TaxTMI 
TaxTMI 
2016 (5) TMI 1542
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....ter rejection of petition u/s 264 on this issue in case of one of JV partner." 3. Ld. DR contends that the additional grounds are purely legal in nature, do not require fresh verification of facts and are necessary for the proper disposal of the appeal; in view thereof they may be admitted. Ld. Counsel for the assessee is heard. After hearing both the parties we admit the additional grounds raised by the revenue. 4. Brief facts are - M/s Kiran Tirupati Mangla JV i.e. assessee is an AOP, consisting of following three members/ participant companies namely: (1) M/s Kiran Infra Engg. Ltd., B-141, Road No. 9D, V.K.I.A., Jaipur; (2) M/s Tirupati Plastomatics Pvt. Ltd., B-141A, Road No. 9D, V.K.I.A., Jaipur and; (3) M/s Mangla Ispat (Jaipur) Ltd., B-234, Road No. 9, V.K.I.A., Jaipur. They formed a Joint Venture (JV) for making a bid of the supply and installation of signaling and telecommunication equipments in connection with the work invited by Rail Vikas Nigam Ltd. for conversion of meter gauge single line to broad gauge railway line of Rewari - Ringus - Phulera - Ajmer Section (294.57) in terms of the joint venture agreement dated 04.07.2006. 4.1 It was agreed between the JV....
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....nother member. Ld. CIT (Admn.)-II, Jaipur, however rejected the petition u/s 264 vide orders dated 05.03.2012 by following observations: "Therefore, the application of the assessee is rejected. The assessee may take other remedies available in the Income Tax Act to seek desired relief." Assessee was under bona fide impression that income cannot be taxed twice and suitable relief will be awarded by the 264 petition in the case of KIEL, consequently it awaited for its disposal. Since it was rejected it was left with no other option but to file an appeal before the Ld. CIT(A) belatedly. Appeal was allowed by the Ld. CIT(A) holding that department cannot tax an income twice which is against the fundamental principles of income tax, equity and justice, consequently the additions made by Ld. AO in the hands of assessee were deleted. 5. Aggrieved against the order of the Ld. CIT(A), the revenue is in appeal before us. 6. Ld. DR adverting to the first additional ground contends that the first appeal filed by the assessee was belated and ld. CIT(A) has not expressly condoned the delay, therefore, the matter should be set aside back to the file of ld. CIT(A) for passing appropriate orde....
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....d by law and was prevented by a reasonable cause in belated filing of first appeal. The facts in this behalf are self speaking; therefore, there is no perceivable delay in filing of appeal before ld. CIT(A). Besides ld. CIT, himself while passing the order u/s 264 rightly advised the assessee to pursue any other legal remedy and appeal before ld. CIT(A) being the other remedy it has been availed by the assessee. Consequently first additional ground of revenue is dismissed. 11. Apropos second additional ground also we find merit in the contentions of ld. Counsel for the assessee that 264 order was passed not in the case of impugned assessee but on the petition of lead partner KIEL, therefore, the technical bar raised by revenue may be applicable in the case of lead partner KIEL but byu no stretch of imagination in the hands of the assessee before us. The case laws cited by ld. DR are not at all applicable to the facts of the present case. Consequently this additional ground raised by revenue is also dismissed. 12. Adverting to merits of the case ld. DR relied on the order of ld. AO and contends that the right income should be assessed in the right hands. The income of the JV in th....
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....oon & Co. Vs CIT (26 ITR 27) (SC) wherein it was held that what was sought to be taxed must be income and it could not be taxed unless it had arrived at a stage when it could be called income. In the present case no income whatsoever had arisen or accrued to the assessee as the project was executed by M/s Kiran Infra Engg. Ltd. and entire receipts from such execution had been disclosed in its books of account. The concept of real income was therefore applicable in the case of the assessee as it had not earned any income chargeable to tax. Moreover the other partners of joint venture namely M/s Tirupati Plastomatics Pvt Ltd had supplied goods worth Rs. 80,65,615/- to M/s Kiran Infra Engineering Ltd which were ultimately consumed in the project. The other partner namely M/s Mangla Ispat had supplied steel for the project but their material was rejected since it did not conform to the standards laid down by the Indian Railways. Therefore the entire receipts of Rs. 52,29,54,166/- (including the receipts of Rs. 17,37,17,953/- taxed in the hands of assessee) were disclosed in the books of account of M/s Kiran Infra Engineering Ltd and profit of Rs. 3,13,68,010/- (including the profit of ....
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....ere firstly received in the bank account of Kiran Tirupati Mangla JV and immediately were transferred to M/s Kiran Infra Engg. Ltd. During the year under appeal. (2) That, entire receipts so received by M/s RIEL were disclosed in the return of income filed for A.Y. 2008-09 however, M/s Rail Vikas Nigam Ltd. has deducted the TDS only on the payment of Rs. 5,83,09,455/- which was claimed by M/s KIEL only, in the return of income filed by it, copy of the return of income, computation of income, Profit & Loss Account, details of contract receipts and bank account of M/s Kiran Tirupati Mangla JV have been placed on paper book. Further the copy of the work order awarded and the memorandum of understanding for JV participation are on record. (3) The contract as awarded by M/s Rail Vikas Nigam Ltd. was executed in sum and substance by M/s Kiran Infra Engg. Ltd. being a lead party to the joint venture and have also discharged the obligations of the project by utilizing its own funds and resources and had also provided the administrative and other necessary support as was required from time to time and had thus claimed the entire receipts from the execution of the project work as its gro....
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....e work and other administrative and financial supports therefore, the assessee joint venture being only a formal head to it has neither retained the receipts nor has earned any profit. 15. Ld. counsel submits that, all these crucial facts have completely been ignored by Ld. AO which make the assessment as arbitrary, leading to double taxation and contrary to settled principles of law. The Ld. CIT(A) after making analysis of entire facts has rightly concluded that the income being already accrued & declared by one of the constituents of JV, same income could not be assessed in the hands of this assessee. 15.1 The concept of accrual was considered in E. D. Sassoon & Co. v. CIT, (1954) 26 ITR 27 (SC) and it was held: "What is sought to be taxed must be income and it cannot be taxed unless it has arrived at a stage when it can be called income". In this case no income whatsoever has arisen to the assessee JV as the project was admittedly executed by lead partner M/s Kiran Infra Engg. Ltd. and entire receipts from such execution have been offered by it and accepted by the department. Consequently the ratio of E. D. Sassoon case on real income coupled with settled principle of not taxi....
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....a High Court in case of CIT (Asst.) V/s. Industrial Credit and Development Syndicate Ltd.[2006] 285 ITR 0310 has held that only real income alone taxable by following observations:- The inclusive definition of the word "income" in section 2(24) of the Income-tax Act, 1961 adds several artificial categories to the concept of income, but on that account, the expression does not lose its natural connotation. It has to be construed as comprehending only such things which are income according to the natural import of the term. It is the income which has really accrued or arisen to the assessee that is taxable. Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation. When in reality there is neither accrual nor receipt of income by the assessee, even though an entry to that effect might in certain circumstances have been made in the books of account, it would not constitute income for the purpose of levy of tax. A rebate obtained by the purchaser or remission of debt by a creditor would not result in the creation of income in the hands of the purchaser or debtor. It is contended that, Ld. CIT(A) after taking into c....