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TMI Blog2017 (11) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the findings of the Commissioner. The Tribunal, in its decision under appeal, observed that the assessing officer did not point out any defect in the “settlement/contract”. There is no cloud on remittance of the said sum to Alishan, which has been referred to as a paper company by the assessing officer. But the Revenue has not been able to establish any defect or fault in the transaction itself between the assessee and Alishan. The transaction of purchase and sale of the land by the assessee pursuant to the MOU is not in dispute. Doubt has been sought to be raised on lopsided profit sharing arrangement, which according to the Revenue, is a colourable device adopted for evading tax. But as we have already observed, the first and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shan. The assessing officer found Alishan to be a paper/jama kharchi company, which was used by the assessee to reduce its profits. The copy of the Memorandum of Understanding was made available to the Commissioner of Income Tax (Appeals), and has been produced before us as well. The assessee s position is that payment to Alishan was legitimate consideration for certain services rendered by Alishan in pursuance of the (MOU). The services which Alishan was to undertake included identifying the buyer and also carrying out various other tasks relating to sale of the property involved. The assessing officer had directed addition of the entire sum to the assessee s income chargeable to income tax as the assessee had not deducted TDS in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the books of M/s. Alishan Estates Pvt. Ltd. are duly audited and it is impossible that the alleged accrued income has not been reflected. It is to be mentioned that the paper book submitted by the appellant which was forwarded to the AO contained an affidavit by one Pramod Sharma acting on behalf of M/s.Alishan Estates Pvt. Ltd., attesting to the receipt of this amount as compensation. Further Page- 8 of the said paper book identified the said person as a director of M/s.Alishan Estates Pvt. Ltd. No comments in any of the remand reports are seen to be forthcoming from the AO on this. In the absence of any adverse view on this evidence, it is difficult to justify the AO's assertion that the appellant is making a false claim. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was to be shared between the assessee and M/s. Alishan Estates P. Ltd. in ratio 25:75. The profit includes loss as well. Had there been a loss whether the AO would have treated the said transaction as a sham transaction, obviously the answer is No. Since joint venture has earned a profit and same was shared between the said two parties. Therefore, we are of the view that the transaction is completely in lieu of joint venture agreement. The AO is not justified in treating the said payment made by the assessee to the joint venture partner, M/s. Alishan as an expenditure and no TDS is required to be deducted on the profit so shared between the said two joint venture partners. In the circumstances and facts of the present case the addition s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han Estates Pvt.Ltd. before the assessing officer to prove that the transaction is genuine and the said company is existing, the Learned Tribunal erred in law in overlooking the material part of the finding of the Assessing Officer and most erroneously upheld the order of the Commissioner of Income Tax (Appeals). 7. At the stage of admission, we shall, thus, examine this question only. Our attention has been drawn by Mr. Ghoshal, learned advocate appearing for the Revenue to various deficits in the operations of Alishan to establish that the arrangement between the assessee and Alishan constituted sham transaction. He has also taken us through different provisions of the 1961 Act. He has emphasized on failure on the part of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct . 9. Mr. Ghoshal submits that the assessing officer was right in expressing his view that the explanation on payment to Alishan was not satisfactory on the ground that the recipient company was a paper company and the entire transaction was sham. But two statutory appellate authorities expressed contrary view. There is no cloud on remittance of the said sum to Alishan, which has been referred to as a paper company by the assessing officer. But the Revenue has not been able to establish any defect or fault in the transaction itself between the assessee and Alishan. The transaction of purchase and sale of the land by the assessee pursuant to the MOU is not in dispute. Doubt has been sought to be raised on lopsided profit sharing arrange ..... X X X X Extracts X X X X X X X X Extracts X X X X
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