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TMI Blog2020 (5) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee : Sh. Prakash Sinha, CA For the Department : Sh. C.P. Singh, SR. DR ORDER These 04 appeals filed by the different Assessees are directed against the common order dated 29.6.2018 passed by the Ld. CIT(I), Gurgaon in relation to assessments year 2015-16. Since the issues involved in these appeals are common and identical, hence, I am reproducing hereunder the common grounds raised in ITA No. 5842/Del/2018 (AY 2015-16) and dealing the same by passing a common order for the sake of convenience. 1. That the Ld. AO erred in understanding the fact that the status of the assessee is joint venture and not AOP. The assessment completed by the Ld. AO by considering the fact that the assessee is an AOP. The term AOP is a much wider term where there should be association between more than one person. Here all the partners of JV are independent, responsible for their own work and there exists no association between them. Merely participation in the tender jointly does not mean that there is an AOP. Similarly, merely preparing of accounts and having surplus of some account also that there was an AOP. The Delhi High Court has an occasion to discuss the AOP issue in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Benches and enclosed the copies thereof with the Paper Book from pages 1-35. He requested that respectfully following the said decisions, the addition in dispute may be deleted by allowing the appeal filed by the Assessee. 4. On the contrary, Ld. DR has not raised any objection on the request of the Ld. Counsel for the assessee. 5. I have heard both the parties and perused the orders of the revenue authorities, grounds of appeals raised in all these appeals alongwith the orders passed by the Tribunal in assessee s own case and copies thereof are attached with the Paper Book at pages 1-35 in assessee s case i.e. ITAT orders in the cases of KEC PLR KPIL-JV vs. ITO KEC Asiakom UB JV vs. ITO for 2015-16; ITO vs. KEC Sidharth JV for AY 2013-14 and ITO vs. KEC PLR KPIPL JV for AY 2013-14 2014-15; ITO vs. KEC Delco Vraha (JV) for AY 2011-12; KEC Sidhartha JV vs. ITO for AY 2012-13 and order of ITO vs. KEC Asiakom UB (JV) for AY 2011-12. For the sake of convenience, the relevant findings of the ITAT, SMC Bench in the case of KEC PLR KPIPL-JV vs. ITO and KEC AsiaKom UB JV vs. ITO decided in ITA No. 7763/Del/2018 (AY 2015-16) and 7764/Del/2018 (AY 2015-16) vide order dated 09.5.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. However, in the instant case, the AO estimated the profit of the assessee and determined the income, nowhere he doubted the expenses incurred by the assessee. Therefore, I am of the confirmed view that the AO was not justified in making the addition by invoking the provisions of Section 40A(2)(b) of the Act which are applicable to the expenditure and not to the receipts and the ld. CIT(A) rightly deleted the same. A similar issue having identical facts has already been adjudicated by the ITAT Delhi Bench SMC , New Delhi vide order dated 21.11.2016 in ITA No. 2326/Del/2016 for the assessment year 2011-12 in the case of ITO, Ward-2(2), Gurgaon Vs KEC-Asiakom UB (JV), Gurgaon wherein the relevant findings are given in paras 5 6 of the order dated 21.11.2016 which read as under: 5. It is noticed that the AO made disallowance u/s 40A(2)(b) of the Act by opining that the assessee should have earned income from subcontracting. At this stage, it is relevant to note the prescription of the relevant part of Section 40A(2), which is as under :- 40A(2)(a) Where the assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich payment has been or is to be made to any person referred to in clause (b) of this sub-section, and the Assessing Officer is of opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. 6. On going through the mandate of the above provision, it is clear that the disallowance under this section is 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. 5. Respectfully following the decision of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 03.4.2018 has decided identical issue and dismissed the appeal filed by the revenue in all these appeals by observing as under:- 8 I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted position that the AO made the addition by invoking the provisions of Section 40A(2)(b) of the Act which are applicable to the expenses considered to be excessive or unreasonable having regard to the fair market value of the goods/services or facilities for which the payment is made. However, in the instant case, the AO estimated the profit of the assessee and determined the income, nowhere he .doubted the expenses incurred by the assessee. Therefore, I am of the confirmed view that the AO was not justified in making th~ addition by invoking the provisions of Section 40A(2)(b) of the Act which are applicable to the expenditure and not to the receipts and the ld. CIT(A) rightly deleted the same. A similar issue having identical facts has already been adjudicated by the ITAT Delhi Bench SMC , New Delhi vide order dated 21.11.2016 in ITA No. 2326/Del/2016 for the assessment year 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings from the side of the Revenue in all the cases fixed before the Bench today. The ld. AR insisted that the appeal be disposed of I am agreeable with the contention of the ld. AR and, accordingly, proceeding to dispose of the instant appeal ex parte qua the Revenue. 5. It is noticed that the AO made disallowance u/ s 40A(2)(b) of the Act by opining that the assessee should have earned income from sub-contracting. At this stage, it is relevant to note the prescription of the relevant part of Section 40A(2), which is as under:- 40A(2)(a) Where the assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred to in clause (b) of this sub-section, and the Assessing Officer is of opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. 6. On going through the mandate of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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