Geoconsult GmbH vs. DIT (AAR)

DATE: (Date of pronouncement)
DATE: August 22, 2008 (Date of publication)

Where the applicant had entered into a joint venture with two Indian companies for providing consultancy services for the development of tunnels and the question was whether the JV constitutes an ‘Association of Persons’, HELD:

(i) An ‘AOP’ is one in which two or more persons join in a common purpose or common action with the object of producing income, profits or gains. The control and management must be unified.

(ii) On facts, as the client had entered into a contract with the ‘consortium’ and each of the companies was made ‘jointly and severally’ liable and the other provisions revealed unity of action, common management and planned coordination among the JV partners, there was an AOP.

(iii) The fact that the contract distributed duties and responsibilities and that no member could bind the other did not affect the integrity of the association;

(iv) Also, the fact that there is no sharing of profit or loss and each member of JV makes its own investment and maintains its own accounts and receives payment directly from the client (pursuant to a consolidated invoice) does not detract from the existence of an AOP. Ruling in Van Oord 248 ITR 399 distinguished on facts.