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TMI Blog2020 (9) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... is partly allowed TDS u/s 194C - disallowance of expenses for Non-Deduction of the TDS on payment of share of income of joint venture partner alleging it to be in the nature of procurement commission - HELD THAT:- Assessee had entered into a JV with HCIL for the construction of road in Bihar - From the MOU, Learned AR has also demonstrated that the respective parties were not entitled to the profit or loss arising from the services performed by the other party. To the understanding of the sharing of the revenue on receipt from the clients. Considering the totality of the aforesaid facts, we find force in the argument of Ld AR that the amount paid to HCIL represented the diversion of income by overriding title. We also find support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 23.05.2016 in Appeal No. 03/CIT(A)-7/Del/14-15 granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds: 1. That the facts and circumstances of the case the Ld. AO/CIT(A)-VII has erred in law, in making an addition of ₹ 13,65,851/- to the returned income as disallowance of capital expenditure. 2. That the facts and circumstances of the case the Ld AO/CIT(A)-VII has erred in law, in making an addition of ₹ 30,92,818/- to the returned income as disallowance of expenses for Non-Deduction of the TDS on payment of share of income of joint venture partner alleging it to be in the nature of procurement commission. 3. The appellant takes le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance of ₹ 37,000/- on account of penalty and to that extent the disallowance be confirmed. However with respect to disallowance of ₹ 8,67,245/- paid to Larsen Toubro Ltd., he submitted that it is towards the comprehensive repairs of machinery. He pointed to the copy of the invoice placed in the paper book and from that he pointed out that it is for the purpose of repairs and that no new machinery has come into existence. He submitted that amount of expense cannot be a criteria to judge the nature of expenses. 7. With respect to the expense of ₹ 4,52,400/- paid to Larsen Toubro Ltd. and which has been held to be capital expenditure. He pointed to the copy of the bill/purchase order placed in the paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come into existence. Considering the totality of the aforesaid facts, we are of the view that the repairs was for preserving and maintaining an already existing asset. We therefore set aside the addition confirmed by CIT(A) and hold the expense to be of revenue in nature. Thus the ground of the assessee is partly allowed 10. Second ground is with respect to disallowance of ₹ 30,92,818/- on account of non-deduction of TDS. 11. AO noted that assessee had paid commission to HCIL for procurement of projects from RCD Bihar but had not deducted TDS at the time of making the payment. The assessee was therefore asked to show-cause as to why the expenses not be disallowed u/s 40(a)(ia) of the Act for non deduction of TDS. Assessee inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assigned a contract by Bihar Government for improvement of existing road in Siwan Dist. As per the MOU, both the parties of the JV were to jointly open an account in the name of JV with two signatories, one from each party. It was further agreed between the partners of the JV that on receipt of payment from client, JV account will pay 3% to HCIL and 97% to assessee. The MOU also spelt out the role and obligation of both the parties. Further, as per the JV that both the parties were responsible to render their respective share of services to the client and both the parties shall individually assume the risks and that neither of the parties will be entitled to the profit or loss of the other party arising from the service performed by the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the respective parties were not entitled to the profit or loss arising from the services performed by the other party. Learned AR has also pointed to the understanding of the sharing of the revenue on receipt from the clients. Considering the totality of the aforesaid facts, we find force in the argument of Ld AR that the amount paid to HCIL represented the diversion of income by overriding title. We also find support from the decision rendered by Hon ble J K High Court in the case of Soma TRG Joint Venture (supra) wherein on identical facts the issue was decided in Assessee s favour. Before us, Revenue has not pointed to any factual error in the submissions of Learned AR nor has pointed to any contrary binding decision. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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