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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-I’ : NEW DELHI
Before: SHRI P.K. BANSAL
O R D E R Both these appeals, since involve the common issue, therefore, they are being disposed off by this common order.
The only issue involved in both the appeals relate to the assessing of an income being interest on income-tax refund u/s 56 of the Income-tax Act, 1961 (hereinafter ‘the Act’) in the hands of the 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 is Rs.7,06,312
Both the parties are agreed that both the appeals be decided vide ITA No.5556/Del/2015.
I heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. I noted that in the case of the assessee Hon’ble Delhi High Court in the case of the assessee reported in 374 ITR 35 at page 44 held as under :-
“11. In the present case too, the Court is of opinion that the consistent and concurring opinions of CIT (A) and ITAT were that the JV was formed only to secure the contract, in terms of which the scope of each JV partner’s task was distinctly outlined. Further, the entire work was split between the two JV partners; they completed the task, through sub-contracts and were responsible for the satisfaction of the NHAI. Therefore, applying the principles of the law declared in Linde AG, Linde Engineering division 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 answered in favour of the assessee and against revenue.”
In view of this finding of Hon’ble Delhi High Court, the assessee has to be a tax neutral entity and the assessee cannot be liable 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 divided the income among the joint venture partners and shown the same as income from their return and paid the taxes. Accordingly, the aforesaid decision of the Hon’ble Delhi High Court is binding on me. Respectfully following the decision of the Hon’ble Delhi High Court in the case of the assessee, I set aside the order of the CIT (A) and direct the AO not to assessee this income i.e. interest on refund in the hands of the assessee but in the hands of the joint venture partners.
Ld. AR before me has taken the plea that the interest received on refund has to be assessed under the head ‘Income from business’ and not under the head ‘Income from other sources’ in the hands of the joint venture partner. This plea, in my opinion, does not 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 Hon’ble Supreme Court in the case of Donald Miranda vs. CIT reported in 42 ITR 166 specifically at page 171. I have gone through that decision and noted that the decision does not relate to the interest 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 cannot assist the assessee. I accordingly dismiss this plea of the ld. AR.
In the result, both the appeals filed by the respective assessees are allowed with the aforesaid observations. Order pronounced in open court on this 15th day of February, 2016.