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Income assessable only in the hands of the person which has executed the work even in JV

CIT vs. M/s SMSL-UANRCL (JV) (Bombay High Court)

The High Court had to consider whether the entire income earned by the joint venture company is liable to be taxed in the hand of one of the members of the assessee company without appreciating the fact that the contract was awarded to the assessee company and not to the individual member of the assessee company. It also had to consider the impact of C.H. Acthaiya 218 ITR 239 (SC) and Murugesa Naicker Mansion 244 ITR 461 (SC) wherein it was held that AO is not precluded from taxing the right person merely on the ground that a wrong person is taxable. HELD by the High Court dismissing the appeal:

 The ITAT has as a matter of fact found that the assessee/ joint venture did not execute the contract work and the said work was done by one of its constituents namely SMS Infrastructure Limited. It is also found that the receipts for the said project work are reflected in the books of account of SMS Infrastructure Limited and in return, said SMS Infrastructure Limited has disclosed that income. The said return was accepted by the Assessing Officer in the assessment made under Section 153A read with Section 143 (3) of the Income Tax Act, 1961. It found that, therefore, some income could not have been taxed again in the hands of joint venture/assessee.

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