TaxTMI 
TaxTMI 
2006 (8) TMI 168
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.... of Haryana. It appears that under the local laws no entity could hold more than 28 acres of land and for a township to be set up there was a requirement of a minimum land holding of 100 acres. It is under these circumstances that the five companies decided to form a joint venture for development of land under the name of "Malibu Town". The question that arose before the income-tax authorities was whether these companies constitute an "association of persons" within the meaning of section 2(31)(v) of the Income-tax Act, 1961. According to the Assessing Officer, the entire control and management of all the five companies was in the hands of Shri Sudershan Kohli and his wife Mrs. Kumkum Kohli. The Commissioner of Income-tax (Appeals) in....
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....ng, development and sale of land reflected in the books of the assessee-company and similarly all the sales are shown in the books of the assessee-company. It is contended on the basis of these facts that there is no difference between the assessee and the other four companies and, therefore, the taxable entity is the assessee and not the association of persons. Learned counsel for the Revenue has relied upon B.R. Ltd. v. V.P. Gupta, CIT [1978] 113 ITR 647 (SC); Juggilal Kamlapat v. CIT [1969] 73 ITR 702 (SC) and CIT v. National Finance Ltd. [1962] 44 ITR 788 (SC) in support of her contention. The broad contention of learned counsel for the Revenue is that since there is unity of control and inter-dependence of these four companies....
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.... only one assessee was carrying on different businesses. But what is important in that judgment is that the conclusion of law that has been relied upon, namely, that if there is a common management, a common business organisation, a common administration, a common fund and a common place of business with inter-lacing and inter-dependence of business, then it could be said that there is no difference between two or more different businesses. But as noted above, the facts in B.R. Ltd. [1978] 113 ITR 647 (SC) are not at all applicable to this case where the entities are different. In Juggilal Kamlapat [1969] 73 ITR 702 (SC) and National Finance Ltd. [1962] 44 ITR 788 (SC), there were two separate entities and the issue was whether there is ....
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....essee and the other four companies are one and are carrying on the business with a view to denying tax to the Revenue does not arise. It is also worthwhile to note that the Commissioner of Income-tax (Appeals) has specifically referred to certain conclusions that he has arrived at. These facts are as follows: 1. There are five companies owning land and contributing these land holdings to a joint venture. Their ownership of land has not been questioned by the Assessing Officer. 2. They are not bogus companies. Their genuineness has not been questioned by the Assessing Officer. 3. Four of these companies have given a power of attorney to the assessee under which the assessee is developing/has developed the township. Thus, the asse....
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.... to the extent of the notional interest that should have been charged from the other four companies. It appears from the record that the Commissioner of Income-tax (Appeals) as well as the Tribunal have come to the conclusion that these were not in fact loans that were given by the assessee to the other four companies but it was their proportional share of the amounts earned by the business activities of the joint venture. The joint venture had received a sum of Rs. 55.96 crores as advance from the customers in respect of lands owned by all joint venture partners and sold by them. Out of this amount, a sum of Rs. 37.24 crores had been spent on the project and the balance funds were disbursed to the other companies after retaining some pa....