COMMISSIONER OF INCOME TAX Vs. BHOORATNAM & COMPANY

JUDGEMENT

(1.) The respondent/assessee in I.T.T.A. No. 117 of 2012 is M/s. Bhooratnam and Co., a partnership firm engaged in the manufacture of PSCC/RCC and MS pipes, cement slabs and also executes civil contracts. With effect from 16-07-2003, the said firm was converted into a company by name M/s. Bhooratnam Construction Company (P) Limited. By virtue of the conversion, all the assets and liabilities of the erstwhile partnership firm had become assets and liabilities of this Company. In I.T.T.A. No. 222 of 2012, this company is the respondent. The assessee along with three others i.e. M/s. Koya and Company Construction Limited, the Indian Hume Pipe Company Limited and M/s. Taherali Industries and Projects Private Limited entered into a joint venture agreement called "Agreement for Collaboration and Cooperation" on 12-03-2003 for the purposes of preparing and submitting prequalification/post qualification tender to the Hyderabad Metropolitan Water Works and Sewerage Board. According to the terms of the said agreement dated 12-03-2003 between these entities, each party i.e. co-venturer in the joint venture is responsible for his respective profit or loss earned by him in the execution of each one's respective share in works. Each of the parties to the joint venture is concerned with its share of work/contract and the profit or loss arising therefrom and the agreement was not to be treated as an agreement to earn profits only.

(2.) Contract receipts up to 15-07-2003 were offered for taxation in the hands of the firm and after 15-07-2003 from all existing works/contracts on hand have been declared in the hands of the company.

(3.) On 01-11-2004, for the assessment year 2004-05, for the period up to 15-07-2003, the firm filed its return of income declaring an income of Rs. 1,23,47,000/-.