Oriental Structure Engineers P.L.- KMC Construction Ltd.- JV, New Delhi V. ITO, New Delhi

ITA 5556/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6795 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 15-02-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 23-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL SENIOR
• Assessee Lawyers: KRISHNA
• Keywords: Question of law
• Section: 6; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-I : NEW DELHI) BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.5556/DEL./2015 (ASSESSMENT YEAR : 2011-12) ORIENTAL STRUCTURE ENGINEERS P.L. VS. ITO, WARD 38 (3), - KMC CONSTRUCTION LTD. JV, NEW DELHI. 21 / 48, COMMERCIAL COMPLEX, MALCHA MARG, NEW DELHI 110 021. (PAN : AAAAO0576A) ITA NO.5557/DEL./2015 (ASSESSMENT YEAR : 2011-12) ORIENTAL STRUCTURE ENGINEERS P.L. VS. ITO, WARD 38 (3), - GAMMON INDIA LTD. JV, NEW DELHI. 21 / 48, COMMERCIAL COMPLEX, MALCHA MARG, NEW DELHI 110 021. (PAN : AAAAO0576A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KRISHNA, CA REVENUE BY : SHRI ROBIN RAWAL, SENIOR DR DATE OF HEARING : 15.02.2016 DATE OF PRONOUNCEMENT : 15.02.2016 O R D E R BOTH THESE APPEALS, SINCE INVOLVE THE COMMON ISSUE , THEREFORE, THEY ARE BEING DISPOSED OFF BY THIS COMMON ORDER. ITA NOS.5556 & 5557/DEL./2015 2 2. THE ONLY ISSUE INVOLVED IN BOTH THE APPEALS RELA TE TO THE ASSESSING OF AN INCOME BEING INTEREST ON INCOME-TAX REFUND U/S 5 6 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT) IN THE HANDS OF T HE ASSESSEE TAKING THE STATUS OF THE ASSESSEE TO BE ASSOCIATION OF PERSONS ON THE BASIS OF PERMANENT ACCOUNT NUMBER ALLOTTED TO THE ASSESSEE. THE QUANTUM OF ADDITION OF THE DISPUTE INVOLVED IN ITA NO.5556/DEL /2015 IS RS.7,06,312 AND IN ITA NO.5557/DEL/2015 IS RS.1,63,749/-. 3. BOTH THE PARTIES ARE AGREED THAT BOTH THE APPEAL S BE DECIDED VIDE ITA NO.5556/DEL/2015. 4. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT IN THE CASE OF THE ASSESSEE HONBLE DELHI HIGH COURT IN THE CAS E OF THE ASSESSEE REPORTED IN 374 ITR 35 AT PAGE 44 HELD AS UNDER :- 11. IN THE PRESENT CASE TOO, THE COURT IS OF OPINI ON THAT THE CONSISTENT AND CONCURRING OPINIONS OF CIT (A) AND I TAT WERE THAT THE JV WAS FORMED ONLY TO SECURE THE CONTRACT, IN T ERMS OF WHICH THE SCOPE OF EACH JV PARTNERS TASK WAS DISTINCTLY OUTL INED. FURTHER, THE ENTIRE WORK WAS SPLIT BETWEEN THE TWO JV PARTNERS; THEY COMPLETED THE TASK, THROUGH SUB-CONTRACTS AND WERE RESPONSIBL E FOR THE SATISFACTION OF THE NHAI. THEREFORE, APPLYING THE P RINCIPLES OF THE LAW DECLARED IN LINDE AG, LINDE ENGINEERING DIVISIO N AND ANR, IT IS HELD THAT THE ITAT DID NOT FALL INTO ERROR OF LAW, IN HOLDING THAT THE JV WAS NOT AN ASSOCIATION OF PERSONS AND LIABLE TO BE TAXED ON THAT BASIS. THE QUESTION OF LAW FRAMED IS ACCORDINGLY A NSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE. ITA NOS.5556 & 5557/DEL./2015 3 IN VIEW OF THIS FINDING OF HONBLE DELHI HIGH COURT , THE ASSESSEE HAS TO BE A TAX NEUTRAL ENTITY AND THE ASSESSEE CANNOT BE LIA BLE TO BE TAXED AS AN AOP AND WHATEVER INCOME HAS BEEN EARNED BY THE ASSESSEE HAS TO BE DIVIDED AMONG THE JOINT VENTURE PARTNERS AND THE TAX HAS TO BE PAID BY THE JOINT VENTURE PARTNERS. IN THIS CASE, THE ASSESSEE HAS D IVIDED THE INCOME AMONG THE JOINT VENTURE PARTNERS AND SHOWN THE SAME AS IN COME FROM THEIR RETURN AND PAID THE TAXES. ACCORDINGLY, THE AFORESAID DEC ISION OF THE HONBLE DELHI HIGH COURT IS BINDING ON ME. RESPECTFULLY FO LLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF THE ASS ESSEE, I SET ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE AO NOT TO ASSES SEE THIS INCOME I.E. INTEREST ON REFUND IN THE HANDS OF THE ASSESSEE BUT IN THE HANDS OF THE JOINT VENTURE PARTNERS. 5. LD. AR BEFORE ME HAS TAKEN THE PLEA THAT THE INT EREST RECEIVED ON REFUND HAS TO BE ASSESSED UNDER THE HEAD INCOME FR OM BUSINESS AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE H ANDS OF THE JOINT VENTURE PARTNER. THIS PLEA, IN MY OPINION, DOES NO T ARISE OUT OF THE GROUNDS TAKEN BEFORE ME. BEFORE ME, THE APPELLANTS ARE NOT THE JOINT VENTURE PARTNERS BUT THE JOINT VENTURE FIRMS. WHEN THE INCOME HAS NOT BE ASSESSED IN THE HANDS OF THE JOINT VENTURE CONCERN, THE QUESTION OF HEAD OF THE INCOME DOES NOT ARISE. THE LD. COUNSEL RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DONALD MIRANDA VS. CIT REPORTED IN ITA NOS.5556 & 5557/DEL./2015 4 42 ITR 166 SPECIFICALLY AT PAGE 171. I HAVE GONE T HROUGH THAT DECISION AND NOTED THAT THE DECISION DOES NOT RELATE TO THE INTE REST ON REFUND AND THERE IS NO FINDING IN THE DECISION THAT INTEREST ON REFUND HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. THIS DECISION CAN NOT ASSIST THE ASSESSEE. I ACCORDINGLY DISMISS THIS PLEA OF THE LD. AR. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE RES PECTIVE ASSESSEES ARE ALLOWED WITH THE AFORESAID OBSERVATIONS. ORDER PRONOUNCED IN OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2016. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED THE 15 TH DAY OF FEBRUARY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-20, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.