Case Law Details
Ramky ECI JV Vs ITO (ITAT Kolkata)
ITAT Kolkata held that Joint Venture is not required to deduct TDS u/s. 194C from the payments made to one of its constituents for execution of work awarded to it as no contractual relation exists. Further, Joint Venture is also not required to deduct TDS u/s. 194H from payments made to another constituent as compensation.
Facts- The issue involved in the present two appeals is that whether assessee who is a Joint Venture is required to deduct tax u/s. 194C from the payments made to one of its constituents for execution of work awarded to it and further, whether payments made to another constituent as compensation, constitutes payment in the nature of commission to be covered u/s. 194H of the Act. Assessee has taken six grounds of appeal on the aforesaid issues in AY 2018-19 and five grounds in AY 2019-20 wherein a demand of Rs.20,08,126/- is raised for AY 2018-19 u/s. 201(1)/201(1A) and Rs.1,48,00,974/- for AY 2019-20.
Conclusion- Held that assessee JV does not fall in the category of AOP under the Act. Further, there does not exist a relationship of a contractor and sub-contractor within the meaning of section 194C, therefore, question of deduction of tax at source does not arise. Once there is no liability to deduct tax at source, holding assessee JV as assessee in default is also not tenable.
Held that in the present case, compensation paid by assessee JV is not for acting on behalf of JV for any service. Further, there are no services taken by the JV in the course of buying or selling of goods nor there is any transaction relating to any asset, valuable articles or thing. Accordingly, the payment is not in the nature of commission and section 194H does not get attracted. Hence, assessee JV is not to be treated as assessee in default.
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