ITO, Ward 3(1), Pune v. Shraddha & IHP Joint Venture,, Pune

ITA 944/PUN/2013 | 2009-2010
Pronouncement Date: 28-11-2014 | Result: Dismissed

Appeal Details

RSA Number 94424514 RSA 2013
Assessee PAN AACAS5181K
Bench Pune
Appeal Number ITA 944/PUN/2013
Duration Of Justice 1 year(s) 6 month(s) 27 day(s)
Appellant ITO, Ward 3(1), Pune
Respondent Shraddha & IHP Joint Venture,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-11-2014
Date Of Final Hearing 21-07-2014
Next Hearing Date 21-07-2014
Assessment Year 2009-2010
Appeal Filed On 01-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 942/PN/2013 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER WARD3(1) PMT COMMERCIAL BUILDING SHANKARSHET ROAD PUNE 411 037 .. APPELLANT V/S SHRADDHA & MAHALAXMI JOINT VENTURE (DONGARGAON WORK) SHRADHA HOUSE CST NO.1206 A/1 PLOT NO.887 A SHIROLE ROAD OFF J.M. ROAD PUNE 411 004 .... RESPONDENT PERMANENT ACCOUNT NUMBER AACAS5181K ITA NO. 943/PN/2013 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER WARD3(1) PMT COMMERCIAL BUILDING SHANKARSHET ROAD PUNE 411 037 .. APPELLANT V/S SHRADDHA & IHP JOINT VENTURE WANGANA WORK SHRADHA HOUSE CST NO.1206 A/1 PLOT NO.887 A SHIROLE ROAD OFF J.M. ROAD PUNE 411 004 .... RESPONDENT PERMANENT ACCOUNT NUMBER AACAS5182L ITA NO. 944/PN/2013 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER WARD3(1) PMT COMMERCIAL BUILDING SHANKARSHET ROAD PUNE 411 037 .. APPELLANT V/S SHRADDHA & IHP JOINT VENTURE PADMALAYA WORK SHRADHA HOUSE CST NO.1206 A/1 PLOT NO.887 A SHIROLE ROAD OFF J.M. ROAD PUNE 411 004 .... RESPONDENT PERMANENT ACCOUNT NUMBER AACAS5182L REVENUE BY : MS. M.S. VERMA ASSESSEE BY : SHRI KISHORE PHADKE 2 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE DATE OF HEARING : 25.11.2014 DATE OF PRONOUNCEMENT : 28.11.2014 O R D E R PER SUSHMA CHOWLA J.M: THE PRESENT APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST SEPARATE ORDERS OF EVEN DATE 31 ST DECEMBER 2012 RELATING TO THE ASSESSMENT YEAR 2009-10 AGAINST THE ORDER PASSED U NDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (FOR SHORT 'THE ACT' ). 2. ALL THE APPEALS RELATING TO THE DIFFERENT ASSESS EES ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER REFEREN CE IS BEING MADE TO THE FACTS IN ITA NO.944/PN/2013 IN ORDER TO ADJ UDICATE THE ISSUE. 3. THE ASSESSEE HAS RAISED COMMON GROUNDS OF APPEAL AN D THE GROUNDS OF APPEAL IN ITA NO.944/PN/2013 READ AS UN DER:- 1. THE CIT(A) ERRED IN RELYING ON THE DECISION OF HIS PREDECESSOR IN THE CASE OF OTHER JOINT VENTURE AND DELETED THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) WITHOUT A PPRECIATING THE FACT THAT THE WORK CONTRACT ORDER ISSUED TO THE ASS WERE IN ASSESSEES NAME AND SO ALSO THE PAYMENTS WERE CREDI TED TO THE ASSESSEES ACCOUNT AND AS SUCH REALLOCATION OF THES E CONTRACTS AMONG THE MEMBERS OF THE ASSESSEE WOULD AMOUNT TO S UB CONTRACTING. 2. THE CIT(A) ERRED IN NOT APPRECIATING THAT THE AS SESSEE JOINT VENTURE WAS IN FULL CONTROL OF THE CONTRACT RESPON SIBLE FOR ITS COMPLETION SUBMITTING BILLS RECEIVING PAYMENTS AN D MAKING THOSE PAYMENTS TO ITS MEMBERS TOWARDS SUB CONTRACT ON WHICH TAX WAS DEDUCTIBLE UNDER SECTION 194C. 3. THE CIT(A) ERRED IN NOT CONSIDERING THAT IF THE SHARE OF PROFIT IS DETERMINED IN THE JOINT VENTURE AGREEMENT THEN IT CANNOT BE ANYTHING BUT AOP AND WHERE THE CHARGE IS ON THE INC OME OF THE AOP IN SUCH STATUS THE ASSESSING OFFICER HAS NO C HOICE BUT TO TAX IT IRRESPECTIVE OF THE FACT AS TO WHETHER SUCH SHARE OF PROFIT HAS BEEN OFFERED TO TAX OR TAXED IN THE HANDS OF ME MBERS OR NOT. RELIANCE IS PLACED ON DECISION OF HONBLE SUPR EME COURT IN THE CASE OF CH. ACHAIAH (1996) 218 ITR 239 AND ON T HE RULING OF AAR IN THE CASE OF GEOCONSULTANT ST GMBH IN 304 ITR 283. 3 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE 4. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS A JOINT VE NTURE OF M/S. SHRADDHA CONSTRUCTIONS AND POWER GENERATION PVT. LT D. AND THE INDIAN HUME PIPE CO. LTD. IS AN AOP HAVING CONTRAC T RECEIPTS. IT HAS TAKEN CONTRACT AND THE DISTRIBUTION OF CONTRACT REC EIPTS BETWEEN THESE TWO MEMBERS HAD BEEN AGREED IN THE RATIO OF 70:30% RESPECTIVELY. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE H AD RECEIVED GROSS CONTRACT RECEIPTS OF ` 9 95 00 000 AND THE ENTIRE C ONTRACT WAS GIVEN TO M/S. SHRADDHA CONSTRUCTIONS AND POWER GENERATION PVT. LTD. FOR ITS EXECUTION . M/S. SHRADDHA CONSTRUCTIONS AND POWER GENERATION PVT. LTD. FURTHER SUB - CONTRACTED THE SAID WORK TO INDIAN HUME PIPE CO. LTD. FOR ` 2 73 82 672 OUT OF THE WO RK ALLOTTED TO IT BY THE ASSESSEE. 5. THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFIC ER WAS THAT THE JOINT VENTURE DOES NOT EXECUTE ANY CONTRACT BUT WAS A CONDUIT FOR OBTAINING WORK RECEIVING PAYMENTS AGAINST WORK DON E BY THE INDIVIDUAL CONSTITUENTS AND DISTRIBUTION OF AMOUNTS IN THEIR INDIVIDUAL SHARES AS PER THE AGREED RATIO. THE ASSESSING OFFIC ER OPINED THAT THE ASSESSEE WAS AN AOP WHICH HAD NOT EXECUTED ANY CONT RACT HOWEVER THE ENTIRE CONTRACT IS GIVEN TO ITS MEMBERS AND TH EREFORE IT PARTAKES THE CHARACTER OF SUB-CONTRACT GIVEN BY THE AOP. HE FURTHER STATED THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCE EDINGS SUBMITTED THAT THE CONTRACT WORK HAD BEEN GIVEN TO ITS MEMBER WITHOUT DEDUCTION OF TAX AT SOURCE IN TERMS OF PROVISIONS O F SECTION 194C. 4 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE DETAIL SUBMISSIONS WERE MADE BY THE ASSESSEE WHICH WERE NOT ACCEPTED BY THE ASSESSING OFFICER FOR THE REASON TH AT THE ASSESSEE WAS AN AOP WHICH HAS AWARDED THE CONTRACT OF EXECUT ING THE WORK AND THE SAID WORK HAS BEEN CARRIED OUT BY A DIFFERE NT ENTITY. THE ASSESSING OFFICER HELD THAT THE EXECUTION OF CONTRA CT WORK WAS THE ACCOUNTABILITY OF AOP WHICH HAD RECEIVED THE CONTRA CT BUT THE WORK HAD BEEN EXECUTED BY A DIFFERENT ENTITY WHICH WAS NOTHING BUT A SUB- CONTRACT AND JUST BECAUSE IT WAS GIVEN TO ONE OF TH E MEMBERS OF AOP IT COULD NOT BE CALLED AS REVENUE SHARING AGREEMENT . THE ASSESSING OFFICER ACCORDINGLY HELD THAT IN VIEW OF THE PROV ISIONS OF SECTION 40(A)(IA) THE ENTIRE PAYMENT MADE BY THE AOP TO TH E SAID TWO SUB- CONTRACTORS WERE TO BE TAXED IN THE HANDS OF THE AS SESSEE FOR NON- DEDUCTION OF TAX AT SOURCE OUT OF SUCH PAYMENTS. 6. THE CIT(A) FOLLOWING THE ORDER OF HIS PREDECESSOR- IN-OFFICE IN SWAPNALI RDS JOINT VENTURE WHICH WAS UPHELD BY THE TRIBUNAL PUNE BENCHES IN ITA NO.771/PN/3022 VIDE ORDER DATED 26 TH SEPTEMBER 2012 DELETED THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER UNDER SECTION 40(A)(IA) OF THE ACT. AGGRIEVED BY THE ORDE R SO PASSED BY THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 7. BEFORE US THE DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT THE FACTS IN THE PRESENT CASE WERE IDENTICAL TO THE FACTS IN ITO V/S SWAPNALI RDS JOINT VENTURE ITA NO.771/PN./2011 OR DER DATED 26 TH SEPTEMBER 2012 ENDORSED BY THE ASSESSING OFFICER I N THE OFFICE NOTE ATTACHED TO THE ASSESSMENT ORDER PASSED IN THE CASE . 5 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE 8. THE A.R. FOR THE ASSESSEE IN SUPPORT OF HIS CLAIM RELIED UPON THE FOLLOWING CASE LAWS:- I) ITO V/S SWAPNALI RDS JOINT VENTURE ITA NO.771/PN./ 2011 ORDER DATED 26 TH SEPTEMBER 2012; II) SHRADDHA & S.S. KALE J.V. CIT(A)S ORDER DTD 31.8. 2012; III) VAN OORD ACZ BV IN RE. [2001] 248 ITR 399 (DEL.); AND IV) HYNDAI ROTEM CO. IN RE. [2010] 323 ITR 277 (AAR). 9. HE HOWEVER SUBMITTED THAT THE ISSUE INVOLVED IN A LL THESE APPEAL IS SQUARELY COVERED BY THE DECISION OF THE P REDECESSOR-IN-OFFICE OF THE CIT(A) IN SWAPNALI RDS JOINT VENTURE CITED S UPRA WHICH WAS SUBSEQUENTLY UPHELD BY THE TRIBUNAL PUNE BENCH AN D IN VIEW OF THIS THE APPEALS PREFERRED BY THE REVENUE ARE LIABLE TO BE DISMISSED. 10. WE HAVE HEARD THE RIVAL AND PERUSED THE RECORDS. IN THE FACTS OF THE PRESENT CASE THE ISSUE ARISING BEFORE US IS IN RELATION TO THE APPLICATION OF PROVISIONS OF SECTION 40A(IA) OF THE ACT. THE ASSESSEE AOP HAD RECEIVED CONTRACTS FROM THIRD PARTY WHICH IN TURN WAS EXECUTED BY THE TWO MEMBERS OF AOP. THE PLEA OF THE ASSESSEE AOP WAS THAT IT WAS CONSTITUTED FOR OBTAINING WORK AND RECEIVING PAYMENTS AGAINST THE SAID WORK DONE BY THE CONSTITUENTS OF T HE AOP AND THE SAID PAYMENT WAS TO BE DISTRIBUTED IN THE AGREED RA TIO BETWEEN THE TWO MEMBERS OF THE AOP FOR CARRYING OUT THE WORK. S UCH ASSIGNMENTS OF THE WORK TO THE MEMBERS AS PER THE MEMORANDUM OF UNDERSTANDING AGREED UPON IS NOT EQUIVALENT TO SUB- CONTRACT AND AS SUCH THE ASSESSEE AOP WAS NOT LIABLE TO DEDUCT TAX AT SOURCE OUT OF THE AMOUNT DISTRIBUTED AMONGST THE MEMBERS OF THE A OP IN THE AGREED RATIO OF SHARE. THE ASSESSING OFFICER WHILE DECIDING THE ISSUE IN THE HANDS OF THE ASSESSEE HAD GIVEN AN OFFICE N OTE TO THE EFFECT 6 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE THAT IN THE CASE OF M/S. SWAPNALI RDS JOINT VENTURE (SUPRA) SIMILAR ADDITION UNDER SECTION 40(A)(IA) OF THE ACT HAS BEE N MADE FOR THE ASSESSMENT YEAR 2008-09 WHICH HAS BEEN DELETED BY T HE CIT(A)-II PUNE. DEPARTMENT HAS FILED APPEAL AGAINST THIS ORDE R TO ITAT AND THE MATTER IS PENDING BEFORE ITAT. TO KEEP THE ISSUE AL IVE IN OTHER CASES ALSO THE SIMILAR ADDITION IS BEING MADE IN THIS CA SE ALSO. THE FACTS AND CIRCUMSTANCES ARISING IN THE PRESENT APPEAL ARE IDE NTICAL TO THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE THE TRIBUNAL I N M/S. SWAPNALI RDS JOINT VENTURE (SUPRA) WHEREIN IT WAS HELD AS U NDER:- 2. AT THE OUTSET OF HEARING LD. AUTHORISED REPRES ENTATIVE POINTED OUT THAT THIS CASE IS COVERED IN FAVOUR OF THE ASSESSEE BY ITAT PUNE BENCH IN ITA.NO.65/PN/2011 FOR A.Y. 200 6-07 IN THE CASE OF ITO VS. GAMMON PROGRESSIVE-JV WHEREIN VIDE PARAS 5 TO 9 THE TRIBUNAL DECIDING SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE REVENUE HAS HELD AS U NDER: 5. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND MATERIAL ON RECORD WE FIND 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 FILE D WAS THAT OF AN AOP. IT WAS EXPLAINED THAT IN THE RETURNS OF INCOME SINCE BEGINNING TILL THE A.Y. 200 6- 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 OCCURRE D. 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 PROVIS IONS 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 LIMIT. 7 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE 6. IT WAS FURTHER EXPLAINED ON BEHALF OF THE ASSESSEE THAT JOINT VENTURE AS SUCH DOES NOT EXECUT E ANY CONTRACT WORK BUT WERE MERELY FORMED FOR OBTAINING CONTRACT WORK AND FOR RECEIVING THE PAYMENT WHICH WAS IMMEDIATELY DISTRIBUTED IN THE RATIO OF THE SHARE OF THE WORK DONE. THE ACTUAL SHARE IN THE JOINT VENTURE OF THE TOTAL WORK ALLOCA TED WAS 60% FOR M/S.GAMMON INDIA LTD. AND 40% FOR M/S.PROGRESSIVE CONTRACTION LTD. IN THIS BACKGROUN D IT WAS EXPLAINED THAT THE CONTRACT ACCOUNT AND THE BALANCE SHEET OF THE JOINT VENTURE REVEALS NOTHING BUT APPORTIONMENT OF CONTRACT RECEIPTS ASSETS AND LIABILITIES BETWEEN THE MEMBERS. THERE WAS NO EXPENDITURE BOOKED IN THE CONTRACT ACCOUNT NOR ANY PROFIT AND LOSS ACCOUNT PREPARED FOR THE PURPOSE SINCE THERE DID NOT ARISE ANY PROFIT OR LOSS TO THE ASSESSEE PER SE. THE JOINT 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 DULY ISSUED EVERY YEAR BY THE ASSESSING OFFICER. IN THIS BACKGROUND IT WAS SUBMITTED THAT THERE WAS NO RELATIONSHIP OF CONTRACTOR AND SUB-CONTRACTOR BETWEEN THE JOINT VENTURE AND ITS TWO MEMBERS. THEREFORE THERE WAS NO QUESTION OF APPLICABILITY OF TDS PROVISIONS U/S.194C OF THE ACT. THE ASSESSEE ALSO EXPLAINED WHY A RETURNS WERE FILED BY THE JOINT VENTURE AS AO P. IT WAS EXPLAINED THAT IT WAS DONE TO PASS ON THE CREDIT OF TDS TO THE MEMBERS ON THE BASIS OF TAX APPORTIONMENT CERTIFICATES WHO HAVE ACCOUNTED FOR THE CORRESPONDING CONTRACT REVENUE IN THEIR RESPECTIVE RETURNS. IT WAS ALSO SUBMITTED THAT NI L INCOME ARISING IN THE HANDS OF THE AOP IS CONFIRMED BY THE ACTION OF THE ASSESSING OFFICER IN NOT ASSESSING ANY PROFIT/INCOME ARISING FROM THE CONTRA CT APART FROM THIS DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE ASSESSEE VIDE ITS SUBMISSIONS DATED 26.03.2010 AND 06.09.2010 EXPLAINED THE DIFFERENCE BETWEEN REVENUE SHARING ARRANGEMENT ENTERED INTO BY THE JOINT VENTURE VIS-A-VIS SUB- CONTRACT. IT WAS EXPLAINED ON BEHALF OF THE ASSESS EE THAT IN THE CASE OF SUB-CONTRACT THERE WAS A RELATIONSHIP OF PRINCIPAL AND AGENT WHEREAS IN THE SITUATION OF REVENUE SHARING IT WAS ON A PRINCIPAL TO PRINCIPAL BASIS. FURTHER IN SUB-CONTRACTING THE CONTRACTOR RETAINS HIS SHARE OF PROFIT ALONGWITH TH E TDS AND ONLY THE BALANCE IS PASSED ON TO SUB- CONTRACTOR. BUT IN JOINT VENTURE ASSESSEES DID NO T 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 8 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE 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 RS.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 B EEN 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 SUBMISSIO N DATED 22.04.2010 FURNISHED THE DETAILS WHICH REVEALED 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 YEAR S 2001-02 TO 2008-09. IT WAS FURTHER EXPLAINED BY TH E ASSESSEE 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 TRANSPORT COOPERATIVE SOCIETY (2009) 227 CTR 299 (HP). 7. IN THE BACKGROUND OF THE TAX APPORTIONMENT CERTIFICATES ISSUED BY THE ASSESSING OFFICER IT WA S STATED ON BEHALF OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS MARKED COPY OF THIS CERTIFICATE TO THE MEMBERS OF THE JOINT VENTURE AS WELL AS TO THEIR RESPECTIVE ASSESSING OFFICERS WHICH SHOWS THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND AND CONSCIOUSLY ACCEPTED THE FACT THAT THE JOINT VENTUR E AOP WAS FOR THE DISTRIBUTION OF RECEIPTS AMONGST IT S CONSTITUENTS IN PROPORTION OF THEIR WORK SHARING. THEREFORE 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 DOMESTIC COMPANIES BEING JOINT VENTURE PARTNER IN THEIR INDIVIDUAL CAPACITY AND TH E TAX RATES APPLICABLE TO THE AOP. HOWEVER IN SUBMISSION DATED 21.10.2010 IT WAS EXPLAINED THAT TAX RATES IN THE CASE OF DOMESTIC COMPANY AND THE AOP WOULD BE THE SAME IN THIS CASE. THIS WAS DUE T O APPLICABILITY OF SECTION 167B OF THE ACT. THE ASSESSEE ALSO FILED DETAILS OF THE RETURNS OF INCOM E OF THE TWO CORPORATE ENTITIES BEING JOINT VENTURE MEMBERS ALONGWITH ACKNOWLEDGEMENTS OF THEIR I.T. RETURNS WHICH REVEALED THAT BOTH OF THEM HAD HUGE POSITIVE RETURNED INCOMES EVERY YEAR. FOR THIS PAYMENT THE STAND OF THE ASSESSEE WAS THAT THE METHOD OF APPORTIONMENT OF REVENUE TO THE MEMBERS 9 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE WAS NOT TO TAKE ANY UNDUE BENEFIT OF LOSSES INCURRE D BY THEM. THEREFORE IT WAS STATED THAT THERE WAS N O LOSS TO THE REVENUE AS A RESULT OF THIS METHOD ADOPTED BY THE ASSESSEE OF SHARING THE GROSS REVENUE BY ITS MEMBERS WHICH WAS TAXED IN THEIR HANDS. HOWEVER THIS EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR FROM THE ASSESSING OFFICER. TH E ASSESSEE HAS ALSO RAISED THE ISSUE OF 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 PRINCIPL E 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 INC OME 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 WAS ALSO CONTENDED THAT HON'BL E KERALA HIGH COURT IN THE CASE OF MANJUNATH MOTOR SERVICE AND CANARA PUBLIC CONVEYANCES 197 ITR 321 (KAR.) OBSERVED THAT METHOD ADOPTED BY THE ASSESSING OFFICER WOULD RESULT IN DOUBLE TAXATION O F THE SAME INCOME SINCE GROSS RECEIPTS DISTRIBUTED AMONGST THE TWO JOINT VENTURE PARTNERS WAS INCLUDED AS RECEIPTS IN THEIR RESPECTIVE CASES AND THE JOINT VENTURE PARTNERS HAD ALSO UTILISED THE TDS CREDITS ON THE BASIS OF APPORTIONMENT CERTIFICATE ISSUED BY TH E ASSESSING OFFICER. IN VIEW OF THE ABOVE DISCUSSION CIT(A) WAS JUSTIFIED IN HOLDING THAT IN ABSENCE OF ANY CONTRACT OR SUB-CONTRACT WORK BY JOINT VENTURE TO I TS MEMBER COMPANIES PROVISIONS 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 RESPECTIVE SHARES AND TDS APPORTIONMENT CERTIFICATE S WERE ALSO ISSUED BY THE ASSESSING OFFICER EVERY YEA R 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 ANY EXPENDITURE. THEREFORE THERE WAS NO QUESTION OF ANY DISALLOWANCE UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. MOREOV ER 10 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE DISALLOWANCE U/S. 40(A)(IA) MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. IN EFFECT THE METHOD ADOPTED BY THE ASSESSING OFFICER WILL ALSO RESULT I N DOUBLE TAXATION OF THE SAME CONTRACT REVENUE WHICH IS IN VIOLATION OF THE KARNATAKA HIGH COURT DECISIO N REPORTED IN 197 ITR 321 (KAR.). THIS VIEW IS FORTI FIED BY THE DECISION OF THE ITAT PUNE BENCH IN ITO VS. RAJDEEP & PMCC INFRASTRUCTURE WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER: 6. WE HAVE NOTED THAT IT IS AN ADMITTED POSITION THAT NO WORK IS CARRIED OUT BY THE AOP IT HAS ACTE D AS A CONDUIT BETWEEN THE MSRDC AND THE TWO PERSONS CONSTITUTING THIS AOP SO FAR AS THEIR SEPARATE AND NEATLY IDENTIFIED WORK AREAS ARE CONCERNED. A MERE EXISTENCE OF AN AOP CANNOT LEAD TO TAXABILITY IN THE HANDS OF THE AOP UNLESS THE AO P RECEIVES MONIES IN ITS OWN RIGHT. WE HAVE NOTED TH AT HON'BLE AUTHORITY OF ADVANCE RULINGS WAS IN SEISIN OF A MATERIALLY IDENTICAL SITUATION IN THE CASE OF VAN OORD ACZ BV IN RE(248 ITR 399) IN WHICH TWO CONTRACTORS JOINED HANDS FOR CARRYING OUT NEATLY IDENTIFIED SEPARATE WORK 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 CONTRACTO RS. 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 CONSTITUTIO N 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 LOS S 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 ORDE R 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 I S 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 PROFI T SEPARATELY. BOTH HAVE AGREED TO EXECUTE THE JOB TOGETHER FOR BETTER CO-OPERATION IN THEIR RELATIONS HIP WITH THE CHENNAI PORT TRUST. THE INTENTION WAS NOT TO CARRY OUT ANY BUSINESS IN COMMON ONLY A PART OF TH E JOB WILL BE DONE BY VOACZ ACCORDING TO ITS TECHNICA L SKILL AND CAPABILITY. THE OTHER PART OF THE CONTRAC T WILL BE EXECUTED BY HCC. THE TOTAL VALUE OF THE CONTRACT WAS RS. 2 62 01 03 120. THE APPLICANT'S SHARE OF WORK WAS VALUED AT RS. 44 52 78 920 (17 PER CENT OF TOTAL VALUE). THE ASSOCIATION WITH THE HCC WAS NOT 11 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE WITH THE OBJECT OF EARNING THIS INCOME BUT FOR CO ORDINATION IN EXECUTING THE CONTRACT SO THAT HCC COULD ALSO MAKE ITS OWN PROFIT. HHC'S WORK AND INCOME ARISING THEREFROM WAS QUITE SEPARATE AND INDEPENDENT OF THE APPLICANT'S WORK AND INCOME. IF THE COST INCURRED BY THE HCC OR THE APPLICANT WAS MORE THAN THEIR INCOME EACH PARTY WILL HAVE TO BEA R ITS LOSS WITHOUT ANY ADJUSTMENT FROM THE OTHER PART Y. THE ASSOCIATION OF THE PETITIONER 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 EXAMPLE A BUILDING CONTRACTOR MAY ASSOCIATE WITH A PLUMBER AND AN ELECTRICIAN TO EXECUTE A BUILDING PROJECT. A LL THESE PERSONS ARE DRIVEN BY PROFIT-MAKING MOTIVE. BUT THAT BY ITSELF WILL NOT MAKE THE THREE PERSONS LIABLE TO BE TAXED AS AN AOP IF EACH ONE HAS A DESIGNED AND INDEPENDENT ROLE TO PLAY IN THE BUILDI NG PROJECT. IN THE INSTANT CASE THE APPLICANT HAS STA TED THAT THE APPLICANT HAS MADE ITS OWN ARRANGEMENT FOR EXECUTION OF WORK INDEPENDENT FROM THAT OF HCC. THERE IS NO CONTROL OR CONNECTION BETWEEN THE 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 LEVY OF INCOME-TAX. THE APPLICANT WILL BE LIABLE TO BE TAXED 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 RULING. WE ADOPT THE REASONING OF THE HON'BLE AAR AND RESPECTFULLY FOLLOWING THE SAME APPROVE THE CONCLUSION ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN 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 ASSESSING OFFICER TO DELETE THE ADDITI ON. THE SAME IS UPHELD. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 3. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. 4. FACTS BEING SIMILAR SO FOLLOWING SAME REASONING WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF THE C IT(A) WHO HAS RIGHTLY HELD THAT THERE IS NO QUESTION OF DISALLOWA NCE MADE U/S. 40(A)(IA) OF THE ACT. SAME IS UPHELD. 12 SHRADDHA & MAHALAXMI JOINT VENTURE SHRADDHA & IHP JOINT VENTURE SHRADDHA & IHP JOINT VENTURE 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 REASONI NG WE UPHOLD THE ORDER OF THE CIT(A). CONSEQUENTLY THE GROUNDS OF A PPEAL RAISED BY THE REVENUE ARE DISMISSED. 12. THE FACTS AND THE ISSUE IN ITA NOS.942 AND 943/PN/2 013 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.944/PN/2 013 AND OUR DECISION IN ITA NO.944/PN/2013 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.942 AND 943/PN/2013. 13. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER 2014. SD/ - G.S. PANNU ACCOUNTANT MEMBER SD/ - SUSHMA CHOWLA JUDICIAL MEMBER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY PUNE DATED: 28 TH NOVEMBER 2014 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT PUNE CITY CONCERNED; (5) THE DR ITAT PUNE; (6) GUARD FILE. TRUE COPY BY ORDER (ASSTT. REGISTRAR) ITAT PUNE