DDIT, NEW DELHI vs. M/S. PERSYS PUNJ LLYOD VENTURE, NEW DELHI

The grounds of appeal are as under:- “On the facts and circumstances of the case, Ld.CIT(A) erred in holding that the assessee Joint Venture was not assessable as a resident AOP.”

The assessee is an unincorporated Joint Venture (‘JV’) between M/s Persys SDN BHD Malaysia (‘Persys’) and M/s Punj Lloyd Ltd. (‘PLL’). The JV was formed to bid for DMRC contract namely Construction of rail corridor contract 3C22 - construction of elevated viaduct for line no. 3. The said contract was awarded by DMRC vide letter dated 14.05.2003. Subsequently, Persys and PLL executed a Joint Venture Agreement on 10.10.2003 which superseded pre-bid agreement executed earlier. The assessee filed return of income accompanied by balance sheet only and claiming a refund of Rs. 89,07,499/- in respect of TDS made by DMRC. No P&L a/c was attached along with return of income and no taxable income was declared therein. The Assessing Officer after observing that facts of the case under consideration are identical to those in preceding Assessment Years held that the assessee is a taxable entity as Association of Person (‘AOP’) with status of ‘resident’. Consequently, the Assessing Officer assessed the taxable income @ 10% of receipts applying the principle contained in Section 44BBB of the Act.

Being aggrieved by the same, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.

We have heard both the parties and perused the records. It is pertinent to note that this issue has been decided by the Tribunal in assessee’s own case vide order dated 26/4/2016 wherein it is held as under:- “7. We have noted that Id. CIT (A) has also passed the order considering all the above material issues determining whether the consortium is to be taxed as an AOP or Individual members are to be taxed separately . Based on the above circular we have requested the parties to appraise that how the issue is different in this case than dealt with by the circular.

We have heard the rival contentions. We have examined the Joint venture agreement dated 17th December 2002. On reading of clause no .4 5,8,10,11,16 especially and on conjoint reading of other clauses of the agreement its is apparent that each of the members is responsible for its own part of the contract execution , will take away gross receipt and incurred expenditure for the execution of project relating to his part and earn profit or loss accordingly. The control and management of consortium rests with individual consortium members with respect to their work and for the coordination purposes one Lead party Persys SDN. BHD. Is nominated for coordination with DMRC. Therefore, it satisfies all the four conditions mentioned in para no 3 of the above circular. Ld. DR could not point out any clause of the agreement, which does not satisfy any of the above four conditions of the circular. Further by the circular stated above revenue has also reiterated salient features of what would constitute and AOP and held that if the above four conditions are satisfied than the, consortium arrangement shall not be treated as an AOP but individual members will be taxed separately.