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TMI Blog2019 (9) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon order dated 28th September, 2018 of the CIT(A)-1, Gurgaon, relating to Assessment Year 2015-16. 2. Since identical grounds have been taken by the respective assessees, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. ITA No.7764/Del/2018 (KEC ASIAKOM UB JV) 3. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 28th August, 2015 declaring a loss of ₹ 29,295/-. The Assessing Officer noted that the assessee is a joint venture between M/s KEC International Ltd., M/s ASIA Communication Electronic Sdn. Bhd. and M/s Unique Builders formed for the purpose of applying for tender to the Railways. The three joint venture partners had share of 60%, 25% and 15% respectively. The Assessing Officer noted that the work contract was awarded to the assessee by the RVNL. This work was in turn subcontracted by the assessee to M/s KEC International Ltd. Contract price receivable by the assessee from RVNL was ₹ 56,96,05,620/- and the sub contract amount payable to M/s KEC International was ₹ 56,88,08,170/- leaving an amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Assessing Officer. 7. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by challenging the order of the CIT(A) in confirming the disallowance made by the Assessing Officer under the provisions of section 40A(2)(b) of the IT Act. 8. The ld. counsel for the assessee, at the outset, filed the decision of the Hon'ble J K High Court in the case of Soma TRG Joint Venture vs. CIT reported in (2017) 398 ITR 425 (J K) and submitted that the Hon'ble High Court in the said decision has held that where assessee, a joint venture company, was formed for only purpose of submission of tender while actual work was executed by parties to joint venture and no expenditure was incurred by joint venture itself, receipt in respect of said contract could not be treated as assessee JV s income as there was diversion of income at source; on allocation of aggregate receipts to partners assessee-JV had no TDS obligation . 9. Referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Oriental Structural Engineers Pvt. Ltd. reported in 374 ITR 35 (Del), he submitted that the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Revenue from operations (1,28,99,176) 2 Paid to the JV partner (1,28,81,117) 3 Other Expenses 11,236 4 Profit/(Loss) (29,295) 14. I find the Assessing Officer disallowed expenditure @ 4% of the total expenses incurred towards KEC International Ltd. by invoking the provisions of section 40A(2)(b) which has been confirmed by the CIT(A). I find identical issue had come up before the Tribunal in the case of KEC-Delco-Vraha (JV) (supra) and the Tribunal has dismissed the appeal filed by the Revenue by observing as under:- 9. We have considered the rival arguments made by both sides and perused the orders of the authorities below. We find the SMC Bench of the Tribunal in the case of ITO Vs. M/s KEC Sidharth JV and in the case of ITO Vs. M/s. KEC PLR KPIPL JV in the consolidated order dated 03.04.2018 has de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in respect of the expenses incurred or payments made which are not deductible. This section has no application to income aspect of the assessee. As the AO has made disallowance u/s 40A(2)(b) in respect of income which the assessee in his opinion ought to have earned rather than certain expenses incurred, I am of the considered opinion that the provisions of this section are not attracted. I, therefore, uphold the impugned order on this score deleting the disallowance. 9. The aforesaid order was followed in the assessee s own case in ITA No. 5943/Del/2016 for the assessment year 2012-13 vide order dated 28.02.2017 wherein it has been held as under: 4. I have considered the submissions of both the parties and perused the record of the case. Admittedly, the Assessing Officer has invoked the provisions of section 40A(2)(b) as the contract had been given to associated party. I find that under identical circumstances the Tribunal in the case of Kec-Asiakom UB (JV) (supra) has observed as under:- 4. I have heard the ld. AR and perused the relevant material on record. None is present on behalf of the Revenue. In fact, there is no one to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT (A) is in consonance with the decisions of the Tribunal in other group concerns, therefore, in absence any contrary material brought to our notice against the orders of the Tribunal and considering the fact that the Ld. CIT (A) while deciding the issue has followed the decisions of the Hon ble High Court, therefore, we find no infirmity in the order of Ld. CIT(A). Accordingly, the same is upheld and the grounds raised by the revenue are dismissed. 15. Since the facts of the impugned appeal are identical to the facts of the case decided by the Tribunal in the case of ITO vs. M/s KEC-Delco Varaha (JV) cited (supra) therefore, respectfully following the same, I set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly allowed. ITA No.7763/Del2018 (A.Y. 2015-16) 16. After hearing both the sides and perusing the material available on record, I find the grounds raised by the assessee are identical to the grounds raised in ITA No.7764/Del/2018. I have already decided the issue and the grounds raised by the assessee have been allowed. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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