ITO,Ward 14(3), Hyderabad V. M/s. KCEL-MEIL(JV), Hyderabad

ITA 323/HYD/2014

• Counselvise Citation: 32322514 RSA 2014
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Non-deduction of tax; Assessment record
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M.JAGTAP , ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO/ ___________ CROSS OBJEC - TION NO. THEREIN ASSESS - MENT YEAR APPELLANT RESPODNENT/ CROSS OBJECTOR 323 /HYD/201 4 & CO 29/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. KCEL - MEIL ( JV) HYDERABAD (PAN AABAC 7129 H) 324 /HYD/201 4 & CO 30/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - MAYTAS - ABB - AAG (JV) , HYDERABAD (PAN AABAM 1584 F) 325 /HYD/201 4 & CO 3 1 /HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - KCCL - FLOWMORE (JV) HYDERABAD (PAN AABAM 1253 H) 326 /HYD/201 4 & CO 3 2 /HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - MAYTAS - KBL (JV) HYDERABAD (PAN AABAM 1251 F) 327 /HYD/201 4 & CO 3 3 /HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - SEW - MAYTAS - BHEL(JV) , HYDERABAD (PAN AABAM 1587 G) 328 /HYD/201 4 & CO 34/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - SEW - ABB - AAG (JV) , HYDERABAD (PAN AABAM 1585 E) 329 /HYD/201 4 & CO 35/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - RATNA - KBL (JV) , HYDERABAD (PAN AABAM 1252 G) 330 /HYD/201 4 & CO 36/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. HCC - MEIL - CBE (JV) HYDERABAD (PAN AAAAH 3287 R) ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 2 331 /HYD/201 4 & CO 37/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - KBL - WEG - (JV) HYDERABAD (PAN AABAM 3374 P) 332 /HYD/201 4 & CO 3 8 /HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - MAYTAS - WPIL (JV) , HYDERABAD (PAN AABAM 1254 A) 333 /HYD/201 4 & CO 39/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. HCC - MEIL - NCC - WPIL (JV) , HYDERABAD (PAN AAAAH 3848 N) 334 /HYD/201 4 & CO 40/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - GAYATRI - ZVS - ITT (JV) , HYDERABAD (PAN AABAM 3375 N) 335 /HYD/201 4 & CO 41/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - ZVS - PVSRSN - ITT (JV) , HYDERABAD ( PAN AABAM 3376 R) 336 /HYD/201 4 & CO 42/HYD/2014 2010 - 11 INCOME - TAX OFFICER, WARD 14(3), HYDERABAD M/S. MEIL - IVRCL - HCC - WPIL (JV) HYDERABAD (PAN AABAM 1586 H) APPELLANT BY : SHRI RAMAKRISHNA BANDI RESPONDENT S/ CROSS OBJECTORS BY : SHRI K.C.DEVADAS DATE OF HEARING 12.12.2014 DATE OF PRONOUNCEMENT 13.01.2014 O R D E R PER BENCH : TH E S E FOURTEEN APPEAL S FIL E D BY THE R E VENU E IN THE CA S E OF FOURTEEN ASSESSEES ARE DIRECTED A G AIN S T A COMMON ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD DATED 6.12.2013 AND THE SAME HAVE B E EN H EA RD TOGETHER AND ARE BEIN G ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 3 DISPOSED ALONGWITH CORRESPONDING CROSS - OBJ E CTIONS FIL E D BY THE ASSES SEE COMPANIES, BEING CO NOS. 29 TO 42/HYD/2014 , BY A SINGLE CONSOLIDATED ORDER FO R TH E SAKE OF CONVENIENCE. 2. THE SOLITARY COMMON ISSUE INVOL V ED IN THE APPEALS OF THE REVENUE IS WHETHER THE ASSESSEE S IN THE PR E SEN T CA S E, WHICH ARE JOINT VENTURE S /CONSORTIUM S ARE REQUIRED TO DEDUCT TAX AT SOU R CE FORM THE PAYM E N T S MADE TO THEIR CONSTI T UENT MEMBERS ON ACCOUNT O F EXECUTION OF CONTRACT WORK. 3. THE ASSESSEES IN THE PRESENT CA S E ARE JOINT VENTURE S /CONSORTIUM S FORMED BY CERTAIN CONSTITUENT MEMBERS. THE PU R POSE OF THE FORMATION OF THESE JO I NT VENTURES/CONSORTIUM BY THE CONSTITUENT MEMBERS IS TO PUT THEIR EXPERTISE AND FINANCES TOGETHER SO AS TO M AKE THEMSELVES ELIGIBLE TO BID FOR BIGGER GOVERNM E N T CONTRACTS. ACCOR D INGLY , VARIOUS GOVERNMENT CONTRACTS W ERE SECURED IN THE NAMES OF JOI N T VENTURES/CONSORTIUM. ON ACCOUNT OF EXECUTION OF THE SAID CONTRACTS, PAYM E N T S WERE RECEIVED BY THE JOINT VENTURE S /CONSORTIUM S DURING THE YEAR UN D ER CON S IDERATION FROM THE CONCERNED GOVERNMENT AGENCIES AFTER DE D U C TION OF TAX AT SOU R CE AND THE SAME WERE TRANSFERRED TO THEIR CONSTITUENT MEMBERS AS PER THEIR RESPECTIVE SHARE S IN THE EXECUTION OF CONTRACT WI T HOU T DEDUCTION OF ANY TAX AT SOU R CE. THE CON S OR T IUM DID NO T RETAIN ANY COMMI S SION / MARGIN FOR T HEM SEL VES AND ACCORDINGLY FILED NIL RETURN OF INCOME FOR TH E YEAR UNDER CONSIDERATION. TH E CREDIT FOR TAX DEDUCTED AT SOU R CE BY THE DIFFERENT GOVERNMENT AGENCIES WAS ALLOWED TO BE CLAIMED BY THE CONSTITUENT MEMBERS IN AC C ORDANCE WITH RULE 37BA(2) OF THE INCOME - TAX RULES. 4. A SURVEY UNDER S.133A WAS CARRIED OUT IN THE BU S IN E SS PREMISES OF THE ASSESSEES ON 13.11.2009. BASED ON THE FINDINGS OF THE SURVEY, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE PAYMENTS MADE ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 4 BY THE JOINT VENTURE S TO T HEIR CONSTITUENT MEMBERS CON S T IT U TED PAYMENT S MADE TO THE SUB - CONTRACTORS AND THE ASSESSEE S (JOINT VENTURES), TH E R E FORE, WERE LIABLE TO DEDUCT T AX AT SOU R CE FROM THE SAID PAYMENT S UNDER S.194C OF THE ACT. SINCE NO SUCH TAX AT SOU R CE WAS DEDUCTED BY THE ASSESSEES, THE ASSESSING OFFICER TR E ATED THEM AS THE ASSESSEE S IN DEFAULT UNDER S.201(1) OF THE ACT IN THE CAPACITY OF AS S OCI A T I ON OF P ERSONS AND ALSO LEVIED INTEREST UNDER S.201(1A) OF THE A C T, ON THE FOLLOWING GROUNDS, AS SUMMARIZED BY THE LEARNED CIT(A) IN HIS IMPUGNED ORDER - (A) THE INTENTION/COMMON GOAL OF THE JOINT VENTURE WAS TO PRODUCE INCOME FROM RENDERING THE CONTRACT WORK. FOR THIS PURPOSE THE CONSTITUENTS OF THE JOINT VENTURE FORMED AN ASSOCIATION OF PERSONS. (B) ALL THE CONSTITUENTS ARE JOINTLY AND SEVERALLY RESPONSIBLE TO THE GOVERNMENT FOR EXECUTING PROJECT. (C) THE GOVERNMENT HAS AWARDED THE CONTRACT TREATING THE JOINT VENTURE AS A UNIT. THE CONTRACT IS NOT AWARDED TO THE INDIVIDUAL MEMBERS. (D) THE LEAD MEMBER IS RESPONSIBLE FOR DAY TO DAY MANAGEMENT AND COORDINATION AMONGST CONSTITUENTS. (E) THUS, THE JOINT VENTURE HAS THE ATTRIBUTES OF COMMON OBJECTIVES AND UNIFIED MANAGEMENT. (F) THUS, IN VIEW OF THE ABOVE CHARACTERS OF THE JOINT VENTURE WHERE THERE IS A COMMON PURPOSE OF PRODUCING THE INCOME AND THERE IS UNIFIED MANAGEMENT, JOINT VENTURE HAS TO BE TREATED AS ASSOCIATION OF PERSONS AND THE PAYMENTS MADE TO CONSTITUENTS ARE EQUIVALENT TO PAYMENTS MADE TO SUB - CONTRACTORS THEREFORE, LIABLE TO TDS U/S. 201(1) AND U/S. 201(1A). 5. AGAIN S T THE OR D ERS PASSED BY THE AS SESSING OFFICER UNDER S.201(1) AND S.201(1A) OF THE AC T, APPEALS WERE PREFERRED BY THE ASSESSEES BEFORE THE LEARNED CIT(A), WHO INITIALLY UPHELD THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER S.201(1)/S.201(1A), TR E ATIN G THE ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 5 ASSESSEE S AS IN DEF A ULT FOR T HEIR FAILURE TO DEDUCT TAX AT SOU R CE FROM THE PAYM E N T S MADE TO THEIR CON S TITUENT MEMBERS. ON FURTHER APPEALS FIL E D BY THE ASSESSEES, THE TRIBUNAL VIDE ITS ORDER DATED 30.5.2012 PASSED IN ITA NOS. 63 TO 76/ H Y D /0212, RESTORED THE MATTER BACK TO THE FIL E OF THE LEARNED CIT(A) TO DECIDE THE SAME AFRESH, WITH THE FOLLO W IN G DIRECTIONS - WE HAVE ALSO PERUSED THE DECISION OF THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF ITO V/S. UAN RAJU CONSTRUCTIONS (2011) 48 SOT 178) (VSPTNM ) AND MUMBAI BENCH DECISION OF THE TRIBUNAL IN THE CASE OF SMC CONSTRUCTIONS V/S ITO(2011)TIOL 597 - ITAT - MUM. RELATING TO TDS MATTERS IN RESPECT OF WORKS CONTRACTS TRANSFERRED BETWEEN THE JV AND ITS CONSTITUENTS/MEMBERS. THE TRIBUNAL UPHELD THE PROPOSITION THAT THE CONSORTIUM OF JV FORMED ONLY TO PROCURE CONTRACT WORKS AND THAT THE SAID CONTRACT WORK WAS EXECUTED BY THE CONSTITUENT/MEMBER, THERE IS NO MERIT IN PRESUMING THAT THE JV IS A CONTRACTOR AND ITS MEMBERS WERE SUB - CONTRACTORS FOR THE PURPOSE OF APPL YING TDS PROVISIONS AND THE PROVISIONS OF S.40(A)(IA). THE CIT(A) IS DIRECTED TO KEEP IN MIND THE RATIO OF THESE DECISIONS ALSO, WHILE RE - EXAMINING THESE MATERS AFRESH. ACCORDINGLY, IMPUGNED ORDERS OF THE CIT(A) ARE SET ASIDE AND ALL THESE MATTERS ARE RES TORED TO THE FILE OF THE FIRST APPELLATE AUTHORITY FOR FRESH ADJUDICATION ON ALL THE ISSUES INVOLVED IN THE APPEALS BEFORE HIM, IN VIEW OF OUR ABOVE DISCUSSION AND IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEES. 6. DURING THE COURSE OF SET ASIDE PROCEEDINGS, ELABORATE SUBMI S SION S WERE MADE ON BEHALF OF THE ASSESSEES BEFORE THE LEARNED CIT(A) IN SUPPORT OF THEIR CASES AS A WHOLE , CHALLENGING THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER S .201(1)/S.201(1A) TR E ATING THEM AS ASSESSEES IN DEFAULT, AND THE SAID SUBMI S SION S , AS SUMMARIZED BY THE LEARNED CIT(A) IN H ER IMPUGN E D ORDERS , WERE AS UNDER - ( A ) THE APPELLANT IS A JOINT VENTURE COMPRISING OF ITS CONSTITUENTS. IT HAD TAKEN UP IRRIGATION WORKS MOSTLY WITH THE GOVERNMENT OF ANDHRA PRADESH. THE WORK INVOLVED IS HIGHLY TECHNICAL AND REQUIRES BOTH EXPERTISE AND FINANCES. ( B ) THE GROSS RECEIPTS RECEIVED BY JOINT VENTURE ARE DISTRIBUTED AMONG ITS CONSTITUENTS IN PROPORTION TO THEIR SHARES. THE ARRANGEMENT BETWEEN THE J OINT VENTURE AND ITS CONSTITUENTS ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 6 WAS FOR SMOOTH IMPLEMENTATION OF ITS WORK AS PER THE STIPULATIONS OF THE GOVERNMENT. ( C ) THE EXECUTION OF WORK BY CONSTITUENTS OF JOINT VENTURE WAS AN INTERNAL ARRANGEMENT FOR SMOOTH AND TIMELY EXECUTION OF WORK DEPLOYING THE IR EXPERTISE AND CAPITAL. THERE IS NO CONTRACT BETWEEN THE JOINT VENTURE AND ITS CONSTITUENTS. IT IS THE JOINT VENTURE WHICH IS LIABLE TO THE GOVERNMENT FOR ANY BREACH OF CONTRACT BUT NOT ITS CONSTITUENTS. ( D ) AS PER THE LAW THERE CANNOT BE A CONTRACT BETWEEN THE JOINT VENTURE AND ITS CONSTITUENTS AS THERE IS NO DISTINCTION BETWEEN THE JOINT VENTURE AND ITS CONSTITUENTS. ( E ) ALTHOUGH THE JOINT VENTURE WAS ALWAYS CONSCIOUS THAT NO TDS IS DEDUCTIBLE AS PER LAW, THE TDS WAS DEDUCTED AS PER THE DIRECTION OF THE ASSES SING OFFICER AND THE SAME WAS TAKEN AS CREDIT BY CONSTITUENTS. THIS WAS DONE AS A MEASURE OF PRUDENCE TO AVOID ANY FUTURE DISPUTE AND PENAL ACTION/ THE CONCESSION UNDER INCORRECT ASSUMPTION OF LAW CANNOT BE TREATED AS WORDS OF STATUTE. IT IS WELL RECOGNIZE D PRINCIPLE THAT THERE IS NO ESTOPPEL AGAINST LAW, THE APPELLANT PLACES RELIANCE ON THE FOLLOWING CASE LAWS; ( I ) CIT V/S. VMRP FIRM 56 ITR 67 1974 IF A PARTICULAR INCOME IS NOT EXIGIBLE TO TAX UNDER THE STATUTE, THE ITO HAS NO POWER TO IMPOSE TAX ON THE SAME . ( II ) IN THE CASE OF A.VENKAT RAMAIAH 57 ITR 185V, THE HONBLE SUPREME COURT HELD THAT. EVEN IN CASES WHERE THE ASSESSEE HIMSELF HAD OFFERED THE INCOME TO TAX, IF IT IS NOT TAXABLE AS PER THE STATUTE, THE AMOUNT CANNOT BE BROUGHT O TAX. ( III ) BHARAT GENERAL RE - INSURANCE CO. LTD. 81 ITR 303 DELHI ( IV ) S.R.KOSHTI VS. CIT 193 CTR 518(GUJARAT) WHEREIN IT IS HELD THAT TAX CAN BE COLLECTED ONLY ON PROFIT UNDER THE ACT. IF AN ASSESSEE, UNDER A MISTAKE, WAS OVER ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRED TO AS SIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES ARE COLLECTED. ( F ) IN THE ABSENCE OF LIABILITY TO DEDUCT TDS, INTEREST U/S. 201(1A) IS NOT LEVIABLE. SINCE THE JOINT VENTURE CONSTITUENTS ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 7 HAVE ALREADY TAKEN CREDIT FOR TDS, THE ISSUE TO THAT EXTENT MAY BE TREATE D AS FINAL. ( G ) THAT THERE IS NO AGREEMENT BETWEEN THE JOINT VENTURE AND ITS CONSTITUENTS. THERE IS ONLY A MEMORANDUM OF UNDERSTANDING AMONG JOINT VENTURE CONSTITUENTS DISTRIBUTING AND ALLOCATING THE WORK. BY NO MEANS THESE AGREEMENTS CAN BE HELD AS AGREEME NT FOR CONTRACT BETWEEN THE JOINT VENTURE AND ITS CONSTITUENTS ( H ) THOUGH THE JOINT VENTURE HAS NOT RETAINED ANY PROFIT/COMMISSION WHEN THE AMOUNTS WAS PAID TO ITS CONSTITUENTS. THE JOINT VENTURE ALWAYS FILED A NIL RETURN OF INCOME AND THE PROFITS ACCRUED T O CONSTITUENTS WERE OFFERED IN THEIR RESPECTIVE INCOME - TAX RETURNS. ( I ) THE JOINT VENTURE IS AN ENTITY WHICH IS NOT GOVERNED BY INDIAN PARTNERSHIP ACT OR ANY OTHER STATUTE. THERE IS NO DEFINITION OF JOINT VENTURE IN INCOME - TAX ACT. ( J ) RELIANCE IS PLACED ON THE FOLLOWING PRECEDENTS. ( I ) GAURANGALAL CHATTERJEE (2001)(15 TAXMANN 653) ( II ) ITO VS/. OUN RAJU CONSTRUCTIONS VISAKHAPATNAM (2011) TIOU 5542 VIZAG ( III ) S.M.AMBICA JV VS. ITO (2011) (TIOL) 597 ITAT MUMBAI ( IV ) CIT V/S. SKAY CONSTRUCTION COJMPANY 2004, 140 TAXMANN 442(P& H) ( K ) DURING THE COURSE OF CURRENT PROCEEDINGS, THE APPELLANT TOOK THE STAND THAT THE TDS WAS MADE BY JOINT VENTURE ON THESE CONSTITUENTS ON ACCOUNT OF SURVEY ON 13.11.2009 ON BEING COMPELLED BY THE ASSESSING OFFICER AND SUCH PAYMENTS WERE MADE TO GOVERNMEN T ACCOUNT UNDER PROTEST. ( L ) THAT THE GOVERNMENT HAS ALREADY DEDUCTED TDS ON JOINT VENTURE. IF THE JOINT VENTURE AGAIN HAS TO DEDUCT TDS ON CONSTITUENTS, IT AMOUNTS TO DOUBLE DEDUCTION. AT EVERY STEP TDS AND AP VALUE ADDED TAX HAS TO BE DEDUCTED RESULTING IN SERIOUS LIQUIDITY PROBLEMS. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 8 7. THE ASSESSEES ALSO FURNISHED THE FOLLO W IN G DETAILS AND DOCUM E N T S BEFORE THE LEARNED CIT(A) IN SUPPORT OF THEIR CASES - ( A ) COPY OF INCOME - TAX RETURN OF JOINT VENTURE ( B ) COMPUTATION OF INCOME OF JOINT VENTURE ALONGWITH ANNUAL ACCOUNTS, 3CD REPORT ( C ) JOINT VENTURE AGREEMENT BEFORE BIDDING FOR THE CONTRACT. ( D ) A COPY OF THE CONDITIONS SPECIFIED BY THE GOVERNMENT BOTH FINANCIAL AND TECHNICAL AT THE TIME OF BIDDING WHICH RUNS INTO MORE THAN 500 PAGES (AS IT IS NOT POSSIBLE TO SUBMIT COP IES FOR ALL THE JOINT VENTURES A SAMPLE COPY WAS SUBMITTED IN THE CASE OF MEIL - MAYTAS - AVB - ANVRTIZ (JV)} ( E ) COPY OF THE JOINT VENTURE AGREEMENT AMONG CONSTITUENTS SUBSEQUENT TO AWARD OF CONTRACT BY THE GOVERNMENT. SAMPLE COPY OF MEIL, IVRCL - HCC WAS SUBMITTED A ND THE APPELLANT INFORMED THAT IN ALL THE EXISTING CASES THE TERMS OF AGREEMENTS ARE MORE OR LESS SIMILAR. 8 . AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE S AS WELL AS THE RELE V ANT DOCUMENTARY EVIDENCE PLACED ON RECORD BEFORE H ER , THE LEARNED CIT(A) OBSERVED THAT THE GOVE R NMENT AGENCY AS PER THE RELEVANT AGREEMENTS WERE CLEARLY DEALING WITH ONLY ONE ENTITY TERMED AS CONTRACTOR , WHICH W AS JOINT VENTURE. SHE NOTED THAT IN TH E AGREEM E NT RUNNING INTO MORE THAN 500 PAGES , NO REFERENCE WAS MADE EITHER TO JOINT VENTURE OR ITS CON S TITUENTS , AND THE REFERENCE ALL THROUGH WAS BY THE EXPRESSION CONTRACTOR AS A SIN G LE ENTITY AND AS SUCH, IN THE EYES OF THESE GOVERNMENT AGENCIES, THE CONSTITUENTS WERE NON - EXI S TING AND THEY HAD NO LOCUS STANDI . SHE HELD THAT ALTHOUGH DECLARATIONS UNDER RULE 37BA ( 2) WERE GIVEN BY THE JOINT VENTURE S AS DEDUCTEES TO THE DE D U C TOR FOR GIVING CREDIT OF TDS TO THE CONSTITUENTS, THE J OINT V ENTURE , AS PER THE AGREEMENTS WITH THE GOVERNMENT AGENCIES , W AS UNDER OBLIGATION TO ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 9 INFORM TO THE GOVERNM E N T AGENCIES ABOUT ANY WORK TO BE DONE BY THE SUB - CON T RACTORS AT THE TIME OF PUTTING THE BIDS, WHICH WAS NOT DONE. 9 . THE LEARNED CIT(A) FURTHER NO T ED F R OM THE PAST ASSESSMENT RECORDS THAT THE JO I NT VENTURE, HAD ALWAYS BEEN DEDUCTING TAX AT SOURCE F R OM THE PAYMENTS MA D E TO ITS CON S TITUENTS AND EVEN AS PER CLAUSE 6.5(H) OF THE J OINT V ENTURE AGREEMENT DATED 21.2.2009, THE JO I NT VENTURE W AS REQUIRED TO DEDUCT TAX AT SOU R CE FROM THE PAYMENTS MADE TO THE CONSTITUENTS. THE LEARNED CIT(A) ALSO NOTED FROM THE ANNUAL ACCOUNTS OF THE JOINT VENTURE THAT THE EXPRESSION SU B - CONTRACTOR WAS ALWAYS USED BY THE ASSESSEE W H ILE REFERRING TO THE CONSTITUENTS. AFTER HAVING RECORDED ALL THE ADVERSE FIN D IN G S AGAINST THE ASSESSEE R E J ECTIN G THE VARIOUS CONTENTION S RAISED ON BEHALF O F THE ASSESSEE S, THE LEARNED CIT(A) HOWEVER FINALLY HELD, FOR TH E FOLLO WIN G R E ASONS GIVEN , IN PARAGRAPH 11 OF HER IMPU G N E D ORDER, THAT THE ASSESSEE S COULD NO T BE TREATED AS IN DEFAULT AS PER S.201(1) OF THE ACT - 11. TO SUMMARIZE, THE JOINT VENTURE IN THIS GROUP OF CASES OBTAINED THE CONTRACT FROM THE GOVERNMENT. THE GOVERNMENT DEDUCTED THE TDS ON JOINT VENTURES. THE JOINT VENTURES IN TURN DEDUCTED ON ITS CONSTITUENTS. THE CONSTITUENTS HAD FILED THEIR INCOM E TAX RETURNS AND TAKEN THE CREDIT FOR THE TDS DEDUCTED BY THE JOINT VENTURES. AS PER THE AGREEMENT ENTERED AMONGST CONSTITUENTS, NONE O F THEM HAS ANY CONTROL OVER THE OTHER. EACH OF THEM IS EXECUTING THE CONTRACT AS S P E CIFI E D IN THE AGREEMENT. TH E CAPI T AL, TH E FINANCE, THE EXPERTISE, THE P R O F IT, OF EACH CONSTITUENT IS INDEPENDENT. THE PU R PO S E O F FORMING THE JOINT VENTURE IS TO MAKE IT ELIGIBLE TO BID FOR A CONTRACT. THE CONSTITUENTS ARE CAREFULLY CHOSEN S O THAT TOGETHER THEY QUALIFY FOR A PARTICULAR CONT RACT OF GOVERNMENT. IN THS SCENARIO, TH E JUDICIAL PRECEDENTS ARE PREDOMINANTLY IN F A VOUR O F TH E APPELLANT STATIN G THAT IN CA S ES WHERE THERE IS NO CONTRACT BETWEEN JOINT VENTURE AND ITS CONSTITUENTS, THE P R OV I SION S OF SECTION 194C ARE NO T APPLICABLE. TH E R E FORE, THE APPELLANT CANNOT BE DEEMED TO B E IN DEFAULT AS PER SECTION 201. , ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 10 10 . AFTER HAVING HELD T H A T THE ASSESSEE S COULD NOT BE TR E ATED AS ASSESSEES IN DEFAULT UNDER S.201(1), THE LEARNED CIT(A) HELD THAT THE ASSESSEE S WERE STILL LIABLE FOR PAYM E N T OF INTEREST UNDER S.201(1A) AND RELYING ON THE DECISION OF THE APEX COU R T IN THE CA S E OF HINDUSTAN CO - COLA B E VERAGES L TD. V/S. CIT (29 3 ITR 226), SHE HELD THAT SIN C E THE TDS MADE BY THE JOI N T VENTURE WAS THE MONEY BELONGING TO THE GOVERNMENT AND THE SAM E WAS NO T PAID WITHIN THE PR E SCRIBED TIME LIMITS, IT WAS LOGICAL TH A T THE J OINT V EN T U R E SHOUL D PAY INTEREST UNDER S.201(1A) OF THE ACT FOR USING THE GOVE R NMENT MONEY. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) GIVING RELIEF TO THE ASSESSEE IN TERMS OF S. 201(1), THE REVENUE HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL, WHEREAS THE ASSESSEES HAVE FILED THE C R OSS OBJ E CTIONS C HALLENGING THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE LEVY OF INTEREST UNDER S.201(1A). 11. THE LEARNED DEPARTMENTA L REPRESENTATIVE SUBMITTED THAT THERE WE RE TWO AGREEMENTS ENTERED INTO BETWEEN THE CONSORTIUM AND THEIR CONSTITUENT MEMBERS, ONE BEFORE SECURING THE TENDER AND THE OTH E R AFTER SECURING THE TENDER. HE CON T ENDED THAT THESE AGREEMENTS SPECIFICALLY ENTERED I NTO BETWEEN THE ASSESSEE - CONSORTIUM S AND THEIR CONSTITUENT MEMBERS FOR DISTRIBUTION OF THE WORK FOR EXECUTION OF CONTRACTS ARE IN THE NATURE OF WORKS CONTRACTS, AS ENVISAGED IN S.194C. HE CONTENDED THAT SUCH CONTRACTS , IN ANY CASE , CAN BE VERBAL ALSO AND THE FACT THAT T HE WORK SECURED BY THE ASSESSEE - JOINT VENTURES WAS ULTIMATELY ENTRU S TED TO THE CONSTITUENT MEMBER S FOR EXECUTION CLEARLY SHOW S THAT THERE WAS A CONTRACT BETWEEN THEM, SINCE IT IS NO T POSSIBLE WITHOUT SUCH CONTRACT, EI THER WRITTEN OR VERB AL, TO ENTRUST THE WO R K OF E X ECU T ION ON MUTUAL TERMS AND CONDITIONS. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER CONTENDED THAT THE GOVERNMENT AGENCIES, WHO ENTRUSTED THE CONTRACT TO THE CONSORTIUMS , NEVER RECOGNIZED THE CONST ITUENT MEMBERS OF THE ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 11 CONSORTIUM, AS THEY WERE NOT PARTIES TO ANY AGREEMENT ENTERED INTO WITH THE GOVERNMENT AGENCIES. HE SUBMITTED THAT THE CONTRACT FOR EXECUTION OF WORK WAS BETWEEN THE PRINCIPAL AND THE JOINT VENTURES OF THE CON S TI T UENTS, AND SIN C E T HE CONSTITUENT MEMBERS WERE NO T P A RTIES TO THE AGREEMENT/CONTRACT BETWEEN THE PRINCIPAL AND THE JOINT VENTURES, THERE HAS TO BE A SEPARATE AGREEMENT/CONTRACT BETWEEN THE JOINT VENTURE WHO GOT THE CONTRACT AND THEIR CON STI TUENTS, WHO EXECUTED THE CONTRACT. HE CONTENDED T H A T THE OBLIGATION TO PERFORM THE CONTRACT WAS ON THE JOINT VENTURE, AND IT WAS NOT POSSIBLE WITHOUT THERE BEING ANY CONTRACT/AGRE E MEN T TO ENTRUST THAT WORK/OBLIGATION TO THE CONSTITUENT M EMBERS . HE CONTENDED T H A T THE AGREEMENT ENTERED INT O BETWEEN THE J O INT VE N TURE AND THEIR CONSTITUENT MEMBERS POST TENDER TO DISTRIBUTE THE WORK OF EXECUTION OF CONTR A CT THUS ASSUMES SIGNIFICANCE AND THE SAME CLEARLY CONSTITUTES A CONTRACT BETWEEN THE JOINT VENTURE AND ITS CONSTITUENT MEMBERS TO ENTRUST TH E WORK OF EXECUTION, THUS ATTRACTING THE P R OVISION S OF S.194C OF THE ACT. IN SUPPO R T OF THESE CONTENTIONS, HE RELIED ON THE DECISION OF THE AUTHORITY FOR A DV ANCE R ULING REPORTED AT GEOCONSULT ZT GMBH, IN RE ( 304 ITR 283 ) - AAR. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO POIN T ED OUT THAT THE ENTIRE CONTRACT RECEIPTS RECEIVED FROM THE PRINCIPAL ON E XE CUTION OF WORK BELONG ED TO THE JOINT VENTURE S /CONSORTIUM S AND THE SAME INDEED W AS RECOGNISED BY THEM BY CREDITING SUCH RECEIPTS TO THEIR PROFI T & LOSS ACCOUNT. HE POIN T ED OUT THAT EVEN THE PAYMENTS MADE BY THE CONSORTIUM S /JOINT VENTURES TO ITS CONSTITUENT MEMBERS ON ACCOUNT OF EXECUTION OF WORK WERE CLAIMED AS EXPENDITURE BY THE M , TR E ATING THE SAME AS PAYMENTS MADE TO THE SUB - CONTR A CTOR S . HE CO NTENDED THAT THE RELATIONSHIP OF CONTRACTOR AND SUB - CONTRACTOR THUS WAS RECOGNISED AND ACCEPTED BY THE JOINT VENTURE S /CONSORTIUM S IN THEIR BOOKS O F ACCOUNT AND THIS T R E ATMENT GIVEN BY THE JOINT VENTURE S /CONSORTIUM S IN THE BOOK S OF ACCOUNT IS SUFFICIENT TO SHOW THAT THE TAX AT SOU R CE WAS REQUIRED TO BE ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 12 DEDUCTED BY THE ASSESSEE - JV S FROM THE PAYMENTS MADE TO THEIR CONSTITUENT MEMBERS AS PER THE P R O V I SI ON S OF S.194C. 14. THE LEARNED COUNSEL FOR THE ASSESSEE , ON THE O T H E R HAND , INVITED OU R ATTENTION TO THE REL E VANT PO R TION OF THE ORDER PASSED BY THE T RIBUNAL IN THE FIRST ROUND AND POIN T ED OUT THAT A SPECIFIC DIR E CTION WAS GIVEN BY THE T RIBUN A L TO THE LEARNED CIT(A) TO DECIDE THE ISSUE INVOLVED IN TH ESE CA S E S AFRESH IN THE L IGHT OF THE DECISION OF THE VISAKHA PATNAM B ENCH OF ITAT IN THE CA S E OF I TO V/S. UAN RAJU CON S TRUCTIONS (SUPRA) AND M UMBAI BENCH O F THE TRIBUNAL IN THE CA S E OF SMC AMBICA (SUPRA). HE ALSO INVITE D OUR ATTENTION TO PARAGRAPH 11 OF THE IMP UGNED ORDER O F THE LEARNED CIT(A) TO POINT OUT TH A T THE LEARNED CIT(A) AS P E R THE DI R ECTION S OF THE TRIBUNAL DECIDED THE ISSUE IN FAVOU R O F TH E ASSESSEE , HOLDING THAT THERE WAS NO RELATIONSHIP OF CONTR A CTOR AND SUBCONTRACTOR BETWEEN THE ASSESSEE - JOINT VENTURES AND THEIR CONSTITUENT MEMB E RS, SO AS TO ATTRACT THE P R OVISION S OF S.194C, RELYING ON THE DECISIONS OF THE VISAKH A PATNAM B ENCH OF THE ITAT IN THE CASE OF ITO V/S. UAN RAJU COSNTRUCITO0NS (SUPRA) AS WELL AS MUMBAI BENCH OF THE TRIBAL IN THE CASE OF SMC AMBIKA JV V/S. ITO (SUPRA). HE CONTENDED THAT THE F A CTS INVOLVED IN BOTH THESE CA S ES DECIDED BY THE COORDINATE BENCHES OF THE TRIBUNAL ARE SIMILAR TO THE FACTS OF THE PRESENT CA S ES AND THE LEARNED CIT(A) THEREFORE , WAS FULLY JUSTIFIED IN FOLLO W IN G THE SAID DECISION S OF THE TRIBUNAL TO DECIDE THE ISSUE IN FAVOU R O F THE ASSESSEE. RE LIANCE WAS ALSO PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE PUNJAB AND HARYANA H IGH COU R T IN THE C A SE OF E SS KAY CON S TRUC T ION S (1 67 I TR 618 ) IN SUPPORT OF THE ASSESSEES CA S E AND SUBMITTED THAT THE DECI SION RENDE RE D IN THE SAID CA S E BY THE HON'BLE PUNJAB AND H ARYANA H IGH COU R T INVOLVING SIMILAR FACTS AND CIRCUM S TANCES, HAS B E EN FOLLOWED BY THE MUMBAI BENCH O F THE TRIBUNAL IN TH E C AS E OF SMC AMBIKA JV (SUPRA), TO DECIDE A SIMI L AR ISSUE IN FAVOUR O F THE AS SESSEE. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 13 15. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ISSUE INVOLVED IN THE PRESENT CA S E THUS IS SQU A RELY COVER E D IN F A VOUR O F THE ASSESSEE BY THE TWO DECI SI ON S OF THE TRIBUNAL AS WELL AS THE DECISION OF TH E HON'BLE P U NJAB AND HARYANA HIGH COU R T IN TH E CA S E OF ESS KAY CON STRUCTION S (SUPRA) , WHEREIN A SIMILAR ISSUE WAS DECI D ED IN FAVOUR OF THE ASSESSEE INVOLVING SIMILAR FACTS AND CIRCUM S TAN C ES OF THE C A S E. HE INVITED OU R A T T ENTION TO THE COMPARATIVE STATEMENT PREPARED AND FURNISHED AT P A GES 10 TO 14 OF HIS PAPER BOOK TO POINT OUT THAT THE FACTS INVOLVED IN THE PRESENT CASE AS WELL AS T HE CLAUSES OF AGREEMENTS ARE NOT O N LY SIMILAR, BUT STRONGER THAN THE CA S ES DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE ON A SI M ILAR ISSUE. AS REGAR D S THE TREATMENT GIVEN BY THE ASSESSEE RECOGNIZING THE ENTIRE CONTR A CT RECEIPTS AS THEIR INCOME AND PAYM E N T S MADE TO THE CONSTITUENT MEMBERS TOWARDS EXECUTION OF CONTRACT, AS EXPENDITURE TR E ATIN G THE SAME AS PAYMENT TO SUB - CONTRACTS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOMENCLATURE USED IN THE A CC OUNT S OR TREATMENT GIVEN IN THE BOOKS OF ACCOUNT IS NO T CO N CLU S IVE TO DECIDE THE NATURE OF PAYM E NTS OR RELATIONSHIP BETWEEN THE TWO PART IES. HE ALSO POINTED OUT THAT THIS ASPECT HAS ALREADY BEEN CON S I D ERED IN ONE OF THE DECI S ION S RENDERED BY THE COORDINATE BENCH IN THE CASE OF HINDUSTAN RATNA JV V/S. ITO (ITA NO.372/HYD/2013) DATED 18 TH DECEMBER, 2013, WHILE DECIDIN G A SIMI L AR ISSUE IN FAVOUR O F THE ASSESSEE. HE PL A CED ON RECORD A COPY O F THE SAID DECISION RENDERED BY THE TRIBUNAL AND SUBMI T TED T H A T TH E ENTIRE CONTRACT RECEIPTS RECEIVE D BY THE JOIN T VENTURE WERE PASSED ON TO THE CON S TITUENT MEMBERS BY THE ASSESSEE IN THE SE CA S ES, WI THOUT KEEPING ANY PROFIT, AS IN THE CA S E OF HIND USTAN RATNA JV. (SUPRA). 16. IN THE REJOINDER, THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CA S E - LA W S CITED BY THE LEARNED COUN SE L FOR THE ASSESSEE ARE D ISTINGUIS H ABLE ON FACTS IN AS MUCH AS THE JOINT VENTURES IN TH E SE CA S ES W E RE FORME D TO SECURE THE CONTRACTS ONLY, AND THE EXECUTION WAS DONE ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 14 SEPARATELY BY THE CONSTITUENT MEMBERS. HE SUBMI T TED THAT THE BASIS OF SUCH BIFURCATION OF WORK WAS VERY CLEAR AND THE SAME WAS VERY MUCH KNOWN TO THE P R INC IPAL, WHO ENTRUSTED THE CONTRACT. HE ALSO SUBMI T TED THAT THE CONTRACT RECEIP T S IN TH OSE CA S ES DID NO T BELONG TO THE JVS AND THE SAME WERE RECOGNIZED BY THE CONSTITUENT MEMBERS AND NOT BY THE JOINT VENTURES. 17. WE HAVE CONSIDERED THE RIVAL SUBMI S SION S AND ALSO P E RUSED THE RELEVANT MATERIAL ON RECORD. THE COMMON ISSUE INVOL V ED IN THE PR E SEN T CA S ES I S WH E TH ER IN THE FACTS AND CIRCUMSTANCES OF THE C A S ES, THE ASSESSEES WHICH ARE JOINT VENTURES ARE REQUIRED TO DEDUCT TAX AT SOU R CE F R OM THE PAYM E N T S MADE T O THEIR CONSTITUENT MEMBERS ON ACCOUNT OF EXECUTION OF THEIR RESPECTIVE SHARES OF WORK. IT IS OB S ERVED THAT THIS I S SUE EARLIER HAD COME UP FOR CON S I D ERATION BEFORE THE COORDINATE BENCH O F THIS TRIBUNAL IN THE FIRST ROUND, AND KEEPING IN VIEW TH E VAR I OUS CONTENTION S RAISED ON BEHALF O F THE ASSESSEE, WHI C H WERE FOUND TO BE NOT PROPERLY ADJU D I C ATED BY THE LEARNED CIT(A), THIS ISSUE WAS REMITTED BACK BY THE TRIBUNAL TO THE LEARNED CIT(A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE PROVISIONS OF S.250(6). WH ILE DOING SO, THE TRIBUNAL IN PAR A GRAPH NO.12 OF ITS ORDER DATED 30 TH MAY, 2012 (SUPRA) TOOK NOTE OF THE TWO DECI S IONS CITED ON BEHALF O F THE ASSESSEE, ON E O F THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF U AN RAJU CON S TRUCTIONS (SUPRA) AND THE O T H E R BY THE MUMBAI BENCH OF THE TRIBUNAL IN TH E CASE OF SMC AMBIKA JV (SUPRA). ON A P ER U S AL OF THE ABOVE TWO DECISIONS, THE TRIBUNAL OB S ER V ED THAT THE SAME WERE RELATING TO T DS MATTERS IN RESPECT OF WORKS CONTRACTS TRAN S FERRED BETWEEN THE JV AND ITS CONSTIT UENT MEMBERS, WHEREIN THE PROPOSITION UPHELD WAS THAT THE CONSORTIUM OF J V WAS FORMED ONLY TO PRO C URE CONTR A CT WORKS, AND SIN C E THE SAID CONTRACT WAS EXECUTED BY THE CONSTITUENT/MEMBER S , THERE WA S NO MERIT IN PRESUMING THAT THE J V IS A CONTRACTOR AND ITS CONSTITUENT - MEMBERS A RE SUB - CON T RACTORS FOR THE PU R PO S E O F APPLYING TDS P R OVI S ION S AND THE P R O V I SI ON S ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 15 O F S.40(A)(IA). KEEPIN G IN VIEW THIS PROPOSITION PROPOUNDED BY THE TRIBUNAL IN ITS TWO DECISIONS, THE LEARNED CIT(A) WAS S PECIFICALLY DI RECTED BY THE TRIBUNAL TO KEEP IN MIND THE RATIO O F THESE DECISIONS ALSO AND REEXAMINE THE M ATTER AFRESH. 18. AS PER THE DIRECTION S OF TH E TRIBUNAL , THE LEARNED CIT(A) IN PAR A GRAPH NO.10 OF HER IMPUGN E D ORDER CONSI D ERED AND D I S CUSSED INTER ALIA THE DECISION S O F TH E TRIBUNAL IN TH E C A SE OF UAN RAJU CON S TRUC T ION S (SUPRA) AND SMC AMBIKA JV (SUPRA) AS UNDER - 10. T HE JUDICIAL PRECEDENTS ON THE ISSUE ARE AS UNDER : A ) ITO VS. UAN RAJU CONSTRUCTIONS (2011) 48 SOT 178 (VISAKHAPATNAM TRIB). IN THIS CASE, THE HON'BLE TRIBUNAL HAD DEALT WITH THE ISSUE 'WHETHER JOINT VENTURE HAS TO DEDUCT TDS ON CONSTITUENTS' ELABORATELY. THE FACTS OF THE CASE WERE IDENTICAL TO THAT OF THE APPELLANT . THE IMPORTANT OBSERVATIONS/REFERENCES MADE BY THE HON BLE TRIBUNAL ARE AS UNDER: ( I ) THAT THE JOINT VENTURES ARE NOT GOVERNED BY INDI AN PARTNERSHIP ACT, 1932. THERE IS NO STATUTE WHICH GOVERNS A JOINT VENTURE. HENCE, T HE RELATIONSHIP BETWEEN JOINT VENTURE AND ITS MEMBERS HAS TO BE DECIDED ON THE TERMS OF AGREEMENT. THOUGH THE JOINT VENTURE AG REEMENT GENERALLY FALL IN CATEGORY OF ASSOCIATION OF PERSONS UNDER INCOME TAX ACT, 1961. YET THEIR ASSESSABILITY IN THE STATUS OF AOP IS NOT FREE FROM DOUBT. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 16 ( II ) A JOINT VENTURE IS TO BE DISTINGUISHED FROM A RELATIONSHIP OF AN INDEPENDENT CONTRACTOR, THE LATTER BEING ONE WHO, EXERCISING AN INDEPENDENT EMPLOYMENT, CONTRACTS TO DO WORK ACCORDING TO HIS OWN METHODS AND WITHOUT BEING SUBJECT TO THE CONTROL OF HIS EMPLOYER EXCEPT AS TO THE RESULT OF THE WORK, WHILE A JOINT VENTURE IS A SPECIAL COMBINATION OF TW O OR MORE PERSONS WHERE, IN SOME SPECIFIC VENTURE, A PROFIT IS JOINTLY SOUGHT WITHOUT ANY ACTUAL PARTNERSHIP OR CORPORATE DESIGNATION. ( III ) IN CONCLUDING REMARKS, THE HONBLE TRIBUNAL HELD AS UNDER - 'THUS ON AN UNDERSTANDING OF THE CONCEPT OF THE 'JOINT VENTURE' AND THE TERMS OF AGREEMENT BETWEEN THE MEMBERS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, THE CONSORTIUM OF JOINT VENTURE HAS BEEN FORMED ONLY TO PROCURE THE CONTRACT WORKS. BY WAY OF THE AGREEMENT, THE PARTIES HAVE ONLY RE GULATED THE RELATION - SHIP INTER SE WITH RESPECT TO THEIR JOINT RESPONSIBILITY THAT EXISTED IN RELATION TO THE PRINCIPAL, VIZ., M/S. KONKAN RAILWAY. IN REALITY, THE PARTIES HAVE DIVIDED THE CONTRACT WORKS BETWEEN THEMSELVES AND THEY HAVE EXECUTED THEIR S HARE OF WORK ON THEIR OWN RISKS. IT IS PERTINENT TO NOTE HERE THAT THE AO HAS NOT GIVEN ANY FINDING ON THE ISSUES LIKE THAT EACH MEMBER HAD AUTHORITY TO INTERFERE WITH OR CONTROL THE WORK EXECUTED BY THE OTHER MEMBER; THAT BOTH THE MEMBERS HAVE JOINTLY EX ECUTED THE PROJECT AND THUS PRODUCED THE INCOME JOINTLY. IN OUR OPINION, THE FINDING ON THE LINES STATED ABOVE IS CRUCIAL TO DETERMINE THE ISSUE OF AVAILABILITY OF INCOME IN THE HANDS OF JOINT VENTURE - AOP. ON THE CONTRARY, THE AO IS ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 17 ON RECORD THAT THE EACH OF THE MEMBERS HAS DECLARED THE INCOME DERIVED FROM THEIR RESPECTIVE SHARE OF CONTRACT WORKS IN THEIR HANDS. IN THIS KIND OF SITUATION, WE DO NOT FIND MERIT IN THE PRESUMPTION MADE BY THE AO THAT THE JOINT VENTURE IS THE 'MAIN CONTRACTOR ' AND THE MEMBERS ARE THE 'SUB - CONTRACTORS'. ONCE THIS PRE - SUMPTION HAS BEEN FOUND TO BE WRONG, THEN THE QUESTION OF ESTIMATION OF INCOME BY WAY OF SUB - CONTRACTOR COMMISSION DOES NOT ARISE. SO ALSO THE QUESTION OF DEDUCTION OF TAX UNDER SECTION 194C(2) OF THE ACT AND THE DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE. IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION REACHED BY THE LEARNED. CIT(A). B ) SMC AMBIKA JV VS. ITO 2011 - TIOL0= - 597 - HONBLE ITAT - MUM. IN THIS CASE, THE ISSUE WAS WHETHER TDS WAS DEDUCTIBLE BY ASSOCIATION OF PERSONS, WHEN THE ENTIRE AMOUNTS RECEIVED WERE TRANSFERRED TO THE ACCOUNTS OF MEMBERS WITHOUT KEEPING ANY COMMISSION OR PROFIT? IT WAS HELD THAT THERE WAS NO CONTRACT OR SUB - CONTRACT RELATIONSHIP BETW EEN JV AND ITS PARTNERS. THEREFORE, SECTION 194C(2) HAS NO APPLICATION. C ) CIT V/S. AMBUJA GRLA KASH 31 DTR 49(HP) IN THIS CASE, THE ISSUE WAS WHETHER AN ASSOCIATION OF PERSONS FORMED BY THE TRUCK OPERATORS, HAS TO DEDUCT TDS WHEN THE PAYMENTS WERE MADE TO TRUCK OPERATORS, WHEN THE TDS WAS ALREADY DEDUCTED ON AOP. THE HON'BLE TRIBUNAL HELD THAT IN THE INSTANT CASE THE COMPANIES ENTERED INTO CONTRACTS FOR TRANSPORTATION OF GOODS WITH THE SOCIETY. THE SOCIETY IS NOTHING BUT CONGLOMERATION OF TRUCK OPERATORS. THE SOCIETY IS FORMED TO ENSURE THAT WORK IS PROVIDED TO ALL TRUCK OPERATORS ON EQUITABLE BASIS. THERE IS NO CONT RACT BETWEEN SOCIETY AND ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 18 MEMBERS. THEREFORE , PROVISIONS OF SECTION 194C(2) ARE NOT ATTRACTED. D ) IN THE FOLLOWING CASES THE HON'BLE SUPREME COURT HELD THAT THERE IS SUBSTANTIAL QUESTION OF LAW INVOLVED IN DETERMINING WHETHER THE AOP WAS LIABLE TO DEDUCT TAX ON ITS MEMBERS AND THE MATTER WAS REMANDED TO RESPECTIVE HIGH COURTS: A . CIT VS. SIRMOUR TRUCK OPERATORS UNION (2009) 313 ITR 27 (SE). A . CIT VS. BILASPUR DISTRICT TRUCK OPERATORS TRANSPORT COOPERATIVE SOCIETY (2009) 225 CTR (SC) 260. E ) GOURANGALAL CHATTERJEE AND OTHERS VS. ITO & OTHERS (2001) 247 ITR 737 (CAL). IN THIS CASE TWO PARTNERSHIP FIRMS WERE FORMED AS A JOINT VENTURE . THE DEPARTMENT ASSESSED THE INCOME IN THE HANDS OF TWO PARTNERSHIP FIRMS. IT WAS HELD THAT THE DEPARTMENT CANNOT PROCEED AGA INST THE JOINT VENTURE TREATING THE SAME AS BODY OF INDIVIDUALS. F ) CIT VS. ESKAY CONSTRUCTION CO. (2004) 267 ITR 618 (P&H) . . IN THIS CASE IT WAS HELD THAT IF THERE IS NO CONTRACT BETWEEN THE ASSESSEE AND A SISTER - CONCERN, THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. 11. ...... 19. AS DISCUSSED AND NOTED BY THE LEARNED CIT(A), THE FACTS INVOL V ED IN THE C A S E OF UAN R A JU CON S TRU C TION S (SUPRA) WERE FOUND TO B E IDENTICAL COMPARED TO THE CA S E OF TH E ASSESSEES HEREIN. SHE ALSO CON S I D ERED THE CONCLUDING REMARKS OF THE TRIBUNAL ON A SIMILAR ISSUE IN THE C A S E OF U AN RAJU CO N STRUCTION S (SUPRA) AS WELL AS IN TH E C A S E OF SMC ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 19 AMBIKA JV (SUPRA), AND FINALLY HELD THAT THESE JUDICIAL PRECEDENTS ARE DIRECTLY I N F A VOUR O F THE ASSESSEE. 20. AT THE TIME O F HEARING BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT THE TWO DECISION S OF THE TRIBUNAL IN THE CASE OF UAN R A JU CON S TRUCTIONS (SUPRA) AND SMC AMBIKA JV (SUPRA) CITED ON BEHA L F OF THE ASSESSEE AND RELIED UPON BY THE LEARNED CIT(A) TO DECIDE THE ISSUE IN F A VOUR OF THE ASSESSEE IN HER IMPU G N E D ORDER, ARE DISTINGUISHABLE ON FACTS IN AS MUCH AS T HE JOI N T VENTURE S IN THESE CASES WERE FORMED JUST TO SECURE THE CON T R A CTS, BU T THE WORK O F EX E CUTION WAS BIFURCATED AMON G ST THE CONSTITUENT MEMBERS ON A DEFINITE BASIS, WHICH WAS KNOWN EVEN TO THE PRINCIPAL. HE HAS ALSO CONTENDED THAT THE CON T R A CT REC E IPTS IN TH O SE C A SES DID NO T BELONG TO THE JOINT VENTURE AND THE SAME WERE RECO G NISED AS THEIR OWN TURNOVER BY THE CONSTITUENT MEMBERS. ON A C A REFUL PERUSAL OF THE DECISION S RENDERED BY THE TRIBUNAL IN TH E SE TWO CA S ES, WE ARE NOT ABLE TO AGREE WITH TH ESE CON T ENTION S OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. 21. IN THE CA S E OF U AN RAJU CON S TRUCTIONS (SUPRA), THE ASSESSEE WAS JOIN T VENTURE OF A COMPANY AND PROPRIETARY CON C ERN. THE JOINT VENTURE WAS FORMED IN ORDER TO COMBINE THEIR RESPECTIVE INDIVIDUAL RESOURCES, SINCE IT WOULD ENABLE TO PARTICIPATE IN THE TENDER PROCESS, WHICH WOULD ULTIMATELY HELP IN GETTING THE MAJOR CON T R A CT WORK. THE JOINT VENTURE OBTAINED CONTRACT FROM KONKAN RAILWAY CORPORATION AND THE SAME WAS D I VIDED BETWEEN THE TWO PARTIES IN AN AGREED RATIO. IN THE ACCOUNTS OF THE JOIN T VENTURE, THE GROSS RECEIPTS OF REL E VANT ACCOUNTING YEAR WERE CREDITED TO THE PROFIT & LOSS ACCOUNT AND TH E VALUE OF WORKS ALLOTTED TO BOTH THE MEMBERS, WHICH WAS EQUAL TO THE GROSS REC E IP T S , WAS DEBITED TO THE PROFIT & LOSS ACCOUNT. THU S , NO IN C OM E WAS SHOWN IN THE HANDS OF THE JOINT V ENTURE AND THE RETURNS OF INCOME WERE FILED IN BOTH THE RELEVANT YEARS IN THE STATUS OF ASSOCI A TION OF P ERSONS, DECLARING NI L ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 20 INCOME. KEEPING IN VIEW THESE FACTS AND CIRCUMSTANCES OF THE C A S E, THE ASSESSING OFFICER WAS OF THE VIEW THAT T H E ASSESSEE AOP SHOULD B E TREATED AS MAIN CON T R A CTOR AND THE MEMBERS TO WHOM THE WORK WAS ALLOT T ED SHOULD BE TREATED AS S UB - CONTR A C T OR. HE TH E R EF ORE , HELD INTER ALIA THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOU R CE FROM THE PAYM E N T S MADE TO TH E MEMBERS, AND SINCE NO SUCH TAX WAS DE D U C TED BY THE ASSESSEE AOP FROM THE CONTR A CT AMOUNT OF RS.31,54,425, HE MADE DISALLOWANCE O F THAT AMOUNT BY INVOKING THE P R OV I SION S OF S.40 (A)(IA). 22. THE FACTS OF THE CASE OF UAN RAJU CONSTRUCTIONS (SUPRA) , AS NARRATED ABOVE, SHOW THAT THE SAME ARE SIMILAR TO THE FACTS OF THE PRESENT CA S E AND IN OUR OPINION, THERE IS NO MATERIAL DISTINCTION IN TH E F A CTS OF THE PRESENT CA S E AS COMPARED TO THE F A CTS IN THE CASE OF UAN RAJU CONSTRUCTIONS (SUPRA). IN THE PR E SEN T CA S E, THE PURPOSE OF FORMING THE CONSORTIUM WAS STAT E D IN THE ORIGINAL CONSORTIUM AGREEMENT , SAMPLE OF WHICH IS PL A CED IN PAPER - BOOK, IN CLAUSE 3 AS UNDER - 3. PURPOSE OF THE CONSORTIUM : 3.1. THE PARTIES HEREBY HAVE AGREED TO COLLABORATE AND TO FORM A CONSORTIUM UNDER THE NAME AN D STYL E OF THE MEIL - SEW - MAYTAS - BHEL (CONSORTIUM), HYDERABAD AND WITH AN INTENTION OF POOLING UP THEIR RESPECTIVE QUALIFICATIONS AND TO SYN ERGIZE AND EXPLOIT THE RESPECTIVE EXPERIENCE AND EXPERTISE IN THE RESPECTIVE FIELDS FOR THE PURPOSE OF SECURING THE CONTRACT AND IN RELATION THERETO TO ASSIST EACH OTHER AND UTILIZE THEIR EXPERTIZE, EXPERIENCE AND KNOWLEDGE, AS MAY BE NECESSARY, FOR THE BI DDING AND IF AWARDED, FOR SUCCESSFUL IMPLEMENTATION, CONDUCT AND COMPLETION OF THE WORKS. THE PAR T IES HEREBY AGREE TO CO - OPERATE AND ACT IN GOOD FAITH, FAIRNESS AND E Q UITY AS BETWEEN THEMSELVES. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 21 3.2 I N THE EVENT, THE CONSORTIUM IS SU C CESSFUL IN TH E TENDER FOR THE WORK, THE P A RTIES HEREIN SHALL ENTER INTO A DETAILED AGREEMENT DEFINING THE NATURE OF THEIR ASSO C I A T I ON, AS THE CA S E MAY BE, AND SHALL REDUCE INTO WRITING THEREUNDER, THEIR RESPEC T IVE SCOPE O F WORKS, RESPONSIBILITIES, LIABILITIES AND ALL OTHER ASPECTS THAT HAVE NOT B E EN SPECIFICALLY COVERED HEREUN D ER. I T IS CLEARLY MANIFEST FROM THE ABOVE CLAUSE OF THE ORIGINAL CONSORTIUM AGREEMENT THAT THE CONSORTIUM/JOINT VENTURE WAS FORMED WITH AN INTENTION OF POOLING UP THEIR RESPECTIVE QUALIFICATIONS AND TO SYNERGIZE AND EXPLOIT THE RESPECTIVE EXPERIENCE AND EXPERTISE IN THE RESPECTIVE FIELDS FOR THE PURPOSE OF SECURING THE CONTRACT. IT WAS ALSO AGREED THAT IN THE EVENT, THE CONSORTIUM IS SUCCESSFUL IN THE TENDER FOR THE WORK, THE PARTIES THEREIN SHALL EN TER INTO A DETAILED AGREEMENT DEFINING THE NATURE OF THEIR ASSOCIATION, AS THE CASE MAY BE, AND SHALL REDUCE INTO WRITING THEREUNDER, THEIR RESPECTIVE SCOPE OF WORKS, RESPONSIBILITIES, LIABILITIES AND ALL OTHER ASPECTS THAT HAVE NOT BEEN SPECIFICALLY COVER ED THEREUNDER. ACCORDINGLY, THE DETAILED CONSORTIUM AGREEMENT WAS ENTERED INTO BETWEEN THE MEMBERS ON 31 ST JANU A RY, 2009 AFTER SECURING THE CONTRACT AND THE WORK O F EXECUTION WAS DISTRIBUTED AMONGST THE CONSORTIUM MEMBERS DEFINING THE SCOPE OF WORK, OP ERATION AND GENERAL APPLICATION IN CLAUSE NO.2.3 AND 3.1 TO 3.7 AS UNDER - 2. PURPOSE OF AGREEMENT 2.1 ...... 2.2 .... ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 22 2.3. THE PARTIES WOULD BEAR THE RESPONSIBILITY OF THE PROJECT SCOPE IN THE FOLLOWING RATIO - MEIL : RS .1504.705 CRORES - 46% SEW : RS. 981.328 CRORES - 30% MAYTAS : RS.654.218 CRORES 20% BHEL : R S.130.843 CRORES 04% 3. SCOPE OF WORK, VARIATIONS AND GENERAL OBLIGATIONS. 3.1 THE PARTIES HAVE AGREED THAT SEW & MAYTAS SHALL BEAR THE RESPONSIBILITY TO EXECUTE THE CIVIL WORKS OF THE PROJECT AND ALL OTHER WORKS LIMITING TO THE ABOVE MENTIONED VALUE IN CLAUSE 2.3. 3.2. MEIL SHALL EXECUTE THE ENTIRE HYDRO MECHANICAL & ELECTRICAL WORK OF THE PROJECT INCLUDING EMBEDDED PARTS WITH INSTALLATION. 3.3 THE CONTRACT ENVISA GES AN OPERATION & MAINTENANCE PERIOD OF 15 YEARS. THE PARTIES SHALL BE RESPONSIBLE FOR THE OPERATION AND MAINTENANCE OF THE SCOPE OF WORK EXECUTED BY THEM. 3.4 THE SITE ESTABLISHMENT FOR THE PROJECT VIZ. OFFICES, CAMP FOR EMPLOYEES/LABOUR , LABORATORY F ACILITIES, WORKSHOPS ETC., PERTAINING TO THE SCOPE OF CIVIL WORKS SHALL BE PROVIDED BY SEW. SIMILARLY, THE SITE ESTABLISHMENT FOR THE HYDRO MECHANICAL AND ELECTRI CAL WORK SHALL B E PROVIDED BY MEIL. 3.5 IT IS AGREED THAT COMMON COST, INCLUDING BUT NOT LIMI TED TO COST FOR THE FINANCIAL AND LEGAL ADVICE FOR COMMON INTEREST OF THE PARTIES SHALL BE BORNE BY THE PARTIES IN PROPORTION TO THE CONTRACT PRICE CORRESPONDING TO ITS SCOPE OF WORK, PROVIDED THAT ITEMS AND AMOUNTS OF COMMON COST SHALL BE MUTUALLY AGR EED BY THE PARTIES BEFORE INCURRING THE COSTS . 3.6. EACH PARTY UNDERTAKES THAT THE SUPPLIES, WORK AND SERVICES TO BE PROVIDED BY IT SHALL BE COMPLETE FOR THE PURPOSES OF THE CONTRACT, ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 23 SO THAT THE SUPPLIES, WORK AND SERVICES PROVIDED BY ALL THE PARTIES TOGETHER SHALL COMPRISE THE ENTIRE WORK. WITHOUT PREJUDI CE TO THE GENERALITY OF THE FOREGOING AND SUBJECT TO THE PROVISIONS OF THIS CLAUSE 3 OF EACH PARTY'S SCOPE OF WORK 3.7. WITHOUT PREJUDICE TO THE PROVISIONS OF OTHER CLAUSES IN THIS AGREEMENT, EACH PARTY SHALL BE SOLELY AND ENTIRELY RESPONSIBLE IN PARTICULAR (BUT WITHOUT LIMITATION) ( A ) FOR THE SUFFICIENCY OF THE TENDER AND CONTRACT PRICES FOR ITS SCOPE OF WORK AND RESPONSIBILITIES; ( B ) FOR THE DUE PERFORMANCE OF ITS SCOPE OF WORK IN ACCORDANCE WITH THE TERMS OF THE CONT R ACT; AND ( C ) FOR THE TIMELY EXECU TION OF ITS SCOPE OF WORK IN ACCORDANCE WITH THE CONTRACT PROGRAMME (AS MAY BE VARIED OR EXTENDED IN ACCORDANCE WITH THE CONTRACT) . ( D ) FOR INVESTIGATION, DESIGN, GOODS SERVICES, FUEL, POWE R C ON SUMABLES AND WORKS, WHICH THOUGH N O T EXPRESSLY STIPUL A TED IN TH E CONTRACT MAY REASONABLY BE INFERRED TO FORM PART OF ITS SCOPE OF WORK OR TO BE NECESSARY FOR THE PERFORMANCE OF SUCH SCOPE OF WORK , EXCEPT TO THE EXTENT : ( I ) SUCH THINGS WHICH ARE EXPRESSLY PROVIDED WITHIN THE SCOPE O F WORK OF ANOTHER PARTY FOR SUCH PURPOSE, OR ( II ) THE EMPLOYER AGREES ON A VARIATION TO CO V ER TH E ADDITIONAL COST OF P R OVI D IN G SUCH THINGS, OR ( III ) THE EMPLOYER ALLOCATES OR AGREES THAT SUCH A THING SHALL BE EXTRA WORK TO THE PROVISIONS IN THE CONTRACT. 3.8.. 23. THE ABOVE CL A USES OF THE DETAILED C ON S ORTIUM AGREEMENT CLEARLY SHOW T H A T T H E CONTR A CT WO R K WAS DISTRIBUTED AMONG THE MEMBERS ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 24 OF THE CONSORTIUM ON A DEFINITE BASIS AND ALTHOUGH I T WAS NO T SPECIFICALLY RECOGNIZED O R ACKNOWLEDGED BY THE PRINCIPAL, COPY O F THE ORIGINAL CONSO RT IUM AGREEMENT HAVING BEEN FIL E D ALONG WITH TH E TENDER DOCUMENT, THE SAID PRINCIPAL S WERE FULLY AWARE OF THE PURPOSE OF FORMING THE CONSORTIUM. IN ANY CA S E, TH E RE IS NOTHING IN TH E O R DER OF THE TRIBUNAL PASSED IN TH E CA S E OF UAN RAJU C ON S TRUC T IONS (SUPRA) TO SHOW TH A T THE BASIS OF THE DIST R IBU T ION OF WORK AMONGS T THE MEMB E RS OF THE CONSORTIUM WAS KNOWN TO AND RECOGNISED BY THE PRINCIPALS, AS SOUGHT TO B E CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE . ON THE OTHER HAND, TH E ENTIR E CONTRACT RECEIPTS WERE PAID BY THE PRIN C IP A L TO THE JOINT VENTURE IN TH A T CASE, LIKE IN THE P R ESENT CA S E, AND THE SAME W E RE SUBSEQUENTLY P ASS ED OVER TO THE CONSTITUENT MEMBERS IN THE R ATIO OF THEIR RESPECTIVE SHARE OF WORK. TH E CON T RACT RECEIPTS SO RECEIVED BY THE JOINT VENTURE WERE CREDITED TO ITS PROFIT & LOSS ACCOUNT AND THE ENTIRE AMOUN T OF SUCH RECEIPTS SUBSEQUENTLY DISTRIBUTED TO THE MEMBERS WAS DEBI T ED TO THE PROFIT & LOSS ACCOUNT, L E AVING NO PROFIT OR INCOME TO THE JOINT VENTURE. 24. IN THE CASE OF UAN RAJU CONSTRUCTIONS (SUPRA), CLAUSE 9 OF THE CONSORTIUM AGREEMENT DEALT WITH THE RESOURCES AND HAD SP E CIFICALLY STATED THAT EACH MEMBER OF THE JOINT VENTURE SHALL PROVIDE PLANT AND EQUIPMENT REQUIRED FOR EXECUTION OF THEIR PORTION OF THE CO NTRACT AND SUCH PLANT AND M A CHIN E RY SHALL N OT B E COM E THE ASSET OF THE JOIN T VENTURE. AF T ER TAKING NO T E O F THIS CLAU S E IN PARAGRAPH NO.11.1 OF ITS ORDER, THE TRIBUNAL HELD THAT THERE WAS THUS NO CL E AR PROVISION IN THE JOIN T VENTURE A G REEMENT PROVIDING ANY JOINT EXECUTION OF THE PROJECT AND THE JOIN T REALIZATION OF PROFITS. IN THE PRESENT CASE , CLAUSE 14 OF THE DETAILED CONSORTIUM AGREEMENT DEALT WITH JOINT AND SEVERAL LIABILIT Y O F THE MEMBERS, WHICH SPECIFICALLY PRO V IDED THAT EACH PARTY SHALL B E RESPONSIBLE TO MOBIL IS E ITS PART OF RESOU R CES R E QUIRED FOR THE PROJECT, FOR EXAMPLE, ENGINEERS, TECHNICIANS, MAN - P OWER, PLANT MACHINERY, LAB AND S URVEY ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 25 EQUIPM E N T AND FINANCIAL R E SOU R CES REQUI R ED TO COMPLETE ITS SCOPE O F THE CONTRACT IN TIME AS PER THE ACC EPTED TIM E SCHEDULE. 25. IN TH E CA S E OF UAN RAJU CONSTRUCTIONS (SUPRA), THERE WAS C LAUSE 3(A ) IN TH E CONSORTIUM JOINT VENTURE AGRE E MENT, WHICH PROVIDED T HAT THE MEMBERS OF THE JOINT VENTURE WOULD SHARE IN A PR E SCRIB E D PERCENTAGE , THE PROFITS ARISING OUT OF THE JOINT VENTURE. IN SPITE OF THIS SPECIFIC CLAUSE, THE TRIBUNAL H E LD THAT IN REALITY, THE MEMBERS OF THE JOI N T VEN T U R E HAD SH A RED THE WORK ONLY AND THERE WAS NO PROFIT OR LOSS IN TH E JOINT VENTURE. AS ALR E ADY NOTED BY US, THE DETAILED CONSORT IUM AGREEMENT IN THE PR E SEN T CA S E PROVIDED FOR SHARING OF THE RESPONSIBILITY OF TH E PROJE C T IN THE PR E SCRIB E D PERCENTAGE AND NOT THE PROFIT ARISING OUT O F THE JOINT VENTURE, AND THI S B E IN G SO, WE AGREE WITH THE CONTENTION OF TH E LEARNED COUNSEL FOR THE ASSESSEE THAT THE FACTS INVOLVED IN THE PR E SEN T CA S E ARE LITTLE MORE FAVOURABLE TO THE ASSESSEE THAN THE FACTS IN THE CA S E OF UAN RAJU CONSTRUCTIONS (SUPRA). 26. IT IS THUS C LEA R THAT THE FACTS INVOLVED IN THE C AS E OF UAN RAJU CONSTRUCTIONS (SUPRA) WE RE MATERIALLY SIMILAR TO TH E FACTS INVOLVED IN THE PRE SE N T CA S E AND AS HELD BY THE TRIBUNAL IN THAT CASE, AFTER T AKING INTO CONSID E RATIO N SUCH FACTS , IT WAS CLEAR FROM TH E TERMS OF THE AGREEMENT BETWEEN THE MEMBERS OF THE JOINT VENTURE THAT THE CONSORTIUM OF JOINT VENTURE HA D B E EN FORMED ONLY TO P R O C URE THE CONTR A CT WORKS AND BY WAY OF THE AGREEMENT , EACH PARTY HAD ONLY REGULATED THE RELATIONSHIP INTO JOIN T RESPONSIBILITY THAT EXISTED IN REL A TION TO THE PRINCIPAL. I T WAS HELD THAT THE MEMBERS OF THE JOINT VENTURE IN REALITY H A D DIVIDED THE CONTRACT WORKS BETWEEN TH E M S ELVES AND THEY HAV ING EXECUTED THEIR RESPECTIVE SHARE OF WORK ON THEIR OWN RISK AND HAVING DECL A RED INCOME FROM THEIR RESPECTIVE SHARE O F WORK IN THEIR HANDS, IT WAS NOT A CASE WHERE THE JOINT VENTURE WAS THE MAIN CONTRACTOR AND THE MEMBERS WERE THE SUB - CON T RACTORS, AS PRESUMED/ALL E GED BY THE ASSESSING OFFICER. IT W A S HELD ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 26 THAT THE QUESTION OF DEDUCTION OF TAX AT SORUCE UNDER S.194C(2) OF THE ACT BY THE JOIN T VENTURE F R OM THE PAYM E N T S MADE TO THE MEMB E RS, T H US, DID NO T ARISE AND THERE WAS NO CA S E OF DISALLOWANCE UNDER S.40(A)(IA). 27. EVEN IN TH E C A S E OF SMC AMBIKA JV (SUPRA), THE FACTS INVOLVED WERE S IMILAR TO THE FACTS OF THE PR E SEN T CA S E INASMUCH AS THE AGREEMENT BETWEEN THE MEMBERS OF TH E AOP H A D CLEARLY S PECIFIED THAT THE AOP WAS FORMED TO BI D FOR THE WORK OF THANE MUNICIPAL CORPORATION AND THAT T HE MEMB ER S WERE TO SHARE THE EXPENSE AS WELL AS THE RESPONSIBILITY FOR THE EXECUTION OF THE PROJECT IN THE RATIO OF 51 AND 49%. FO R TH E REL EV ANT YE A R, THE AOP CRE D ITED THE ENTIRE CONTRACT RECEIPTS FROM TH A N E MUNICIPAL CORPORATION TO ITS PROFIT & LOSS ACCOUNT AND AFTER DEBITING THE PAYM E N T S MADE TO THE MEMBERS TOWARDS THEIR SHARE OF WORK, THE PROFIT WAS DECLARED AT RS.NIL. THE AOP DID NO T CARRY ANY WORK BY ITSELF AND THE ENTIRE WORK WAS C ARRIED OUT BY THE MEMBERS OF THE AOP. THE ENTIRE PROJECT THUS WAS EX E CUTED BY TH E AOP PARTNERS AND THE AOP WAS FORMED ONLY FOR BIDDING THE TEND ER AND GETTING THE CON T RACT FOR THE AOP PARTNERS FOR EXECUTION. KEEPING IN VIEW THESE FACTS OF THAT CA S E, WHICH ARE SIMILAR TO THE FACTS OF THE PRESENT CA S E, THE TRIBUNAL H E LD THAT THERE WAS NO CONTRACT OR O R SUBCONTRACT OR RELATIONSHIP EXISTED B E TWEEN THE AOP AND ITS JOIN T VENTURE PARTNERS AND S .194C(2) HA D NO APPLICATION. 28. AT THE TIME OF HE A RING BEFOR E US, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE DECISION OF THE AUTHORITY FOR AD V ANCE RULING IN THE CA S E OF GEOCONSULT ZT GMBH, IN RE (SUPRA) IN SUPPORT OF THE REVENUE S CASE ON THE I S SUE U NDER CON S IDE R ATION. IT IS HOWEV E R , OBSERV E D THAT THE ISSUE INVOLVED IN THAT CA S E BEFORE THE AAR WAS ALTOGETHER DIFFERENT THAN THE ISSUE INVOLVED IN THE PR E SEN T CA S E. I N TH E SAID CASE, A CO M PA N Y IN C OR PORATED IN AUSTRIA FORMED A JO I N T VENTURE WITH TWO INDIAN COMPANIES SPECIALIZING IN PROVIDING PROJECT C ONSULTANCY SERVI C ES. THE ROAD DE VELOPM E N T C ORPORATION OF H IMACHAL PRADESH HA D AWARDED A ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 27 CONTRACT TO THE AUSTRIAN COMPANY TO PROVIDE CONSULTANCY SERVI C ES FOR THE DEVELOPM E N T O F SEVEN TUNNELS IN SIMLA AS WELL AS OTHER AREAS OF HIMACHAL PRADESH. THE THREE PART I ES WHO FORMED THE JO I NT VENTURE , HAD AGREED TO COLLABORATE FOR ALL WORK ASSOCIATED WITH THE CONSULTANCY SERVI C ES FOR FEASIBILITY DESIGN OF THE ROAD TUNNELS. THE CONTRACT WAS BETWEEN THE THREE PARTNERS OF THE JO I NT VENTURE AND THE CORPORATION AND PROVIDED THAT ANY INCOME EARNED BY THE VENTURE WOULD BE TH E INCOME O F THE VENTURE AND NO T O F THE IN D I V I D UAL PARTNERS. THE AGREEMENT BETWEEN THE THREE P A RTIES TO TH E JOIN T VENTURE PROVIDED I N TER ALIA THAT (I) EACH MEMBER WAS RESPO N SIBL E FOR FULFILLING THE OBLIGATION UNDER THE CONTRACT; (II) EACH MEMBER HAD UNRESTRICTED ACCESS TO ANY WORK CARRIED OUT BY THE MEMBERS IN CONN EC TION WITH THE PROJECT; AND (III) IN TH E EVENT OF INSOLVENCY OF ANY MEMBER, THE O T H E R MEMB ER S WERE IRRE V O C ABLY APPOIN TE D TO ACT FOR THAT MEMBER IN ALL MATT E RS, THEY BEING JOINTLY AND SEVERALLY RESPONSIBLE ON ITS BEHALF. AS BETWE E N T HE MEMBERS OF THE JOINT VENTURE , THE DISTRIBUTION OF FEE S RECE IVED FROM THE CORPO R ATION WAS IN THE RATIO OF 50%, 20% AND 30% AND EACH MEMBER HAD TO BE A R ITS OWN CO S TS AND EXPENSES IN TH E SE FACTS AND CIR C UMST A NCES INVOLVE D IN THE CA S E OF GEOCONSULT ZT GMBH (SUPRA) , RULING WAS SOUGHT FROM THE AAR ON TH E QUESTION WH E TH E R THE JOIN T VENTURE COULD B E TREATED AS AN ASSOCI A TION OF PERSONS UNDER S.2(31) ( V) OF THE INCOME - TAX ACT, 1961 . IT WAS HELD BY THE AAR THAT THE JOIN T VENTURE CON S T IT UTED AN A SSOCIATION O F P ERSONS IN CONSONANCE WITH S.2(31)(V) READ WITH THE E XPLANATION T HERETO, AND THE ASSESSMENT OF A SSOCIATION OF P ERSON THUS WAS MANDATORY IRRESPECTIVE OF THE ULTIMATE D I VISION OF PROFITS AMONGST THE MEMBERS OF TH E JOIN T ENTERPRISE. IT IS THUS CLEAR THAT THE ISSUE INVOL V ED BEFORE THE AAR IN THE CA S E OF GEOCONSULT ZT GMBH (SUPRA) WAS ENTIRELY DIFFERENT FROM TH E I SSUE INVOLVED IN THE PR E SEN T CA S E AND THE RATIO O F THE SAID DECISION CANNOT B E OF ANY HELP TO SUPPO R T THE RE VENUES STAND ON THE ISSUE INVOLVED IN THE PR E SEN T CASE. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 28 29. IT IS OBSERVED THAT HYDERABAD BENCH OF THE TRIBUNAL ALSO H A D A N OCCASION TO DEAL WITH A SIMILAR ISSUE IN THE CA S E OF H INDUSTAN R A TNA JV (SUPRA) IN THE CONTEXT OF DISALLOWANCE MADE UNDER S .40A ( IA ) INVOLVING SIMILAR FACTS AND CIRCUMSTANCES AS INVOL V ED IN THE PR E SEN T CA S E AND THE SAME WAS DECID E D BY TRIBUNAL IN F A VOU R O F TH E ASSESSEE AFTER CONSIDERING ALL THE RELE VA N T ASPECTS OF THE MATTER IN DETAIL IN PARA G RAPHS 14 TO 22, WHICH READ AS UNDER - 14. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. AS SEEN FROM THE RECORD, THE PARTNERSHIP DEED DATED 31/08/2007 PLACED AT PAGES 175 TO 177 OF PAPER BOOK, THE FIRM WAS FORMED WITH TWO PARTNERS, VIZ., HES INFRA PVT. LTD. AND RATNA INFRASTRUCTURE PROJECTS PVT. LTD. FOR THE PURPO SE OF CARRYING THE BUSINESS OF WORKS CONTRACTS TO ACT AND SUBMIT PREQUALIFICATION APPLICATION TO SUBMIT BID IF PREQUALIFIED AND EXECUTE THE CONTRACTS. IN THE WAY OF EXECUTING THE CONTRACT WORKS, ASSESSEE GOT CONTRACT FROM VARIOUS GOVERNMENTS AND DISTRIBUTE D THE WORKS AMONG TWO PARTNERS AND EXECUTED THE WORK AND THE PAYMENT HAS BEEN RECEIVED BY THE PARTNERSHIP FIRM M/S HINDUSTAN RATNA JV. APPRECIATION OF FACTS SHOWS THAT M/S HES INFRA PVT. LTD. AND RATNA INFRASTRUCTURE PROJECTS PVT. LTD. ARE NOT SUB - CONTRACT S, PER - SE, BUT, THEY ARE PARTNERS OF M/S HINDUSTAN RATNA JV. THESE PARTNERS MIGHT HAVE ENTERED INTO AGREEMENTS WITH THE PARTNERSHIP FIRM WHEREIN THEY ARE PARTNERS SO AS TO EXECUTE THE WORKS. THE PARTNERS MIGHT HAVE MAINTAINED THEIR BOOKS OF ACCOUNT AS IF THEY ARE PAYING AND RECEIVING MONIES FROM THE PARTNERSHIP FIRM WHERE THEY ARE PARTNERS. AS ALWAYS ADMITTED, THE FORMAT OF AN AGREEMENT OR THE STYLE OF ACCOUNTS BY THEMSELVES DO NOT DECIDE THE TRUE CHARACTER OF RELATIONSHIP OF PARTIES IN A BUSINESS AND THE NATURE OF TRANSACTIONS RELATING TO THE BUSINESS. WHAT IS TO BE APPLIED IS THE RULE OF PITH (FORM) AND SUBSTANCE. ONE HAS TO SEE THE REAL NATURE OF THE RELATIONSHIP AND CHARACTER OF TRANSACTIONS, NECESSARILY LOOKING BEYOND THE FORMALITIES OF AGREEMENTS AND ACCOUNTS. FOR THAT MATTER FOR CALCULATION, IT IS NOT THE FORMAT OF AGREEMENTS AND THE MANNER OF ACCOUNTING ALONE THAT DECIDE THE ISSUE. THE DECIDING FACTOR IS THE REAL INTENTION OF THE PARTIES, THE ACTUAL CONDUCT OF THE PARTIES AND THE NATURE OF ACTIVIT IES AND THE OVERALL RELATIONSHIP OF THE CONCERNED PARTIES. 15. IN THE PRESENT CASE, THE MODUS OF OBTAINING THE GOVERNMENT CONTRACTS, THE SEQUENCE AND FREQUENCY OF EXECUTION OF THE CONTRACTS CLEARLY SHOW THAT THE ASSESSEE AS A PARTNERSHIP FIRM SECURED CONT RACTS AND GIVEN TO ITS PARTNERS WITH A COLLECTIVE RESPONSIBILITIES AND LIABILITIES JOINTLY AND SEVERALLY LIABLE TOWARDS ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 29 THE OWNERS FOR THE EXECUTION OF THE CONTRACTS IN ACCORDANCE WITH THE CONTRACT OF THE BUSINESS AS PER CLAUSE (G) OF THE PARTNERSHIP DEED. THEY HAVE DEMARCATED THE NATURE OF THE CONTRACTS INTO PRINCIPAL CONTRACTS AND SUB - CONTRACTS FOR THE PURPOSE OF IDENTIFYING THE WORK HANDLED BY THE PARTNERS AND FOR THE PURPOSE OF ACCOUNTING CONTRACT RECEIPTS AND PAYMENTS. 16. IN ORDER TO ESTABLISH A RELA TIONSHIP OF CONTRACTOR AND SUB - CONTRACTOR, IN ADDITION TO A FORMAL AGREEMENT, IT IS NECESSARY TO SHOW THAT THE PARTIES HAVE ACTED IN SUCH A MANNER CONDUCIVE TO UPHOLD A CONTRACTOR - SUB CONTRACTOR RELATIONSHIP WHEN THERE IS A STRONG CASE OF INTERLACING OF F INANCE AND FUNDS, INTERDEPENDENCE OF RESPONSIBILITIES, INTERCONNECTION OF ACTIVITIES. IT IS VERY DIFFICULT TO COME TO A CONCLUSION THAT THE ASSESSEE WERE ACTING IN THE STATUS OF CONTRACTORS VIS - A - VIS SUB - CONTRACTORS. A MORE RATIONAL FINDING WOULD BE THAT T HE PARTIES WERE EXECUTING THE CONTRACTS THROUGH JOINT EFFORT, AS A GROUP OF PARTNERS. 17. DEFACTO SPEAKING, WHEN THERE IS NO BASIS FOR COMING TO A CONCLUSION THAT THERE EXISTED A RELATIONSHIP OF CONTRACTOR VIS - A - VIS SUB - CONTRACTOR, IT IS USEFUL TO LOOK IN TO THE PRINCIPLE EMBODIES IN SECTION 20 OF THE INDIAN CONTRACT ACT OF 1872. THIS SECTION PROVIDES THAT WHERE BOTH PARTIES TO AN AGREEMENT ARE UNDER A MISTAKE AS TO A MATTER OF FACT, ESSENTIALLY TO THE AGREEMENT, THE AGREEMENT IS VOID. IN THE PRESENT CAS E, THE QUESTION IS MAINLY FOCUSSED ON THE CONTRACTUAL RELATIONSHIP OF THE ASSESSEE AND ITS PARTNERS. THIS PRINCIPLE EMBODIES IN THE SECTION 20 OF THE INDIAN CONTRACT ACT HAS GREAT RELEVANCE. IT TURNS OUT THAT THE FORMATS OF THE AGREEMENT ENTERED INTO WITH THE PARTNERS AND THE STYLING OF ACCOUNTS PREPARED BY THEM ARE PRODUCTS OF MISTAKES OF FACT, AND THEREFORE, THE AGREEMENT IS NOT TO BE RELIED ON TO HOLD THAT THE ASSESSEE IS ACTING IN THE STATUS OF CONTRACTORS VIS - A - VIS SUB - CONTRACTORS. THEREFORE, IT IS TO BE SEEN THAT THE QUESTION OF TDS IN THE PRESENT CASE CANNOT BE CONSIDERED ONLY ON THE BASIS OF THE AGREEMENTS ENTERED INTO BETWEEN THE ASSESSEE AND ITS PARTNERS. 18. THE LIABILITY U/S.194C(2) IS CAST ON THE ASSESSEES ONLY WHEN THEY ARE IN FACT AND IN SUB STANCE ACTING IN THE RELATIONSHIP OF CONTRACTORS AND SUB CONTRACTORS. DEHORS THE AGREEMENTS AND ACCOUNTS, WHEN IT IS FOUND THAT THEY ARE ACTING JOINTLY, FOR THE PURPOSE OF THEIR CONTRACT BUSINESS, THERE CANNOT BE A RELATIONSHIP OF CONTRACTOR AND SUB - CONTR ACTOR AND THERE MAY NOT BE AN OCCASION TO INVOKE SECTION 194C(2). WHEN THE SAID PROVISION RELATING TO DEDUCTION OF TAX AT SOURCE IS NOT APPLICABLE FOR THE ASSESSEE FOR THE REASONS STATED ABOVE, VIOLATION ULS.40(A) (IA) DOES NOT ARISE. IF THAT IS THE CASE, PAYMENTS MADE UNDER THE NOMENCLATURE OF 'SUB - CONTRACTORS' ARE NOT LIABLE TO BE DISALLOWED. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 30 19. IT IS ALSO USEFUL TO REFER TO SECTION 70 OF THE CONTRACT ACT WHICH DEALS WITH THE OBLIGATION OF THE PERSON ENJOYING THE BENEFIT OF NON - GRATUITOUS ACT. IN OTHER WORDS, IT IS THE CASE OF 'UNJUST ENRICHMENT'. FOR THE MISTAKES AND FOLLIES COMMITTED BY THE ASSESSEES, IT MAY NOT BE JUSTIFIED ON THE PART OF THE REVENUE TO INSIST THAT THE ASSESSEES WERE MAKING PAYMENTS TO SUB - CONTRACTORS AND THEY WERE BOUND BY SECTION 194C(2) AND CONSEQUENTLY BY SECTION 40(A)(IA). 20. THEREFORE, IF THE PAYMENTS ARE RECORDED B Y THE ASSESSEE AS SUB - CONTRACT PAYMENTS' AS A RESULT OF ACTUAL MISCONCEPTION, THAT SHOULD NOT MAKE WAY FOR UNJUST ENRICHMENT BY THE REVENUE. 21. BEING SO, IF ANY PARTNER USE THE PROPERTY OF THE ASSESSEE FIRM, BENEFIT DERIVED FROM THAT PROPERTY SHALL GO TO THE COMMON POOL OF THE ASSESSEE FIRM, WHICH IS FOR THE COMMON ADVANTAGE TO ALL THE PARTNERS. IF ANY PARTNER CARRIES ON ANY BUSINESS BY USING NAME AND GOODWILL OF THE FIRM, PROFIT DERIVED FROM THAT BUSINESS SHALL BE THE INCOME OF ASSESSEE'S FIRM. FURTHER, NO PARTNER IS ENTITLED TO CARRY ON ANY BUSINESS WHICH IS IN THE NATURE OF COMPETING WITH THE BUSINESS OF THE ASSESSEE FIRM. THE PARTNERS ARE J OINTLY AND SEVERALLY RESPONSIBLE FOR ANY ACTS DONE BY THEM THOUGH INDIVIDUALLY AND JOINTLY. IF THE PARTNERS CARRY ON ANY BUSINESS CONTRARY TO THE PROVISIONS OF PARTNERSHIP DEED OR PARTNERSHIP ACT, THEY ARE NOT ENTITLED TO THAT PROFIT OR LOSS DERIVED FROM S UCH TRANSACTIONS IT DOES NOT BELONG TO INDIVIDUAL PARTNERS AND ON THE OTHER HAND IT BELONGS TO THE FIRM AS A WHOLE. 22. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE RELATIONSHIP CREAT ED BY THE PARTNERSHIP DEED DATED 31 ST AUGUST, 2007 AND PARTNERS CANNOT BE CONSIDERED AS SUB - CONTRACTORS OF THE FIRM AND THEY ARE JOINTLY AND SEVERALLY LIABLE TOWARDS THE OWNERS FOR THE EXECUTION OF THE CONTRACT COMMITMENTS IN ACCORDANCE WITH THE CONTRACT CONDITIONS. BEING SO, THE PROVISIONS OF SECTION 194C CANNOT BE ATTRACTED SO AS TO TREAT THEM AS SUB - CONTRACTORS OF THE FIRM THEREBY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). IN OTHER WORDS, WE CAN SAFELY CONCLUDE THAT THERE IS NO SUB - CONTRACT BETWEEN J V AND THE CONSTITUENTS AND SINCE THE JV HAS BEEN FORMED ONLY TO PROCURE CONTRACT WORKS FROM THE GOVERNMENT AND THE CONTRACT IS BEING EXECUTED BY THE CONSTITUENT PARTNERS IN THEIR SHARING RATIO 60:40 AS PER THE TERMS OF JV, IT CANNOT BE SAID THAT THE JV IS A CONTRACTOR AND ITS CONSTITUENTS ARE SUB - CONTRACTORS. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DELETE THE DISALLOWANCE OF RS. 111,09,23,018/ - MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF T HE ACT. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 31 30. KEEPING IN VIEW THE ABOVE DI S CUSSI O N, WE FIND OURSELVES IN AGREEMENT WITH THE CONTENTION OF THE LEARNED COUN S EL FOR THE ASSESSEE THAT THE COMMON ISSUE INVOLVED IN TH E PR E SENT CA S E S IS SQU A RELY COVERED IN F A VOU R O F THE ASSESSEE BY AT LEAST T HREE DECISIONS OF THE COORDINATE BENCHES OF THIS T RIBUNAL WH E RE IN A SIMI L AR ISSUE HAS BEEN DECIDED IN FAVOUR O F THE ASSESSEE , INVOL V IN G SIMILAR FACTS AND CIR C UM S TANCES O F THE CASE. WE THEREFORE, FIND NO IN F I R MI TY IN THE IMPU G N ED O R DER O F THE LEARNED CIT(A) , WHEREBY SHE HELD FOLLO W IN G TWO OF TH E THREE DECISIONS OF THE TRIBUNAL, VIZ. O F THE VISAKHAPATNAM BENCH IN THE CA S E OF UAN RAJU CONSTRUCTIONS (SUPRA) AND OF THE MUMBAI BENCH IN THE CA S E OF SMC AMBIKA JV (SUPRA) , THAT T HERE B E IN G NO RELATIONSHIP O F CONT RACTOR AND SUBCONTRACTOR BETWEEN TH E ASSESSEE AOP/JOINT VENTURE AND ITS CONSTITUENT MEMBERS, TAX AT SOU R CE WAS NOT REQUI R ED TO B E DE D U C TED FROM THE PAYM E N T S MADE BY THE ASSESSEE AOP TO ITS MEMBERS, AS PER THE P R OVIS I ON S OF S.194C(2), AND CONSEQUENTLY, THE RE WAS NO QUESTION OF TREATING THE ASSESSEES AS IN DEFAULT UNDER S.201(1). WE TH E R E FORE, UPHOLD THE IMPU G N E D ORDER OF THE LEARNED CIT(A) AND DISMISS THESE APPEALS FIL E D BY THE REVENUE. 31. AS REGARDS THE COMMON ISSUE INVOLVED IN THE CROSS OBJECTIONS FIL E D BY THE ASSESSEES REL A TING TO THE CHAR G ING OF INTEREST UNDER S.201(1A), THE SAME , IN OU R OPINION , IS CONSEQUENTIAL TO THE I S SUE INVOLVED IN TH E APPEALS O F TH E REVENUE, WHICH HAS BEEN DECIDED BY US IN F A VOUR O F THE ASSESSEE. AS HELD BY US, THE PROV I S ION S OF S .194C(2) BEING NOT ATTRACTED IN THE CA S E OF PAYM E N T S MADE BY THE ASSESSEE S TO ITS CONSTITUENT MEMBERS, THERE WAS NO QUESTION TO TR E AT THE ASSESSEES AS IN DEFAULT UNDER S.201(1). IT THER E FORE, FOLLO W S THAT NO INTEREST UNDER S.201(1A) CAN BE CHARG ED ON THE ASSESSEES . THE CROSS O B JECTION S FIL E D BY THE ASSESSEES ARE ACCORDINGLY ALLOWED. ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 32 32. TO SUM UP, APPEALS OF THE REVENUE ARE DISMISSED AND CROSS OBJ EC TIONS O F TH E ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13TH JANUARY, 201 5 SD/ - SD/ - (SAKTIJIT DEY) ( P.M.JAGTAP ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/ - 13 TH JANUARY, 2015 COPY FORWARDED TO: 1. M/S. KCEL - MEIL ( JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 2. M/S. MEIL - MAYTAS - ABB - AAG (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD HYDERABAD 3. M/S. MEIL - KCCL - FLOWMORE (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 4. M/S. MEIL - MAYTAS - KBL (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 5. M/S . MEIL - SEW - MAYTAS - BHEL(JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 6. M/S. MEIL - SEW - ABB - AAG (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 7. M/S. MEIL - RATNA - KBL (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 8. M/S. HCC - MEIL - CBE (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 9. M/S. MEIL - KBL - WEG - (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 10. M/S. MEIL - MAYTAS - WPIL (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGA R, HYDERABAD 11. M/S. HCC - MEIL - NCC - WPIL (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD ITA NO. 323 TO336/H YD/ 2014 & COS THEREIN M/S. KCEL - MEIL(JV) , HYDERABAD AND THIRTEEN OTHERS 33 12. M/S. MEIL - GAYATRI - ZVS - ITT (JV), S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 13. M/S. MEIL - ZVS - PVSRSN - ITT (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 14. M/S. MEIL - IVRCL - HCC - WPIL (JV) , S - 2 TECHNOCRAT INDUSTRIAL ESTATES, BALANAGAR, HYDERABAD 15. INCOME - TAX OFFICER, WARD - 14(3), HYDERABAD 16. COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD 17. COMMISSIONER OF INCOME - TAX I, HYDERABAD 18. DR, ITAT, HYDERABAD