TaxTMI 
TaxTMI 
2014 (4) TMI 1120
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....iled. As per the partnership deed Progressive Srinivasa joint venture was a partnership between Progressive Construction Ltd. and Srinivasa Construction Ltd. The assessee has shown NIL profit in the Contract account by showing distribution of contract account receipt of Rs. 57,06,737/- to Srinivasa Construction Ltd. The assessee is a separate legal entity which has received contract from Executive engineer Bhama Askhed Dam Division, Pune. The contract receipt reflected in the contract account have been received from the said authority. The assessee has assigned the work allotted to Srinivasa Construction Ltd .Thus this arrangement between these entities is nothing but a contract and the assessee being a firm joint Venture is Liable to deduction of tax at source under section 194C of the I.T. Act on this sub contract. It is mentioned in column No.26 of tax Audit Report as to whether the assessee has compiled with the provision of chapter XVII B regarding deduction of tax at source as "NA". Thus no tax has been deducted from the sub-contract assigned to Srinivasa Construction Ltd as required under section 194C of the I.T. Act. Since the assessee has handed over the entire contract re....
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.... or not. Reliance is placed on decision of Hon.Supreme Court in the case of Ch.Achaiah (1996) 218 ITR 239 and on the ruling of AAR in the case of Geoconsultant ST GMBH in 304 ITR 283." 4. The Ld. Counsel for the assessee at the outset referring to the decision of the Tribunal in the case of ITO Vs. M/s. Gammon Progressive JV vide ITA No.65/PN/2011 order dated 22-08-2012 submitted that identical issue had come up before the Tribunal and the Tribunal had dismissed the appeal filed by the Revenue by holding that there was no question of any disallowance under the provisions of section 40(a)(ia) of the I.T. Act. Referring to the said order he submitted that the Tribunal after thoroughly discussing the issue has dismissed the appeal filed by the Revenue. Since the facts in the case decided by the Tribunal are identical, therefore, respectfully following the above decision the grounds raised by the Revenue should be dismissed. 5. The Ld. Departmental Representative on the other hand while supporting the order of the Assessing Officer fairly conceded that the issue has been decided against the Revenue by the Tribunal. 6. We have considered the rival arguments ma....
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.... 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 AOP. 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 'Nil' 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 ....
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.... Officer, it was 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 venture AOP was for the distribution of receipts amongst its 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 the 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 to applicability of section 167B of the Act. The assessee also filed details of the returns of income 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 ....
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.... for the purpose of TDS. The two corporate entities forming joint venture were already being assessed since A.Y. 2000-01 onwards on their respective 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 assessee's 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. Moreover, 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 in double taxation of the same contract revenue which is in violation of the Karnataka High Court decision reported in 197 ITR 321 (Kar.). This view is fortified 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 acted as a conduit between the MSRDC and the two persons constituting....