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TMI Blog2012 (11) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Assessing Officer by invoking provisions of section 40A(2)(b) of the Income Tax Act, 1961. 2. That the learned CIT(Appeal) erred in law and on facts in upholding rejection of book results by the learned Assessing Officer u/s.145 of the Act. 3. That the learned CIT (Appeal) erred in law and on facts in approving the invocation of provisions of section 40(a)(ia) of the Act by the learned Assessing Officer, even though the learned Assessing Officer had not allowed any deduction under section 30 to 38 of the Act while estimating the profit of the appellant at Rs.2,76,238/- and subsequently assessing the income of the appellant at Rs.55,24,770/- for the year under appeal. 4. That the learned CIT (Appeal) erred in law and on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere Rs.2,74,40,050/-, however profit was shown at Rs.3,97,324/- which included income from other sources at Rs.3,20,190/- and therefore leaving a meager amount of Rs.77,134/-, as business profit, from the said huge turnover. It has also been noted by the AO that the return of the said AOP- member was filed at Mumbai. The objection of the AO was that a sub-contract was given by the assessee to its members. Those members are the persons specified u/s.40A(2)(b) of IT Act. The AOP had passed on the entire amount to its member without retaining any profit, therefore clearly hit by the provisions of section 40A(2)(b) of IT Act. AO has also opined that due to the said unreasonable payment to members, the books of accounts were not properly maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 40(a)(ia), it was held by the AO that the assessee had not deposited the tax which was deducted u/s.194C of IT Act before the expiry of the time prescribed u/s.200(1) of IT Act. In the result, the claim of deduction of labour charges payment was held as not admissible to the assessee. Resultantly, the entire payment was disallowed. The AO has clarified that on account of the entire amount of disallowance of the total receipts Rs.55,24,770/- no separate addition on account of estimated profit was required. Accordingly an assessment was made which was challenged before ld.CIT(A). 4. The ld.CIT(A) has called for a remand report. The basic facts, such as, the assessee-AOP received an order from Kandla Port Trust and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the law. Though he has referred to the accounting standard (AS 7), I found no force in the said arguments. It is surprising to note that in the additional grounds of appeal, he has confirmed that the payment was made to the subcontractors. I found AO has rightly picked up the issue of payment to sub-contractors and invoked the provisions of section 40a(ia), so that he could estimate the income of the app. Since, the AOP app is a joint venture, the phrase of word itself suggests that it is an association of two or more persons to carry out a single business enterprise for profit. Even in the case of general joint venture, the same rules of partnership are applicable and as per definition of joint venture, the necessary elements are (i) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - in the account of one of its member. From the orders of the Revenue Authorities, it is not evident that whether they have examined the correct nature of the payment and that whether the nature of payment was from a contractor to a sub-contractor. First of all, this preliminary enquiry has to be satisfied so as to arrive at the applicability of the provisions of section 40(a)(ia) r.w.s. 194-C of IT Act. 6.1. If on an investigation as per our direction, the AO arrives at a conclusion that the provisions of section 194C are to be attracted then the next question is that the tax deducted at source of Rs.61,878/- as on 31.03.2005 was undisputedly deposited on 9/06/2005 was within the prescribed time specially when the return of income was fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139." Plainly speaking, assessee had to make deduction before 31st March of the year in question and as long as such amounts were deposited before last date of filing of the return, requirements of law would be fulfilled. It was on this basis that tribunal was of the opinion that the assessee committed no wrong and was therefore, entitled to seek deduction of Rs.32,94,149/- from the income which amount the assessee had deducted from payments of contractors and had also deposited with Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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