INCOME TAX OFFICER Vs. KCEL-MEIL(JV)

JUDGEMENT

(1.) THESE fourteen appeals filed by the Revenue in the case of fourteen assessees are directed against a common order passed by the learned Commissioner of Income -tax(Appeals) II, Hyderabad dated 6.12.2013 and the same have been heard together and are being disposed alongwith corresponding cross -objections filed by the assessee companies, being CO Nos. 29 to 42/Hyd/2014, by a single consolidated order for the sake of convenience.

(2.) THE solitary common issue involved in the appeals of the Revenue is whether the assessees in the present case, which are joint ventures/consortiums are required to deduct tax at source form the payments made to their constituent members on account of execution of contract work.

(3.) THE assessees in the present case are joint ventures/consortiums formed by certain constituent members. The purpose of the formation of these joint ventures/consortium by the constituent members is to put their expertise and finances together so as to make themselves eligible to bid for bigger government contracts. Accordingly, various government contracts were secured in the names of joint ventures/consortium. On account of execution of the said contracts, payments were received by the joint ventures/consortiums during the year under consideration from the concerned government agencies after deduction of tax at source and the same were transferred to their constituent members as per their respective shares in the execution of contract without deduction of any tax at source. The consortium did not retain any commission/margin for themselves and accordingly filed 'nil' return of income for the year under consideration. The credit for tax deducted at source by the different government agencies was allowed to be claimed by the constituent members in accordance with Rule 37BA(2) of the Income -tax Rules.