TaxTMI 
TaxTMI 
2016 (8) TMI 777
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed the order passed by the CIT (A) and AO. 3. Tax Appeal No.2435 of 2010 and Tax Appeal No.2436 of 2010 challenges the order passed by the ITAT dated 16/04/2010 in ITA No.3179/Ahd/2007 for assessment year 2004-05 and ITA No.3180/Ahd/2007 for assessment year 2005-06 respectively and came to be admitted on the following questions of law: "(A) Whether in law, the Appellate Tribunal is justified in holding that the JV was no more in existence after 02.09.2002 and hence income should be taxed in the individual hands of the members of the JV without considering the fact that the JV continues to exist and the assessee filed the return of income for A.Y. 2003-2004 in the capacity of JV and offered the income for taxation in JV only and subse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it is dissolved. 6.1 Learned Counsel for the appellant - department has contended that the AO concluded that on principles of consistency and genuineness there is no justification for PEL to disclose its share of income in its company return of income. As per AO, the change in quantum of execution of work inter se between the members of the AOP (JV) will not affect the source of income generated being out of execution of contract with NHAI. He has contended that the AO asserted that the appellant itself has not disputed the existence of AOP and the income derived from the execution of Surat Manor toll way Project awarded to it by NHAI and thereby the AO concluded that the income of PEL arising out of the contract required to be added in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rangements between the two members. "Whereas, both LGE & C and Patel are jointly and severally liable for the performance of the Contract toward the Employer, and, for the effective and efficient execution of the Contract Work., the parties hereto, by mutual consent, divided the Contract Work approximately in proportion of 75% LGE&C and 25% Patel. Under the agreement, both parties has performed their respective scope of Work by developing its own resources. Patel shall take over, execute and complete the remaining works of LGE&C portion of 75% and all additional works to the original contract with the Employer under the Contract as well as works originally earmarked for Patel. (1) Patel shall complete all the works includi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r duty towards revenue work transferred to PEL which shall indemnify LGE&C against such liability/obligation or loss. LGE&C will remove itself from the site. However Patel will permit the employees to LGE&C to visit the site but the cost thereof shall not be borne by Patel. Patel will receive all the dues from NHAI and receipts from NHAI will be to Patel's account. LGE&C would be paid some compensation of Rs. 2.6 crores for transfer to remaining portion of work to Patel, which would be paid at the end of the contract by Patel. 11. Thus, after withdrawal of LGE&C from the association, no association of persons survived even though legally joint venture continued to exist till the completion of the work. Merely because joint venture is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o join in common purpose or to join in an action. The expression association of persons used in the Income tax assessment means the association in which two or more persons join in a common purpose and the object of each is to produce income profit or gains. Two or more persons to the association must jointly affect the transaction with a common purpose of producing income in a joint venture and both the persons as such play important role in connection with the carrying on of the operation of the business of the joint venture. However, there cannot be a universal formula to find out whether AOP is existing or not. What facts or how many of them or of what nature, are necessary to enquire into, come to the conclusion that there is an associ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ose to produce income, profit and gains. The assesmsent in the status of AOP was held not valid. **** 38. In our considered view income after 292002 really belonged to PEL in respect of the work carried out by it after 292002. Therefore, even if joint venture has declared income from work carried out after 292002 till 3132003 as its income, it does not prevent the revenue from taxing it in the hands of PEL as it is a right person in whose hands income, after supplementary agreement was executed, could be taxed. We have already held that no AOP continued to be in existence after 292002 as one member has lost interest in earning income for itself. Unless both the parties have common interest in earning income, no AOP can be said to be i....