JV of Best and Crompton Engineering Projects Limited and GVPR Engineers Ltd., Hyd, Hyderabad V. ITO, Ward-14(2), Hyderabad, Hyderabad

ITA 811/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2663 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 09-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHAN KUMAR SINGHANIA
• Assessee Lawyers: D V ANJANEYULU
• Keywords: Maximum Marginal Rate
• Section: 44AD; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 811/HYD/2017 ASSESSMENT YEAR: 2013-14 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGINEERS LTD., HYDERABAD. PAN AAAAJ9873H VS. INCOME-TAX OFFICER, WARD 14(2), HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 796/HYD/2017 ASSESSMENT YEAR: 2013-14 INCOME-TAX OFFICER, WARD 14(2), HYDERABAD. VS. JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGINEERS LTD., HYDERABAD. PAN AAAAJ9873H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.V. ANJANEYULU REVENUE BY : SHRI MOHAN KUMAR SINGHANIA DATE OF HEARING : 26-07-2017 DATE OF PRONOUNCEMENT : 31-08-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: BOTH THESE APPEALS ARE CROSS APPEALS DIRECTED AGA INST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 6, HYDERABAD, DATED 22-02-2017 FOR AY 2013-14. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN AOP COMPRISING OF TWO MEMBERS VIZ. M/S BEST & CROMPTON ENGINEERING PROJECTS LTD. (BECPL) AND M/S GVPR ENGINEERS LTD. (GVPREL). IT WAS FORMED AS A JOINT VENTURE FOR SECURING THE CONT RACT OF SUPPLY, ERECTION, TESTING AND COMMISSIONING OF 400 KV AND D C LINE FROM JAIPUR TPP TO RANGAMPET (AP 48) 75.137 KM ON TURNKE Y BASIS AND 2 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. FOR SUPPLY, ERECTION, TESTING AND COMMISSIONING OF 400 KV D/C LINE FROM JUJJURU 400/220 KV SATTENAPALLI SS & LILO OF VTS SRISAILAM 400 KV D/C LINE TO 400/220 KV SATTENAPALLI SS AWARD ED BY M/S TRANSMISSION CORPORATION OF AP LTD. THE RETURN WAS FILED AT A LOSS OF RS. 812/- BY CLAIMING THE JV AS ZERO INCOME RETURN ACCOUNT. THE ASSESSMENT WAS MADE ON A TOTAL INCOME OF RS. 16,85, 92,619/-. 2.1 THE ASSESSEE ENTERED INTO A CONTRACT WITH APTRA NSCO, NOW KNOWN AS M/S TS TRANSCO, VIDYUT SOUDHA, HYDERABAD A ND GOT ITS WORK EXECUTED BY ITS MEMBER, VIZ. M/S GVPREL AND TH E PAYMENT OF RS.16,58,93,431/- FOR THE WORK WAS RECEIVED BY IT A S THE CONTRACTOR AND WAS PASSED ON TO ONE OF THE MEMBER ON BACK TO B ACK BASIS. BUT AS NO TAX WAS DEDUCTED AT SOURCE ON THE PAYMENTS MA DE TO GVPREL, THE ASSESSEE WAS ASKED TO EXPLAIN WHY DISALLOWANCE U/S 40(A)(IA) OF THE ACT SHOULD NOT BE MADE IN ITS CASE. ACCORDING T O THE ASSESSEE, IT WAS NOT LIABLE FOR DEDUCTION OF TAX. IT CONTENDED B EFORE THE ASSESSING OFFICER THAT THE JV AND ITS CONSTITUENT MEMBERS DID NOT HAVE A CONTRACTOR AND SUB-CONTRACTOR RELATIONSHIP AND HENC E, THERE WAS NO LIABILITY ON THE JV TO DEDUCT TAX AT SOURCE U/S 194 C OF THE ACT. FURTHER, IT WAS STATED THAT AS PER THE BENEFICIAL PROVISION INTRODUCED W.E.F. 01.04.2013 TO SECTION 40(A)(IA), DISALLOWANCE WAS N OT TO BE MADE IF THE RECIPIENT HAD PAID TAX ON THE AMOUNT R:ECEIVED. IT WAS SUBMITTED THAT M/S GVPREL HAD ADMITTED THE CONTRACT RECEIPTS IN ITS RETURN OF INCOME FOR THE A.Y. 2013-14 FILED ON 30.09.2013 AND THE ENTIRE TAX LIABILITY WAS COVERED BY TDS. A CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT IN FORM 26A WAS ALSO FURNISHED. THE ASSE SSING OFFICER DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE ON BO TH THE COUNTS. HOLDING THAT THE CLAIM OF EXPENDITURE OF RS.16,85,9 3,431/- TOWARDS PAYMENT MADE TO GVPREL WAS IN CONTRAVENTION TO SEC TION 40(A)(IA), THE ASSESSING OFFICER DISALLOWED THE SAME AND COMPL ETED THE ASSESSMENT ON A TOTAL INCOME OF RS.16,85, 92,619/-. 3 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A). 4. IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE ADDI TION OF RS. 16,85,93,431/- WAS MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IGNORING THE FACT THAT THE SAID WORK EXPE NSES REPRESENTED AMOUNT PAID TO ONE OF THE JV PARTNERS ON 'BACK TO B ACK BASIS' AND THAT NO SUB-CONTRACTOR RELATIONSHIP EXISTED BETWEEN THE JV PARTNERS AS HELD BY JURISDICTIONAL TRIBUNAL IN ITA NO.372/HYD/2 013 DATED 18.12.2013 AND ITA NO.1575/HYD/2014 IN THE CASE OF M/S HINDUSTAN RATNA JV VS. DCIT. IT WAS ALSO SUBMITTED THAT THE A SSESSING OFFICER HAD IGNORED FORM NO.26A R.W.S 40(A)(IA) R.W.S 201(1 ) DULY CERTIFIED BY THE CHARTERED ACCOUNTANT SUBMITTED DURING THE COURS E OF ASSESSMENT PROCEEDING WHEREIN IT WAS CERTIFIED THAT THE ENTIRE INCOME WAS OFFERED TO TAX BY THE RECIPIENT. FURTHER, ACCORDING TO THE ASSESSEE, IN THE ASSESSEE'S OWN CASE THE SAME ANALOGY WAS ACCEPTED I N A.Y. 2012-13 AND A.Y. 2014-15. IN VIEW OF THE AFORESAID, IT WAS REQUESTED THAT DISALLOWANCE MADE U/S 40(A)(IA) MAY BE DELETED. 4.1 IT WAS FURTHER STATED THAT IN THE MOU ENTERED ON 24.08.2010 BETWEEN THE JV PARTNERS IT HAD BEEN SPECIFICALLY ME NTIONED IN CLAUSE 7 OF THE AGREEMENT THAT ON ISSUE OF WORK BY THE CLI ENT, I.E. APTRANCO TO THE JV, THE JV PARTNER BECPL WOULD OFFL OAD THEIR ENTIRE SCOPE OF WORK TO GVPREL ON BACK TO BACK BASI S, WHEREBY ALL THE TERMS AND CONDITIONS OF THE PO/WO PLACED ON THE JV BY THE PRINCIPAL WOULD MUTATIS MUTANDIS APPLY TO GVPREL. B ECPL AGREED TO GIVE IRRECOVERABLE AUTHORISATION LETTER IN THE NAME OF GVPREL TO RECEIVE DIRECT PAYMENT FROM APTRANSCO. IT WAS FURTH ER MENTIONED IN THAT CLAUSE THAT AS ACCEPTANCE OF DIRECT PAYMENT FR OM APTRANSCO TO GVPREL COULD TAKE CONSIDERABLE TIME, TILL THEN, BOTH THE MEMBERS HAD AGREED TO OPEN ESCROW ACCOUNT IN HYDERABAD TO R ECEIVE ALL THE BILLS FROM APTRANSCO. IN THE EVENTUALITY OF APTRANS CO AGREEING TO PAY THE CONTRACT AMOUNT DIRECTLY TO GVPREL, THE ESCROW 4 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. AGREEMENT WOULD BECOME VOID. CLAUSE 9 STATED THAT O N RECEIPT OF BACK TO BACK ORDER, GVPREL WOULD FURNISH THE REQUIR ED PERFORMANCE AND ADVANCE BANK GUARANTEES ON BEHALF OF THE JV TO THE PRINCIPAL. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) ELABORATELY DISCUSSED AND EXAMINED THE ISSUE IN DIS PUTE WITH VARIOUS CASE LAWS AND HELD AS FOLLOWS: 07.17 IN THIS CASE, THE NET PROFIT OF THE ASSESSEE' S BUSINESS IS NOT ASCERTAINABLE. REMUNERATION WAS PAID TO THE IND IVIDUAL MEMBER FOR THE WORK DONE BY IT, BUT THE QUANTUM THE REOF IS ALSO NOT ASCERTAINABLE. THE DOCUMENTS RELATING TO THE AS SESSEE'S BUSINESS TRANSACTIONS HAVE ACTUALLY NOT BEEN PRODUC ED BEFORE THE ASSESSING OFFICER FOR VERIFICATION. IN THIS SIT UATION, ESTIMATE OF THE PROFIT OF 'THE BUSINESS AS WELL AS THE DISAL LOWANCE U/S 40(BA) IS THE ONLY WAY OUT. IT IS SETTLED LAW THAT, WHERE INCOME CANNOT BE ASCERTAINED WITH REFERENCE TO THE BOOKS O F ACCOUNT, IT MAY BE ESTIMATED ON BEST JUDGMENT BASIS AND THAT DI FFICULTY IN MAKING THE ESTIMATE CANNOT BE VALID GROUND FOR NOT MAKING IT. IF THE TOTAL INCOME HAS TO BE ASSESSED IN A PARTICULAR CASE, IT MUST BE ASSESSED IN THAT CASE AND, IF FOR THAT PURPOSE, ESTIMATE OF TOTAL INCOME HAS TO BE RESORTED TO, SO BE IT. SECTI ON 44AD APPLIES TO CONTRACTORS WITH TURNOVER OF LESS THAN R S.60 LAKHS WHO ARE NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOU NT IN RESPECT OF THE BUSINESS. CONSIDERING THAT ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT IN RESPECT OF ITS BUSIN ESS AND THAT THE PROFIT OF ITS BUSINESS IS NOT ASCERTAINABLE FRO M THE ACCOUNTS OF ITS MEMBERS WHO ACTUALLY CARRIED OUT PARTS OF TH E WORK, THE PROVISIONS OF SECTION 44AD IS A GOOD GUIDE FOR ESTI MATION OF PROFIT, EVEN THOUGH THE TURNOVER EXCEEDS THE LIMIT MENTIONED IN THAT SECTION. APPLYING THE PRINCIPLE CONTAINED IN T HAT SECTION, IT WOULD BE APPROPRIATE TO ESTIMATE THE PROFIT OF THE BUSINESS @ 8% OF THE GROSS TURNOVER. NEEDLESS TO SAY, ALL THE DEDUCTIONS AND ALLOWANCES UNDER THE I.T. ACT WOULD BE DEEMED T O HAVE BEEN CONSIDERED AND ALLOWED. ALSO, IT WOULD BE NET OF THE DISALLOWANCE OF THE REMUNERATION PAID TO THE MEMBER S. OF COURSE, A QUESTION MAY ARISE WHETHER TAX IS DEDUCTI BLE ON THE REMUNERATION PAID BY IT TO THE MEMBERS. BUT THAT QU ESTION NEED NOT BE ANSWERED HERE BECAUSE SUCH REMUNERATION ANYW AY GETS DISALLOWED U/S. 40(BA) OF THE IT ACT, IF NOT U/S. 4 0(A)(IA) OF THE IT ACT. AS HELD BY HON'BLE SUPREME COURT IN THE CASE O F ITO V. CH. ATCHAIAH (SUPRA), THE MEMBERS ARE FREE TO PURSU E APPROPRIATE REMEDY UNDER LAW TO SEEK REFUND OF TAX, IF ANY, PAID BY THEM IN RESPECT OF THE PROFIT OF THE ASSESSEES BUSINESS. 5.1 IN OTHER WORDS, THE CIT(A)S DECISION IS SUMMAR IZED AS UNDER: 5 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. I. THE ASSESSEE IS AN AOP. II. IT WAS THE CONTRACTOR IN THE BUSINESS OF LINE W ORK EVEN THOUGH THE WORK WAS DONE THROUGH ITS MEMBER. III. IT IS LIABLE TO COMPUTE THE PROFIT ARISING FRO M THE CONTRACT WORK AND PAY TAX ON THE SAME. IV. THE MEMBER WAS NOT ITS 'SUB-CONTRACTOR' AND, HE NCE, THERE WAS NO REQUIREMENT OF TDS ON THE AMOUNTS CREDITED/P AID BY TO IT. CONSEQUENTLY, THE DISALLOWANCE U/S 40(A)(IA) OF THE IT ACT MADE BY THE AO IS DELETED. V. THE REMUNERATION PAID BY IT TO THE MEMBER, I.E. THE SURPLUS OVER THE EXPENDITURE INCURRED BY THE LATTER FOR THE PURPOSE OF ITS BUSINESS, IS LIABLE TO BE DISALLOWED IN VIEW OF THE EXPRESS PROVISION OF SECTION 40(BA) OF THE IT ACT. VI. THE ASSESSEE'S NET PROFIT IS ESTIMATED TO BE 8% OF ITS GROSS TURNOVER. THAT WOULD BE NET OF ALL ALLOWANCES AS WE LL AS THE DISALLOWANCES, INCLUDING THE ONE U/S 40(BA) OF THE IT ACT. THE CIT(A), THEREFORE, DIRECTED THE AO TO RE-COMPUT E THE ASSESSEE'S TOTAL INCOME ACCORDINGLY AND COMPUTE TAX THEREON AT THE MAXIMUM MARGINAL RATE IN VIEW OF THE PROVISION OF SECTION 1 67B(2) OF THE I.T. ACT. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE A ND THE REVENUE ARE IN APPEAL BEFORE US: 6.1 ASSESSEES GROUNDS OF APPEAL: 1) THE LEARNED CIT (A) ERRED BOTH IN LAW AND FACTS THAT TRANSFER OF ENTIRERECEIPTS BACK TO BACK BASIS TO THE JV MEMB ER AS A REMUNERATION IS LIABLE TO BE DISALLOWED IN VIEW OF THE EXPRESS PROVISION OF SECTION 40(BA) OF THE IT ACT, ALSO DIR ECTED TO 6 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. ESTIMATE 8% OF ITS GROSS TURNOVER NET OF ALL ALLOWA NCES AS WELL AS THE DISALLOWANCES, INCLUDING THE ONE U/S 40(BA) OF THE IT ACT WHERE NO SUCH REMUNERATION IS ALLEGED BY CIT (A) IS MERE WITH SURMISES AND CONJECTURE WITHOUT PROPER APPLICATION OF FACTS AND THEREFORE THE DIRECTIONS ARE ORBITARY , UNWARRANTED BOTH IN LAW AND FACTS. 2) THE CIT (A) FURTHER ERRED IN NOT CONSIDERING THE FACTUAL MATRIX IN PROPER PERSPECTIVE THAT THE ENTIRE WORK , MEMBER OF JV EXECUTED, OFFERED AS RECEIPTS FOR WHICH THERE IS NO DISPUTE IN OTHER WORDS BACK TO BACK BASIS THEREFORE GIVING A D IRECTION TO ASSESS 8% ON THE REMUNERATION PAID BY TO THE MEMBER IS NOTHING BUT THE MISCONSTRUED WHERE THERE IS NO SUCH REMUNERATION IS IMAGINARY, ILLUSORY, HYPOTHETICAL A ND NON APPLICATION OF PRINCIPLES OF LAW WITHOUT ANY BASE O R EVIDENCE AS THE ENTIRE RECEIPTS TRANSFERRED BACK TO BACK BASIS AND THEREFORE THE VERY DIRECTIONS ARE ILLEGAL, AB-INITIO-VOID CON TRARY TO LAW. 3) WITHOUT PREJUDICE TO THE GROUND NO 1 & 2 THE DIR ECTIONS GIVEN BY CIT (A) IS NOT EMANATED EITHER FROM ASSESS MENT ORDER OR SUBJECT MATTER OF ASSESSMENT I APPEAL THAT TO WI THOUT PROVIDING AN OPPORTUNITY BEING HEARD AS THE VERY DI RECTIONS ARE NOT IN ACCORDANCE WITH LAW. 6.2 THE GROUNDS OF APPEAL OF THE REVENUE ARE AS UND ER: I) THE LD CIT(A) ERRED BOTH ON FACTS AND IN LAW. II) THE LD. CIT(A) ERRED IN HOLDING THAT THE MEMBER S OF AOP ARE NOT SUB-CONTRACTS AND HENCE THERE IS NO REQUIREMENT TO DEDUCT TDS AS PER PROVISIONS OF SECTION 194C OF THE ACT, 1 961 AND CONSEQUENTLY NO AMOUNT IS DISALLOWABLE U/S 40((A)(I A) OF THE ACT. 7. THE LD. AR SUBMITTED THAT GVPREL AND BECPL FORME D JV IN ORDER TO PROCURE ORDERS FROM AP TRANSCO. IT IS MUTU ALLY AGREED WITH THE JV PARTNERS THAT PO/WO WILL BE EXECUTED BY ONE OF THE CONSTITUENT THAT IS GVPREL ON BACK TO BACK TO BASIS AND BECPL R ECEIVE REASONABLE COMPENSATION OF LENDING ITS NAME FOR THE PROJECT. ALL THE WORK ORDERS WERE EXECUTED BY GVPREL AND THE SAME WA S DECLARED AS ITS REVENUE FOR WHICH CA CERTIFICATE WAS SUBMITT ED BEFORE THE AO. THIS TYPE OF ARRANGEMENT IS BEING CONDUCTED OVER TH E YEARS AND THE AO HAS ACCEPTED AND COMPLETED RELEVANT ASSESSMENT F OR AY 2012-13 AND 2014-15. A COPY OF THE ASSESSMENT ORDERS ARE PL ACED ON RECORD. IT IS SUBMITTED THAT ONLY IN THE CURRENT AY BACK TO BACK CONTRACT WAS 7 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. AWARDED TO GVPREL WAS CONSIDERED AS SUB-CONTRACT, W HICH IS NOT PROPER. HE SUBMITTED THAT COURTS HAVE HELD THAT CON TRACT EXECUTED BY ONE OF THE CONSTITUENTS OF JV ARE NOT SUB-CONTRACTS . HE RELIED ON THE DECISION IN THE CASE OF IVRCL-JL JV VS. ACIT AND OT HERS, [2016] 386 ITR 564 (AP) AND IN THE CASE OF CIT VS. BHOORATNAM & CO., [2013] 357 ITR 396 (AP). 7.1 FURTHER, LD. AR SUBMITTED THAT THE WHOLE CONTRA CT WAS HANDLED BY GVPREL. HE BROUGHT TO OUR NOTICE CLAUSE (4) OF J V AGREEMENT, AS PER WHICH ALL THE COSTS OF BUYING TENDER AND EXPENS ES RELATING TO SUBMISSION OF TENDERS AND SECURITIES REQUIRED FOR T ENDER INCLUDING BANK GUARANTEES ETC. WERE ARRANGED BY GVPREL AS PER JV AGREEMENT AND ALSO HE BROUGHT TO OUR NOTICE CLAUSE (12) OF TH E JV AGREEMENT, AS PER WHICH, THE LIABILITIES AND OBLIGATIONS OF THE W ORKS CONTRACT INCLUDING STATUTORY DUES AND PENALTIES SHALL BE PAI D BY JV/ GVPREL. IT SHOWS THAT THE JV IS ONLY TO PROCURE THE ORDER,B UT, ALL THE EXECUTIONS ARE DONE BY GVPREL. FURTHER, HE SUBMITTE D THAT ASSESSEE HAS PROCURED THE ORDER AND EXECUTION WAS DONE BY GV PREL AND IN THE RESULT ASSESSEE HAS NOT INCURRED ANY OTHER EXPE NDITURE NOR EARNED PROFIT. HE SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) WILL NOT BE APPLICABLE IN ASSESSEES CASE. 7.2 LD. AR SUBMITTED THAT THOUGH CIT(A) HAS DELETE D THE ADDITION MADE BY THE AO, BUT, HIS FINDING THAT REMUNERATION WAS PAID BY THE ASSESSEE TO THE INDIVIDUAL MEMBER FOR THE WORK DONE BY IT, IS NOT SUSTAINABLE, AS THE ASSESSEE ON ITS OWN, IS NOT IN A POSITION TO PAY REMUNERATION TO ANY OF THE MEMBER. HE ALSO SUBMIT TED THAT ESTIMATING THE PROFIT OF THE BUSINESS @ 8%AS WELL A S MAKING DISALLOWANCE U/S 40(BA) ALSO IS NOT PROPER. ACCORDI NG TO HIM, THE PROVISIONS OF SECTION 40(BA) ARE ALSO NOT APPLICABL E TO THE ASSESSEES CASE AS BUSINESS HAS NOT GENERATED ANY PROFIT TO MA KE ANY SUCH PAYMENT TO THE MEMBERS OF THE JV. 8 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. 8. LD. DR SUBMITTED THAT JV IS NOTHING BUT ASSOCIAT ION OF PERSONS (AOP), AOP IS FORMED BY JOINT CONSTITUENTS, IN THE RESULT, THERE HAS TO BE A PROFIT, BUT, THE QUESTION OF 40(BA) PAYMENT CO MES LATER PART. HE SUBMITTED THAT ASSESSEE AND THE MEMBERS OF JV ARE USING THE JV AS PASS OVER ENTITY. HE RELIED ON THE CASES AND FINDIN GS GIVEN BY CIT(A) IN PARA 7.5 OF THE APPELLATE ORDER. HE SUBMITTED T HAT JV IS FORMED WITH A MOTIVE OF MAKING PROFIT AND THE PROFIT SHOUL D BE DEALT WITH AS PER THE PROVISIONS OF THE ACT AND THE MEMBERS OF JV SHOULD ACT AS A PART OF JV AND SHOULD NOT ACT FOR ITS OWN INDIVIDUA L BENEFIT. IF A MEMBER ACTS ON HIS OWN, THEN, HE IS NOT A MEMBER IN THE JV, THEN, THE TRANSACTION WITH JV WILL BECOME SUB-CONTRACT, T HEN, THE PROVISIONS OF SECTION 194C WILL APPLY. HE SUBMITTED THAT IN CA SE MEMBER HAS WORKED PROMOTING THE BUSINESS OF JV, THEN, THERE H AS TO BE REVENUE IN THE BUSINESS. HE SUBMITTED THAT IN THE PRESENT C ASE, ASSESSEE HAS NOT SHOWN ANY PROFIT. HE RELIED ON THE FINDINGS OF CIT(A) AND SUBMITTED THAT THE FINDINGS OF CIT(A) IS PROPER AND JUSTIFIED, THE INCOME SHOULD BE ESTIMATED IN EVENTUALITY WHEN THE SITUATION DEMANDS AND THE INCOME CANNOT BE ASCERTAINED WITH R EFERENCE TO THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. SINCE THE REMUNERATION IS ALREADY PASSED ON TO THE MEMBERS OF JV AWARDING CONTRACT TO THEM, PROVISIONS OF SECTION 40(BA) ARE VERY MUCH APPLICAB LE TO THE CASE OF THE ASSESSEE. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE TWO ENTITIES, NAMELY, BECPL AND GVPR EL FORMED A JV FOR SECURING THE CONTRACT OF SUPPLY, ERECTION AN D COMMISSIONING OF 40 KV DC LINE, ETC. FROM CORPORATIONS LIKE, AP TRAN SCO, ETC. THEY FORMED THIS JV ONLY TO SECURE THE ORDERS AND AS PER THEIR MUTUAL AGREEMENT THE CONTRACT WILL BE EXECUTED BY ONE OF T HE CONSTITUENTS I.E. GVPREL ON BACK TO BACK BASIS. AS PER THE AGREE MENT, ALL THE COSTS, LIABILITY AND BANK GUARANTEES WILL BE ARRANG ED BY ONLY GVPREL AND BECPL WILL ONLY BE A FACILITATOR IN PROCURING T HE ORDERS. AS PER OUR VIEW, JV IS ONLY AN ARRANGEMENT BETWEEN TWO ENT ITIES ON MUTUAL 9 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. AGREEMENT, JV CAN BE ANY TYPE DEPENDING UPON THE MU TUAL AGREEMENTS AND OBJECT OF SUCH AGREEMENT. THE JV CAN BE RUN ON SIMILAR TO PARTNERSHIP BASIS OR MERE AN ENTITY TO S ECURE THE ORDERS OR MAY BE JUST TO EXECUTE THE WORK ORDERS. IN THE GIVE N CASE, MEMBERS OF JV DECIDED TO FORM A JV ONLY TO SECURE THE ORDER S AND EXECUTION OF THE ORDERS WILL BE DONE BY ONE OF THE CONSTITUENTS OF THE JV. JV IS FORMED FOR THE BENEFIT OF THE INDIVIDUAL MEMBERS AN D A BUSINESS IS CARRIED ON FOR THE BENEFIT OF THE BUSINESSMAN. 9.1 AS HELD BY THE COORDINATE BENCH OF THIS TRIBUNA L IN THE CASE OF HINDUSTAN RATNA JV VS. DCIT AND IN OTHER CASES, THE RE IS NO SUB- CONTRACT RELATIONSHIP EXISTED BETWEEN JV PARTNERS. ACCORDINGLY, THE WORK EXECUTED BY THE GVPREL IS NOT IN SUB-CONTRACT. ACCORDINGLY, GROUND RAISED BY REVENUE IS DISMISSED. 9.2 COMING TO THE FINDINGS OF THE CIT(A) THAT IN TH E CASE OF ASSESSEE ESTIMATE OF THE PROFIT OF THE BUSINESS AS WELL AS DISALLOWANCE U/S 40(BA) IS THE ONLY WAY OUT, THE FA CT THAT JV IS CREATED ONLY TO SECURE THE ORDERS AND NOWHERE ON RE CORD, WE FIND THAT THE ASSESSEE HAS ACTUALLY EXECUTED THE WORK. JV IS FORMED MERELY TO SECURE THE ORDERS AND NOT TO EXECUTE THE ORDERS. W HEN THE ASSESSEE HAS NOT EXECUTED THE ORDER, THERE IS NO QUESTION OF MAKING ANY PROFIT. AS THE ASSESSEE HAS NOT SHOWN ANY PROFIT IN THE BU SINESS AND THE ASSESSEE BEING USED AS A PASSOVER ENTITY AND SET UP ONLY TO SECURE THE ORDER, THE AO HAS THE OPTION OF DISALLOWING ALL THE ADMINISTRATIVE EXPENSES, IF ANY. SINCE THE ASSESSEE HAS NOT SHOWN ANY PROFIT NOR PAID ANY REMUNERATION TO ANY OF THE MEMBERS, THE PR OVISIONS OF SECTION 40(BA) WILL NOT BE ATTRACTED. 9.3 COMING TO THE EXECUTION OF THE CONTRACT AWARDED TO THE ASSESSEE, WE HAVE ALREADY ADJUDICATED THAT IT DOES NOT AMOUNT TO SUB-CONTRACT. THE PAYMENT MADE TO GVPREL WILL NEVER BE CONSIDERED AS REMUNERATION, BUT, PAID FOR EXECUTION OF BACK TO BACK WORK ORDER. 10 ITA NO. 811/H/17 JV OF BEST CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LTD., HYD.. ASSESSE HAS ALREADY SUBMITTED A CERTIFICATE FROM CA S THAT VALUE OF THE WORK ORDER IS ALREADY CONSIDERED AS REVENUE IN CASE OF GVPREL AND OFFERED FOR TAXATION. IT SHOWS THAT THE FULL VA LUE OF REVENUE IS ALREADY OFFERED FOR TAXATION, BY FOLLOWING THE GOLD EN RULE THAT A SOURCE OF INCOME CAN BE TAXED ONLY ONCE. THE SOURCE OF INC OME IS A WORK CONTRACT GIVEN BY THE CORPORATION AND THE SAME WAS OFFERED TO TAX BY GVPREL. SAME SOURCE OF INCOME CAN NEVER BE SUBJECTE D TO TAX TWICE, FIRST BY THE ASSESSEE AND FOLLOWED BY GVPREL . AS FAR AS REVENUE IS CONCERNED, THAT SOURCE IS ALREADY TAXED, IN THE HANDS OF GVPREL, THEREFORE, IT NEED NOT BE TAXED AGAIN IN TH E HANDS OF ASSESSEE. 9.4 IN VIEW OF THE ABOVE DISCUSSION, THE GROUNDS RA ISED BY THE ASSESSEE ARE ALLOWED AND GROUNDS RAISED BY THE REVE NUE ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D AND THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED: 31 ST AUGUST, 2017. KV COPY TO:- 1) M/S JV OF BEST AND CROMPTON ENGG. PROJECTS LTD. & GVPR ENGG. LT., C/O M/S ANJANEYULU & CO., CAS, 30, B HAGYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD 500 080. 2) IT), WARD 14(2), HYDERABAD. 3) CIT(A) - 6, HYDERABAD 4 PR. CIT - 6, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE