CANNOT BE ANYTHING BUT AOP AND WHERE THE CHARGE IS ON THE IN COME 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 TA X OR TAXED IN THE HANDS OF MEMBERS OR NOT . 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN ACCEPTING THE ASSESSEE ' S STAND THAT THE FACTS OF ITS CASE ARE DISTINGUISHABLE FROM THE CASE OF GEOCONSULTANT ZT G MBH DECIDED BY THE HON ' BLE AUTHORITY FOR ADVANCE RULINGS IN RE(2008) 304 I TR 283 WHEREIN THE JOINT VENTURE WAS HELD TO BE AOP FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT DECISION IN THE CASE OF CH. A CHAIAH . 9. THE LEARNED C O MMISSIONER OF IN C OME-TAX (APPEALS) GROSS L Y ERRED I N ATTACHING UNDUE IMPORTANCE TO ISSUE OF TDS APPORTIO NMENT CERTIFICATES IN THE CASES OF THE MEMBERS AND DRAWING INFERENCE THAT THE ISSUE OF SUCH CERTIFICATES PRESUPPOSED APPLICATION OF MIND ON THE PART OF THE ISSUING AUTHORITIES . THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN ANY CASE FAILED TO APPRECIATE THAT THE ASSESSMENT IN TH E CASE OF THE SUBJECT ASSESSEE WAS A SEPARATE PROCEEDING ALTOGETHER WHICH COULD BY NO MEANS BE CONFLATED OR CONFUSED WITH THE ISSUE OF TD S APPORTIONMENT CERTIFICATES BY THE OFFICERS DEALING WITH THE MEMBE R'S CASES . 10. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN HOLDING THAT THE ASSESSEE HAD NOT SUB-CONTRACTED WO RKS TO THE CO- VENTURES BY ENTERTAINING AND ACTING ON SUCH IRRELEV ANT CONSIDERATIONS AS ABSENCE OF INTERCHANGEABI L ITY OF THE RESPECTIVE WORKS ASSIGNED TO THE CO- VENTURER AND THE MUTUAL EXCLUSIVENESS THEREOF . THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE A PPRECIATED THAT THE ABOVE CONSIDERATIONS WOULD BY NO MEANS DETRACT FROM THE FACT THAT THE ASSESSEE HAPPENS TO BE A SEPARATE LEGAL ENTITY GOT CONTRACTS / CONTRACT RECEIPTS AS SUCH SEPARATE ENTITY AND WAS ALSO ITSEL F ACCOUNTABLE TO THE CONTRACTEES FOR SUCH WORKS. 11. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE VACAT ED AND THAT OF THE ASSESSING OFFICER BE RESTORED . 12. THE APPE L LANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL . 5 ITA NOS. 1626 1627 & 1628/PN/2014 SIMILAR GROUNDS HAVE BEEN RAISED IN THE OTHER TWO APPEALS FILED THE REVENUE. 3. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED AT THE OUTSET THAT THE ISSUE RAISED IN THE APPEALS HAS ALREADY BEEN ADJUDICATED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE EARLIER ASSESSMENT YEARS IN THE CASE OF RESPECTIVE ASSESSEES. T HE LD. AR PLACED ON RECORD THE COPY OF THE ORDER IN ITA NOS. 782 783 & 784/PN/2011 FOR ASSESSMENT YEAR 2008-09 DECIDED ON 22-08-2012 IN C ASE TITLE ITO VS. GAMMON PROGRESSIVE JV & ORS. THE LD. AR FURTHER PLACE D RELIANCE ON THE DECISION OF TRIBUNAL IN ITA NOS. 779 TO 781/PN/20 11 FOR ASSESSMENT YEAR 2008-09 DECIDED ON 04-10-2012 IN CASE TITLE ITO VS. P. VENKU REDDY AND AVINASH CONSTRUCTION JOINT VENTURE & ORS. WHEREBY IDENTICAL ISSUE WAS ADJUDICATED BY THE TRIBUNAL. T HE LD. AR FURTHER CONTENDED THAT IN ASSESSMENT YEAR 2009-10 IN T HE CASE OF ITO VS. GAMMON PROGRESSIVE JOINT VENTURE SIMILAR ADDITION WAS M ADE BY THE ASSESSING OFFICER. IN FIRST APPEAL THE COMMISSIONER OF IN COME TAX (APPEALS) REVERSED THE FINDINGS OF ASSESSING OFFICER. IN APPEA L BY THE DEPARTMENT IN ITA NO. 2117/PN/2012 THE TRIBUNAL VIDE ORD ER DATED 31-10-2013 DISMISSED THE APPEAL OF THE REVENUE. AGAIN IN THE CASE OF INCOME TAX OFFICER VS. PROGRESSIVE SRINIVASA JOINT VENTURE THE DEPARTMENT FILED APPEAL IN ITA NO. 1502/PN/2014 FOR ASSESS MENT YEAR 2010-11 ON IDENTICAL SET OF FACTS. THE TRIBUNAL VIDE ORDER DATED 19-02-2016 BY PLACING RELIANCE ON THE ORDER OF CO-ORDINAT E BENCH OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS. PROGRES SIVE SRINIVASA JOINT VENTURE IN ITA NO. 665/PN/2013 FOR ASSESSMENT YEA R 2009-10 DECIDED ON 11-04-2014 DISMISSED THE APPEAL FILED BY THE D EPARTMENT. THE LD. AR SUBMITTED THAT THERE HAS BEEN NO CHANGE IN T HE FACTS AND 6 ITA NOS. 1626 1627 & 1628/PN/2014 CIRCUMSTANCES IN THE APPEALS UNDER CONSIDERATION. THEREFO RE THE SAME ARE LIABLE TO BE DISMISSED. 4. SHRI SUHAS KULKARNI REPRESENTING THE DEPARTMENT FAIRLY CONCED ED THAT THE ISSUE RAISED IN THE PRESENT APPEALS HAS ALREADY BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE PRECEDING ASSESSMENT YEARS. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS OF CO-ORDINATE BENCH O F THE TRIBUNAL ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE. UNDISPUTEDLY THE ISSUE RAISED IN THE PRESENT SET OF APPEALS IS IDENTICAL TO THE ONE ALREADY ADJUDICATED BY THE TRIBUNAL IN THE EARLIER ASSESSM ENT YEARS IN THE CASE OF EACH ASSESSEE. THE TRIBUNAL IN ITA NO. 1502 /PN/2014 IN CASE TITLED INCOME TAX OFFICER VS. PROGRESSIVE SRINIVASA JO INT VENTURE (SUPRA) WHILE ADJUDICATING THE ISSUE HAS HELD AS UNDER : 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRE SENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. THE ASSESSEE IS AN AOP ENGAGED IN THE BUSINESS OF CIVIL CONTRACTORS. THE ASSESSEE IS A JOINT VENTURE BETWEEN PROGRESSIVE CON STRUCTION LTD. AND SRINIVASA CONSTRUCTION LTD. THERE WAS NO RECEIPT/EX PENDITURE AND NO PROFIT AND LOSS IN THE CASE OF ASSESSEE AS THE ENTI RE REVENUE WAS DIRECTLY APPORTIONED BETWEEN THE TWO AFOREMENTIONED CONSTITU ENTS OF J.V. THE ASSESSEE HAS BEEN FILING RETURN OF INCOME IN THE ST ATUS OF AOP SINCE ASSESSMENT YEAR 2001-02 AT NIL. IN THE IMPUGNED AS SESSMENT YEAR THE ASSESSEE FILED RETURN OF INCOME ON 14-10-2010 DECLA RING NIL INCOME AND CLAIMED REFUND OF ` 1 98 000/-. IN THE COURSE OF SCRUTINY ASSESSMENT THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE PAYMENTS MADE TO THE CONSTITUENTS OF J.V. THE ASSESSING OFFICER ACCORDINGLY DISALLOWED THE SUM OF ` 87 37 702/- U/S. 40(A)(IA) OF THE INCOME TAX ACT 1 961. 7 ITA NOS. 1626 1627 & 1628/PN/2014 IN FIRST APPEAL THE COMMISSIONER OF INCOME TAX (APP EALS) FOLLOWED HIS OWN ORDER IN THE PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009-10 AND DELETED THE DISALLOWANCE U/S. 40(A)(IA) . HENCE THE PRESENT APPEAL. 6. WE FIND THAT THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE RAISED IN THE APPEAL BEFORE THE TRIBUNAL IN THE ASSESSMENT YEAR 2009-10. THE RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL DATED 11-04-2014 IN ITA NO. 665/PN/2013 IS REPRODUCED HERE- IN-BELOW: 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND AN ID ENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF M/S. GAM MON PROGRESSIVE JV(SUPRA). WE FIND THE TRIBUNAL VIDE ITA NO.65/PN/2 011 ORDER DATED 22-08-2012 FOR A.Y. 2007-08 WHILE DECIDING THE ISSU E AGAINST THE REVENUE HAS HELD AS UNDER : 5. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND M ATERIAL ON RECORD WE FIND THAT THE FIRST ISSUE IS REGARDING S TATUS OF THE ASSESSEE. THE ASSESSING OFFICER HAS MENTIONED THE S TATUS AS FIRM. HOWEVER IN THE EXPLANATION GIVEN THE ASSESS EE HAS MADE IT CLEAR THAT THE STATUS IN WHICH THE RETURNS WAS F ILED WAS THAT OF AN AOP. IT WAS EXPLAINED THAT IN THE RETURNS OF INC OME SINCE BEGINNING TILL THE A.Y. 2006-07 THE STATUS WAS MEN TIONED AS AOP ONLY I.E. WHEN THE RETURNS WERE FILED MANUALLY. H OWEVER 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 TOTA L INCOME IT WAS CORRECTLY MENTIONED AS AOP. IT WAS EXPLAINED TH AT I.T.RETURN FORM NO.5 WAS ACTUALLY APPLICABLE FOR FIRMS AOPS A ND BOIS. THEREFORE THIS ERROR MIGHT HAVE OCCURRED. THE ASSE SSEE HAS ALSO FILED COMPUTATION OF TOTAL INCOME ALONGWITH ACKNOWL EDGEMENTS FROM A.Y. 2002-03 TO A.Y. 2006-07 IN WHICH THE STAT US WAS REGULARLY SHOWN AS AOP AND EVEN IN THE APPLICATION FORM FOR ALLOTMENT OF PAN IT WAS SHOWN AS AOP. THE CIT(A) NO TICED FROM THE RECORD THAT STATUS WAS SHOWN AS AOP. HOWEVER I T 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 LI MIT. 6. IT WAS FURTHER EXPLAINED ON BEHALF OF THE ASSESS EE THAT JOINT VENTURE AS SUCH DOES NOT EXECUTE ANY CONTRACT WORK BUT WERE MERELY FORMED FOR OBTAINING CONTRACT WORK AND FOR R ECEIVING THE 8 ITA NOS. 1626 1627 & 1628/PN/2014 PAYMENT WHICH WAS IMMEDIATELY DISTRIBUTED IN THE R ATIO OF THE SHARE OF THE WORK DONE. THE ACTUAL SHARE IN THE JOI NT VENTURE OF THE TOTAL WORK ALLOCATED WAS 60% FOR M/S.GAMMON IND IA LTD. AND 40% FOR M/S.PROGRESSIVE CONTRACTION LTD. IN THI S BACKGROUND IT WAS EXPLAINED THAT THE CONTRACT ACCOUNT AND THE BALANCE SHEET OF THE JOINT VENTURE REVEALS NOTHING BUT APPORTIONM ENT OF CONTRACT RECEIPTS ASSETS AND LIABILITIES BETWEEN THE MEMBER S. THERE WAS NO EXPENDITURE BOOKED IN THE CONTRACT ACCOUNT NOR A NY PROFIT AND LOSS ACCOUNT PREPARED FOR THE PURPOSE SINCE THERE D ID NOT ARISE ANY PROFIT OR LOSS TO THE ASSESSEE PER SE. THE JOIN T VENTURE TRANSFERRED NOT ONLY THE GROSS REVENUE BUT ALSO THE CORRESPONDING TDS TO ITS MEMBERS IN THE RATIO OF THEIR WORK DONE BY INDIVIDUAL MEMBERS FOR WHICH THE APPOINTMENT CERTIFICATE WAS D ULY ISSUED EVERY YEAR BY THE ASSESSING OFFICER. IN THIS BACKGR OUND IT WAS SUBMITTED THAT THERE WAS NO RELATIONSHIP OF CONTRAC TOR AND SUB- CONTRACTOR BETWEEN THE JOINT VENTURE AND ITS TWO ME MBERS. THEREFORE THERE WAS NO QUESTION OF APPLICABILITY O F TDS PROVISIONS U/S.194C OF THE ACT. THE ASSESSEE ALSO E XPLAINED WHY A RETURNS WERE FILED BY THE JOINT VENTURE AS AOP. I T WAS EXPLAINED THAT IT WAS DONE TO PASS ON THE CREDIT OF TDS TO TH E MEMBERS ON THE BASIS OF TAX APPORTIONMENT CERTIFICATES WHO HAV E ACCOUNTED FOR THE CORRESPONDING CONTRACT REVENUE IN THEIR RES PECTIVE RETURNS. IT WAS ALSO SUBMITTED THAT NIL INCOME ARISING IN THE HANDS OF THE AOP IS CONFIRMED BY THE ACTION OF THE ASSESSING OFF ICER IN NOT ASSESSING ANY PROFIT/INCOME ARISING FROM THE CONTRA CT APART FROM THIS DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE AS SESSEE VIDE ITS SUBMISSIONS DATED 26.03.2010 AND 06.09.2010 EXPLAI NED THE DIFFERENCE BETWEEN REVENUE SHARING ARRANGEMENT ENTE RED INTO BY THE JOINT VENTURE VIS-A-VIS SUB-CONTRACT. IT WAS EX PLAINED ON BEHALF OF THE ASSESSEE THAT IN THE CASE OF SUB-CONT RACT THERE WAS A RELATIONSHIP OF PRINCIPAL AND AGENT WHEREAS IN TH E SITUATION OF REVENUE SHARING IT WAS ON A PRINCIPAL TO PRINCIPAL BASIS. FURTHER IN SUBCONTRACTING THE CONTRACTOR RETAINS HIS SHARE OF PROFIT ALONGWITH THE TDS AND ONLY THE BALANCE IS PASSED ON TO SUB- CONTRACTOR. BUT IN JOINT VENTURE ASSESSEES DID NOT RETAIN ANY SHARE IN THE REVENUE WITH IT AND HAS PASSED THE ENT IRE GROSS REVENUE ALONGWITH TDS APPORTIONED FOR THEM. IT WAS SUBMITTED THAT THE DEPARTMENT HAS ALSO ISSUED TAX APPORTIONME NT CERTIFICATES EVERY YEAR DURING THE PAST EIGHT YEARS TO ENABLE THE TWO MEMBERS TO CLAIM THE TDS CREDITS IN THEIR RESPE CTIVE CASES. EVEN IN THE CURRENT ASSESSMENT YEAR IT WAS NOTICED THAT TAX APPORTIONMENT CERTIFICATE WAS ISSUED BY THE DEPARTM ENT VIDE LETTER NO.PN/WD.3(4)/TC/07-08 DATED 26.11.2008 OF T HE ASSESSING OFFICER IN WHICH THE ASSESSING OFFICER HA S ALLOWED APPORTIONMENT OF ENTIRE TDS OF RS.9 26 588/- DURING THE YEAR TO M/S.GAMMON INDIA LTD. SINCE ENTIRE WORK DURING THE YEAR WAS 9 ITA NOS. 1626 1627 & 1628/PN/2014 CARRIED OUT BY IT. SIMILARLY THERE HAS BEEN APPORT IONMENT TO EITHER OF THE TWO COMPANIES OR TO BOTH THE COMPANIE S IN THE EARLIER YEARS ALSO BY THE ASSESSING OFFICER FOR ENA BLING THEM TO CLAIM TDS IN RESPECTIVE CASES. THE ASSESSEE VIDE I TS SUBMISSION DATED 22.04.2010 FURNISHED THE DETAILS WHICH REVEA LED 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 ASSE SSEE 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 TRAN SPORT COOPERATIVE SOCIETY (2009) 227 CTR 299 (HP). 7. IN THE BACKGROUND OF THE TAX APPORTIONMENT CERTI FICATES ISSUED BY THE ASSESSING OFFICER IT WAS STATED ON BEHALF O F THE ASSESSEE THAT THE ASSESSING OFFICER HAS MARKED COPY OF THIS CERTIFICATE TO THE MEMBERS OF THE JOINT VENTURE AS WELL AS TO THEI R 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 AM ONGST ITS CONSTITUENTS IN PROPORTION OF THEIR WORK SHARING. T HEREFORE THERE WAS NO APPLICABILITY OF PROVISIONS OF TDS U/S.40(A) (IA) OF THE ACT. 8. FURTHER THE ASSESSEE VIDE ITS SUBMISSION DATED 06.09.2010 MADE COMPARISON OF THE TAX RATES APPLICABLE TO DOME STIC COMPANIES BEING JOINT VENTURE PARTNER IN THEIR IND IVIDUAL CAPACITY AND THE TAX RATES APPLICABLE TO THE AOP. HOWEVER I N SUBMISSION DATED 21.10.2010 IT WAS EXPLAINED THAT TAX RATES I N THE CASE OF DOMESTIC COMPANY AND THE AOP WOULD BE THE SAME IN T HIS CASE. THIS WAS DUE TO APPLICABILITY OF SECTION 167B OF TH E ACT. THE ASSESSEE ALSO FILED DETAILS OF THE RETURNS OF INCOM E OF THE TWO CORPORATE ENTITIES BEING JOINT VENTURE MEMBERS ALO NGWITH ACKNOWLEDGEMENTS OF THEIR I.T. RETURNS WHICH REVEA LED THAT BOTH OF THEM HAD HUGE POSITIVE RETURNED INCOMES EVERY YE AR. FOR THIS PAYMENT THE STAND OF THE ASSESSEE WAS THAT THE METH OD OF APPORTIONMENT OF REVENUE TO THE MEMBERS WAS NOT TO TAKE ANY UNDUE BENEFIT OF LOSSES INCURRED BY THEM. THEREFORE IT WAS STATED THAT THERE WAS NO LOSS TO THE REVENUE AS A R ESULT OF THIS METHOD ADOPTED BY THE ASSESSEE OF SHARING THE GROSS REVENUE BY ITS MEMBERS WHICH WAS TAXED IN THEIR HANDS. HOWEVE R THIS EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR FRO M THE ASSESSING OFFICER. THE ASSESSEE HAS ALSO RAISED THE ISSUE OF 10 ITA NOS. 1626 1627 & 1628/PN/2014 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 BEI NG ISSUED. IT WAS CONTENDED THAT THIS ASPECT HAS NOT BEEN CONSIDE RED IN THE ASSESSMENT ORDER U/S.143(3) FOR A.Y. 2007-08. ON TH E PRINCIPLE OF CONSISTENCY THE LD. AUTHORISED REPRESENTATIVE RELI ED ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F GOPAL PUROHIT (2010) 228 CTR 582 (BOM.) AND ASSESSEE ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 (SC) WHEREIN IT WAS OBSERVED THAT STRICTLY SPEAKING THE PRINCIPLE O F RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS SINCE EACH ASSESSMENT YEAR WAS A SEPARATE UNIT IN ITSELF AND WHAT IS DECI DED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR. IT WAS FU RTHER CONTENDED THAT WHERE A FUNDAMENTAL ASPECT PERMEATIN G 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 NO T BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. IT WAS ALSO CONTENDED THAT HON'BLE KERALA HIG H COURT IN THE CASE OF MANJUNATH MOTOR SERVICE AND CANARA PUBLIC CONVEYANCES 197 ITR 321 (KAR.) OBSERVED THAT METHO D ADOPTED BY THE ASSESSING OFFICER WOULD RESULT IN DOUBLE TAX ATION OF THE SAME INCOME SINCE GROSS RECEIPTS DISTRIBUTED AMONGS T THE TWO JOINT VENTURE PARTNERS WAS INCLUDED AS RECEIPTS IN THEIR RESPECTIVE CASES AND THE JOINT VENTURE PARTNERS HAD ALSO UTILI SED THE TDS CREDITS ON THE BASIS OF APPORTIONMENT CERTIFICATE I SSUED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE DISCUSSION CIT(A) WAS JUSTIFIED IN HOLDING THAT IN ABSENCE OF ANY CONTRAC T OR SUB-CONTRACT WORK BY JOINT VENTURE TO ITS MEMBER COMPANIES PROV ISIONS OF SECTION 194C WERE NOT APPLICABLE FOR THE PURPOSE OF TDS. THE TWO CORPORATE ENTITIES FORMING JOINT VENTURE WERE ALREA DY BEING ASSESSED SINCE A.Y. 2000-01 ONWARDS ON THEIR RESPEC TIVE 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 NO PROFIT AND LOSS ACCOUNT IN THE ASSESSEES CASE AND THERE WAS NO CLAIM OF AN Y EXPENDITURE. THEREFORE THERE WAS NO QUESTION OF AN Y DISALLOWANCE UNDER THE PROVISIONS OF SECTION 40(A)( IA) OF THE ACT. MOREOVER DISALLOWANCE U/S. 40(A)(IA) MADE BY THE A SSESSING OFFICER CANNOT BE SUSTAINED. IN EFFECT THE METHOD ADOPTED BY THE ASSESSING OFFICER WILL ALSO RESULT IN DOUBLE TAXATI ON OF THE SAME CONTRACT REVENUE WHICH IS IN VIOLATION OF THE KARNA TAKA HIGH COURT DECISION REPORTED IN 197 ITR 321 (KAR.). THIS VIEW IS FORTIFIED BY THE DECISION OF THE ITAT PUNE BENCH IN ITO VS. 11 ITA NOS. 1626 1627 & 1628/PN/2014 RAJDEEP & PMCC INFRASTRUCTURE WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER: 6. WE HAVE NOTED THAT IT IS AN ADMITTED POSITION T HAT NO WORK IS CARRIED OUT BY THE AOP IT HAS ACTED AS A CONDUIT B ETWEEN THE MSRDC AND THE TWO PERSONS CONSTITUTING THIS AOP SO FAR AS THEIR SEPARATE AND NEATLY IDENTIFIED WORK AREAS ARE CON CERNED. A MERE EXISTENCE OF AN AOP CANNOT LEAD TO TAXABILITY IN THE HANDS OF THE AOP UNLESS THE AOP RECEIVES MONIES IN ITS OW N RIGHT. WE HAVE NOTED THAT HON'BLE AUTHORITY OF ADVANCE RULING S WAS IN SEISIN OF A MATERIALLY IDENTICAL SITUATION IN THE C ASE OF VAN OORD ACZ BV IN RE(248 ITR 399) IN WHICH TWO CONTRACTORS JOINED HANDS FOR CARRYING OUT NEATLY IDENTIFIED SEPARATE W ORK WHICH WAS A PART OF COMPOSITE CONTRACT 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 HOLD ING SO HON'BLE AUTHORITY FOR ADVANCE RULING OBSERVED AS FOLLOWS: '7. SO FAR AS QUESTION NOS. 1 AND 2 ARE CONCERNED T HE PARTIES HAVE SPECIFICALLY RULED OUT CONSTITUTION OF ANY PARTNERSHIP BETWEEN THEM. THERE IS NO SHARING OF PR OFITS OR LOSS. THEY HAVE SPECIFICALLY PROVIDED IN THE AGR EEMENT THAT EACH PARTY WILL BEAR ITS OWN LOSS AND RETAIN I TS PROFITS AS AND WHEN SUCH PROFITS OR LOSS ARISE. HAVING REGA RD TO THE AGREEMENT WE ARE OF THE VIEW THAT THE APPLICANT CANNOT BE TREATED AS A PARTNERSHIP WHICH CAN ONLY B E CREATED BY AN AGREEMENT. NOR CAN IT BE TREATED AS A N AOP. IN ORDER TO CONSTITUTE AN AOP THERE WILL HAVE TO BE COMMON PURPOSE OR COMMON ACTION AND THE OBJECT OF T HE ASSOCIATION MUST BE TO PRODUCE INCOME JOINTLY. IT I S NOT ENOUGH THAT THE PERSONS RECEIVE THE INCOME JOINTLY. IN THE INSTANT CASE EACH OF THE TWO PARTIES HAS AG REED TO BEAR ITS OWN LOSS OR RETAIN ITS OWN PROFIT SEPARATE LY. BOTH HAVE AGREED TO EXECUTE THE JOB TOGETHER FOR BETTER CO- OPERATION IN THEIR RELATIONSHIP WITH THE CHENNAI PO RT TRUST. THE INTENTION WAS NOT TO CARRY OUT ANY BUSIN ESS IN COMMON ONLY A PART OF THE JOB WILL BE DONE BY VOAC Z ACCORDING TO ITS TECHNICAL SKILL AND CAPABILITY. TH E OTHER PART OF THE CONTRACT WILL BE EXECUTED BY HCC. THE T OTAL VALUE OF THE CONTRACT WAS RS. 2 62 01 03 120. THE APPLICANT'S SHARE OF WORK WAS VALUED AT RS. 44 52 7 8 920 (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 CO ULD ALSO MAKE ITS OWN PROFIT. HHC'S WORK AND INCOME ARI SING THEREFROM WAS QUITE SEPARATE AND INDEPENDENT OF THE 12 ITA NOS. 1626 1627 & 1628/PN/2014 APPLICANT'S WORK AND INCOME. IF THE COST INCURRED B Y THE HCC OR THE APPLICANT WAS MORE THAN THEIR INCOME EA CH PARTY WILL HAVE TO BEAR ITS LOSS WITHOUT ANY ADJUST MENT FROM THE OTHER PARTY. THE ASSOCIATION OF THE PETITI ONER 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 EX AMPLE A BUILDING CONTRACTOR MAY ASSOCIATE WITH A PLUMBER AND AN ELECTRICIAN TO EXECUTE A BUILDING PROJECT. ALL T HESE PERSONS ARE DRIVEN BY PROFIT-MAKING MOTIVE. BUT THA T BY ITSELF WILL NOT MAKE THE THREE PERSONS LIABLE TO BE TAXED AS AN AOP IF EACH ONE HAS A DESIGNED AND INDEPENDENT R OLE TO PLAY IN THE BUILDING PROJECT. IN THE INSTANT CAS E THE APPLICANT HAS STATED THAT THE APPLICANT HAS MADE IT S OWN ARRANGEMENT FOR EXECUTION OF WORK INDEPENDENT FROM THAT OF HCC. THERE IS NO CONTROL OR CONNECTION BETWEEN T HE WORK DONE BY THE APPLICANT AND HCC.' 8. ON THE FACTS HEREINABOVE THE APPLICANT AND HCC CANNOT BE TREATED AS AN AOOP FOR THE PURPOSE OF LEV Y OF INCOME-TAX. THE APPLICANT WILL BE LIABLE TO BE TAXE D AS A SEPARATE AND INDEPENDENT ENTITY. THE QUESTION NO.1 IS ANSWERED ACCORDINGLY.' 7. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEWS SO EXPRESSED BY THE HON'BLE AUTHORITY FOR ADVANCE RULI NG. WE ADOPT THE REASONING OF THE HON'BLE AAR AND RESPECTFULLY FOLLOWING THE SAME APPROVE THE CONCLU SION ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE I N THE MATTER. IN VIEW OF THE ABOVE DISCUSSION WE ARE NOT INCLINE D TO INTERFERE IN THE FINDING OF THE CIT(A) WHO HAS DIRECTED THE ASSE SSING OFFICER TO DELETE THE ADDITION. THE SAME IS UPHELD. 6.1 SINCE FACTS OF THE PRESENT APPEAL ARE IDENTICAL TO FACTS OF THE CASE CITED ABOVE THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL CITED (SUPRA) AND IN ABSENCE OF ANY CO NTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIB UNAL WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE D ISALLOWANCE MADE U/S.40(A)(IA) OF THE I.T. ACT. WE ACCORDINGLY UPHOL D THE SAME. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. 7. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE F INDINGS OF THE CO- ORDINATE BENCH OF THE TRIBUNAL ON THE ISSUE RAISED. RESPECTFULLY 13 ITA NOS. 1626 1627 & 1628/PN/2014 FOLLOWING THE DECISION OF CO-ORDINATE BENCH WE DIS MISS THE APPEAL OF THE REVENUE BEING DEVOID OF ANY MERIT. 6. SINCE THERE HAS BEEN NO CHANGE IN THE FACTS AND CIRC UMSTANCES IN THE PRESENT SET OF APPEALS WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW. THUS IN THE LIGHT OF AFORESAID DECISION OF TH E TRIBUNAL THE APPEALS OF THE DEPARTMENT ARE DISMISSED. 7. IN THE RESULT ALL THE THREE APPEALS BY THE REVENUE ARE DISMISSED . ORDER PRONOUNCED ON FRIDAY THE 30 TH DAY OF SEPTEMBER 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 30 TH SEPTEMBER 2016 RK *+ $-.'/'(- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II PUNE 4. ' / THE CIT-II PUNE 5. !*+ %% - - . /01 / DR ITAT A BENCH PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER %6 1 / PRIVATE SECRETARY - / ITAT PUNE