TaxTMI 
TaxTMI 
2011 (9) TMI 171
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....Developers and that since the tax on the income of the AOP was payable in the case of the AOP itself under Section 167B(2), no tax is payable by the assessee in respect of its share of income from the AOP. In the profit and loss account, the Assessee showed its share of profit from the AOP as Rs. 3.49 crores. In the balance-sheet as of 31-03-2007 the capital contribution of the Assessee with the AOP was disclosed. In the notes to the accounts, under the head of "Revenue Recognition" it was stated that profit from investment in the AOP was accounted for on an accrual basis. 4. On 6 October 2009 the Assessing Officer issued a notice to the Assessee calling upon the Assessee to disclose information, inter alia, relating to the ledger extract of the Assessee's capital account with the AOP and the objects for which the Assessee had used the fund drawn from the account. The Assessee responded by its reply dated 24 October 2009. In response to a further query at a hearing before the Assessing Officer, the Assessee by its letter dated 6 November 2009 enclosed copies of (i) A joint venture agreement between the Assessee and a developer, Raviraj Kothari Associates executed on 26 August 2002....
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....plex. According to the Assessing Officer, the evidence indicated that the Assessee had received a share of 35% from gross receipts on the sale of residential units in the AOP. According to the Assessing Officer, the Assessee had not received its share out of the profits of the AOP and when a director of the Assessee was confronted with this, he had stated that in order to safeguard the development rights of the Assessee over the land, it had entered into an agreement under which it was entitled to 35% of the gross receipts out of the sales of flats in the AOP. The basis on which the Assessing Officer has sought to reopen the assessment is that the Assessee had received its share from gross sale proceeds and not from the share of profits against the surrender of development rights in the land. In view of this, according to the Assessing Officer, the income received by the Assessee from the AOP is not a share of profits but consideration received against development rights sold/surrendered. 7. The Assessee furnished its objections to the reopening of assessment by its letter dated 19 March 2011. In so far as is material, the Assessee contended that the documentary material on the b....
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....conclusion that income had escaped assessment; (iv) Admittedly, the AOP has been brought to tax and an order of assessment had been passed on the basis that there is a valid AOP in existence; and (v) Once the AOP has been assessed as such, and has been brought to tax at the maximum marginal rate of tax, no Assessing Officer properly instructed in law could have come to the conclusion that tax had escaped assessment at the hands of the Assessee. In view of the provisions of Section 86 and Section 167B of the Income-tax Act, 1961, there is no occasion whatsoever to tax the amount received by the Assessee as a member of the AOP. 9. On the other hand, it has been urged on behalf of the Revenue that (i) The order of the Assessing Officer makes a reference to an agreement dated 26 August 2002 and not to the agreement dated 29 April 2003; (ii) Though the AOP has been assessed separately to tax, that would not preclude the Assessing Officer from determining in these proceedings as to whether the AOP is a genuine activity or otherwise. 10. In view of the decision of the Supreme Court in the case of CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312 the law in regard to the ....
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.... 3.49 crores in para 4 of the assessment order as being the share of profits of the Assessee from the AOP. The assessment order also contains a statement reflecting the awareness of the Assessing Officer of the fact that the gross sale proceeds were liable to be shared between the Assessee and its collaborator in the proportion of 35% and 65%. This statement is undoubtedly made in the context of the agreement dated 26 August 2002 which finds reflection in the order of assessment. The order of assessment however significantly demonstrates that (i) The Assessing Officer was aware of the fact that the Assessee had returned an income of Rs. 3.49 crores in the form of a share of profit by the AOP; and (ii) Under the terms of the agreement the Assessee was to have a share in the gross sale proceeds. 13. Now, the basis on which the assessment is sought to be reopened is that during the course of a survey under Section 133A certain material had emerged. More specifically, the reasons disclosed six documents upon which the Department sought to place reliance. In its reply dated 19 March 2011 the Assessee stated that four of the six documents upon which the Department sought to place relian....
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..... The Assessing Officer denied the benefits of Section 80IB(10) to the AOP and an amount of Rs. 14.63 crores was brought to tax. In appeal the CIT (Appeals) by an order 25 March 2010 granted the benefit of a deduction under Section 80IB(10) to the AOP. The Court is informed by learned Counsel that the Revenue has filed an appeal against the grant of a deduction under Section 80IB (10) to the A.O.P. The point, to be noted is that the AOP has been duly assessed and has been subjected to an order of assessment. The existence or validity of the A.O.P. is not questioned. Section 86 of the Income Tax Act, 1961 provides that where the Assessee is a member of an Association of Persons, income tax shall not be payable by the Assessee in respect of his share in the income of the association computed in the manner provided in Section 67A. Section 167B provides that where the individual shares of the members of an association of persons in the whole or any part of the income of such association are indeterminate or unknown, tax shall be charged on the total income of the association at the maximum marginal rate. Sub-section (2) of Section 167B stipulates that in a case which does not fall unde....