INCOME TAX ACT, 1961

Section 194C

Tax deduction at source - Under section 194C - Contract receipts distributed by joint venture amongst member companies - Absence of any contract or sub-contract work by joint venture to its member

Assessee was a Joint Venture consisting of Subhash Projects & Marketing Ltd., B.T. Patil & Sons Belgaum Construction (P.) Ltd., Belgaum and N.V. Kharote Construction (P.) Ltd. It had been formed solely for the purpose of working of construction of Jihe Kathapur Lift Irrigation Scheme. AO noticed that assessee had received contract receipts and amount was paid to the member companies. AO held that assessee was required to deduct tax under section 194C agreement between the entities was nothing but a contract and was liable for TDS under section 194C.Held: Two corporate entities forming joint venture were already being assessed since assessment year 2000-01 onwards on their respective shares and gross receipt distributed amongs two joint venture partners was included as receipt in their respective cases and joint venture partners had also utilised TDS credits on the basis of apportionment certificate issued by AO, to enable them to claim the same in their own cases. Moreover, there was no Profit and Loss Account in assessee's case and there was no claim of any expenditure. Hence, there was no question of any disallowance under section 40(a)(ia), especially in absence of any contract or sub-contract work by joint venture to its member so as to attract TDS provisions under section 194C.