- (1.) The question of law which the revenue seeks to urge in these two appeals, being ITA Nos. 444-445/2014, which involve common questions of fact arising from a common order of the Income Tax Appellate Tribunal (ITAT) in ITA Nos. 2691-92/Del/2012 dated 07-02- 2014 is as follows: "Whether a proportion of the project receipts, commensurate with the risks/performance obligations, should be attributed to the assessee JV to whom tender had been awarded for the project and undertook significant risks and responsibilities for the completion of the project and whether it is allowable for the assessee to divert the entire receipts to its JV partners by designing a sub-contract to that effect?"
(2.) The assessee in ITA No. 444/2014 is a joint venture (JV) between M/s Oriental Structural Engineers P. Ltd, New Delhi and M/s KMC Construction Ltd. Hyderabad, which was formed to undertake projects awarded by NHAI. The assessee reported NIL income for the relevant years and claimed refunds. The case was processed under Section 143(1) of the Income Tax Act, 1961 (hereafter "the Act") and later on selected for scrutiny under compulsory scrutiny norms. Therefore, statutory notices were issued to the assessee and served. From the Profit and Loss Account, it was noticed that the assessee received gross receipt of Rs. 92,31,33,229/-. Against this receipt, the assessee debited an amount of Rs. 90,46,70,560/- towards payment to subcontractors, i.e. the JV partners itself. Apart from this, the JV paid work contract tax of Rs. 1,84,62,669/- apart from other small expenses like bank charges, professional fees etc. The payment made to sub-contractors was 97.99% of the total receipts. The balance was utilized to make payment for work contract tax, professional fees, audit fees etc.
(3.) Similarly, the assessee in ITA No. 445/2014 is a joint venture (JV) between M/s Oriental Structural Engineers P. Ltd, New Delhi and M/s Gammon India Ltd., Mumbai, formed to undertake projects awarded by NHAI. The assessee in the said appeal reported NIL income for the relevant years and claimed refunds. The case was processed under Section 143(1) of the Act, and later on selected for scrutiny under compulsory scrutiny norms. Statutory notices were issued to the assessee and served. From the Profit and Loss Account, it was noticed that the assessee received gross receipt of Rs. 9,98,86,286/-. Against this receipt, the assessee debited an amount of Rs. 9,88,52,617/- towards payment to sub-contractors, i.e. the JV partners itself. Apart from this, the JV paid VAT/Sales Tax of Rs. 8,30,907/- apart from other small expenses like bank charges, professional fees etc. The payment made to sub-contractors was 98.96% of the total receipts. The balance was utilized to make payment for VAT/Sales Tax, audit fees etc.;