TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 221
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....t of consortium where the assessee is mentioned as one of the members holding 20 % share. M/s Deepali design Exhibits Private Limited is denying that it is a member of assessee AOP. As the additions made by the ld AO has been confirmed by the ld CIT (A) therefore the recovery proceedings were initiated against the assessee u/s 177 (3) of the act vide order dated 29/9/2017. Hence , as alleged by revenue being the member of assessee AOP, M/s. Deepali Design and Exhibits Pvt. Ltd preferred this appeal vide ITA No. 1561/Del/2017 against the order of the d CIT (A) . 3. Case history shows that assessee consortium was assessed by the Assistant commissioner of Income Tax , Central Circle -8, New Delhi vide order dated 30.05.2014 passed u/s 153A rws 144 and 144C of the Act, wherein, the income of the consortium is assessed on Rs. 4,05,19,46,960/-. The ld AO in passing the order in consortium has held that appellant M/s. Deepali Design and Exhibits Pvt. Ltd is having 20% in the above joint venture. The ld AO has held that the consortium consists of three partners (i) M/s. PICO Hong Kong with 60% share, (ii) M/s. PICO Event Marketing India Pvt. Ltd; (iii) M/s. Deepali Design and Exhibits Pvt....
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....Act, so far as may be, shall apply to any such assessment or imposition of penalty or other sum. Further as per sub section (4) Where such discontinuance or dissolution takes place after any proceedings in respect of an assessment year have commenced, the proceedings may be continued against the persons referred to in sub-section (3) from the stage at which the proceedings stood at the time of such discontinuance or dissolution, and all the provisions of this Act shall, so far as may be, apply accordingly. We have not been appraised that what are the actions taken by the Deepali against the order passed u/s 177 (3) of the act. It was also not addressed before us whether such order is required to be passed and whether such order is appealable, if yes, before which appellate authority. However the moot question involved in the present case which requires our consideration is whether Deepali is a member of the AOP or not as both the parties have taken a different stand on this aspect. 8. Therefore, an interim order was passed on 03.01.2018, wherein, the ld AO was directed to verify and submit the remand report categorically giving his finding as to whether assessee is member of AOP o....
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....hich is „aggrieved‟ by the any of the specified order u/s 253 of the Income tax Act, who can file an appeal before ITAT, AOP immediately filed an appeal in its own name signed by Deepali to avoid any confusion. Assessee AOP contends that apprehension of the AOP was valid and there was sufficient cause in delay in filing of the appeal. Looking at the facts and circumstances of the issue involved, it is apparent that assessee does not get any benefit in filing the belated appeal. Furthermore, on technical issues if the delays are explained, in the larger interest of the merits of the case, delay should be condoned, if sufficient cause is shown. In the present case, assessee has shown sufficient cause therefore, for rendering substantial justice and adopting a pragmatic and liberal approach we condone the delay in filing of the appeal. 14. On the merits of the issue, we note that the appeal has been filed in the name of M/s. PICO Deepali Overlays Consortium, signed by the authorized signatory of M/s. Deepali Design and Exhibits Pvt. Ltd. In the present case in the AOP M/s. PICO Deepali Overlays and Consortium, M/s. Deepali Design and Exhibits Pvt. Ltd is considered as a m....
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.... M/s Pico Event Marketing India Pvt. Ltd. & M/s Deepali Designs & Exhibits Pvt. Ltd. and formed a consortium for participating in the bid for Commonwealth Games 2010 , Delhi. As per terms of agreement dated 01.06.2010, M/s Deepali Designs and Exhibits P Ltd. was to receive from the consortium entire money related to their scope of activities carried out after a deduction of 23% in records of statutory and non statutory levies. iii. M/s Deepali Designs and Exhibits P Ltd. has referred to CBDT's Circular No. 07/2016 dated 07.03.2016 on the subject of clarification regarding taxability of Consortium members and certain judicial pronouncements on the issue of taxability of consortium. In this regard it is submitted that Board's Circular not applicable in view of the fact that in the instance case. The members of the consortium had themselves formed an AOP and filed that return of income of AOP for this purpose of changeability of tax. No contrary view has been taken by the department while adopting the status of the assessee. Case laws cited by the M/s Deepali Designs and Exhibits (P) Ltd are also of no help to it. In the case of Konkani Bharat Dairy Farm (AOP) vs. Assistan....
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....equisite documents and evidences before the Id AO in order to substantiate its case that it is not a member of the AOP." 2. Deepali Designs & Exhibits Pvt. Ltd. (DDEPL) filed the documents and evidence before the Id. AO and these may be considered as part of this reply, for the sake of brevity. Copy of the introductory notes filed before the assessment officer as per the direction of this Hon'ble tribunal and the index of the annexures filed along is enclosed herewith as Annexure-1 and 2. 3. The AO vide his remand report dated 27.03.2018 has concluded that "the AO had rightly assessed M/s Pico Deepali Overlays Consortium in the status of AOP where M/s Deepali Designs & Exhibits Pvt. Ltd. was a member of the AOP." 4. The above conclusion is premised on, in sum and substance, the following as per the remand report: (i) M/ s Pico Deepali Overlays Consortium filed its return of income in the status of AOP. (Reply - Undisputedly the return of income was filed by Mr. Tham Kok Fai who is a director of Pico Event Marketing (India) Pvt. Ltd.; he is not the manager or AR of M/s Pico Deepali Overlays Consortium nor of M/s Deepali Designs & Exhibits Pvt. Ltd. or in any way related ....
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....part of Deepali Designs & Exhibits Pvt. Ltd. to be a member of the purported AOP. 6. The presumption that PICO Deepali is a member AOP under the provisions of Income Tax Act, 1961 is illegal, bad in law and based on presumption contrary to fact/material available on record. It is also contrary to Circular No. 07/2016 dated 7th March, 2016 (Clarification regarding taxability of consortium members [Page 47-48 of CLC], Judgment of Delhi High Court in the case of Linde AG, Linde engineering division v. DCIT, [2014] 44 taxmann.com 244 (Delhi) [Page 01-44 of CLC] - upheld by Hon'ble Supreme Court in Director of Income Tax v. Linde AG, Linde engineering division, [2016] 73 taxmann.com 212 (SC) [Page 47-48 of CLC], CTCI Overseas Corporation Ltd. v. Director of Income Tax-1, International Taxation, [2014] 366 ITR 33 (Delhi) [Page 49-51 of CLC], 7. It is further submitted that the remand report admits that during the assessment proceedings the AO had knowledge of and on record both the agreements viz. agreement dated 19.12.2009 and 01.06.2010. However despite this, the AO and the assessment order has relied only on the agreement dated 19.12.2009 and has ignored the agreement dated 01....
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....ong Limited had 100% share in the AOP. Despite a company having 100% share in a purported AOP (and of the other two members having zero percent each) and that company using a sister concern to file the return, attend assessment proceedings etc.. As per our Knowledge, the AO has till date never issued any notice either during the assessment proceedings or during recovery proceedings or during remand proceedings to Pico Hong Kong Limited. Even a cursory examination of the materials on record would have shown that Pico Deepali Overlays Consortium is nothing but a trade name used by Pico Hong Kong Limited to do business in India but remain unaccountable under revenue laws. It is submitted that, to the best of our knowledge, Pico Hong Kong Limited did not obtain a PAN and has never filed a return of income; instead, it has been using the facade of Pico Deepali Overlays Consortium to generate income in India, repatriate it to Hong Kong and remain unaccountable for income tax. 12. It is reiterated that this reply is limited to the findings and observations in the remand report. Deepali Designs & Exhibits Pvt. Ltd. would rely on the materials submitted during the remand proceedings and w....
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.... further referred an agreement dated 19.12.2009 entered into by M/s. PICO Hongkong Ltd , M/s. PICO Event marketing India Pvt. Ltd and M/s. Deepali Desings and Exhibits pvt. Ltd. It is stated that at the end of the March 2010 because of dispute between the parties the relationship changed. Therefore, it was stated that from May 2010 onwards the assessee was not a member of the AOP. The ld AR further referred the addendum to the agreement dated 01.06.2011, wherein, the original agreement dated 19.12.2009 were amended. The salient features of the agreement were also explained. On that basis, it was stated that Deepali Design and Exhibits Pvt. Ltd is not member of AOP. However, it was submitted that Deepali Design and Exhibits Pvt. Ltd performed its scope of work in accordance with original contract but it is not a member of the AOP. Though the ld AR has submitted that while filing the return of income in case of APO, same was undeniable filed in the status of AOP but the grievance of the Deepali is that no consent etc was taken of Deepali while filing return as such. We do not find any such provision in the act that at the time of filing of the return of AOP each of the member must co....