An Association of Persons (AOP) or a Body of Individuals (BOI) may be formed or the status of AOP may be accorded to a joint venture by the Income-tax Act. It has thus become necessary to understand the whole concept of AOP/BOI. The book has been written keeping in view this fact. It elaborates the formation, operation and assessment of AOP under direct tax provisions. Taxation provisions have been discussed in the light of case laws.
A Joint Venture is coming together of two or more persons on their own volition with a common objective to carry out some commerce or business to obtain some financial benefit, profit or income. However, under the Income-tax Act, a Joint Venture which is not a partnership or a company or an HUF may primarily be regarded as an AOP or a BOI. The attributes of an AOP or a BOI are almost similar or same as that of a Joint Venture. In that view of the matter the taxation of Joint Venture will be governed by those provisions of the Income tax Act which are applicable to an AOP. Whether a particular association is forming an AOP would depend on the Joint Venture Agreement and intention of the parties reflected therefrom. Therefore, a few sample formats of Development Agreements are also given.
In order to answer all the aforesaid queries, the relevant provisions of the Income-Tax Act and case-law have been discussed in summary form in the book while restricting the scope to joint ventures with reference to real estate development activity only.