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TMI Blog2021 (8) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... MEMBER: 1. This appeal by revenue is directed against the order of ld. Commissioner of Income tax (Appeals)-1, [CIT(A)], Gurgaon dated 26.09.2017 for assessment year (AY) 2014-15. The revenue has raised following ground of appeal:- Whether the Ld. CIT(A) was right on facts and in law in deleting the additions of ₹ 2,19,56,917/- made by assessing officer by computing the profit of joint venture @4% of the gross receipts as the assessee had given the payment to the persons specified under section 40A(2)(b) of the Income Tax Act. 2. Brief facts of the case are that the assessee is a joint venture of KEC International Limited and Kiran Infra Engineers Ltd having sharing of 90% and 10% respectively. The assessee filed its return of income for AY 2014- 15 on 29.11.2014 declaring income of ₹ 30,02,517/-. The case was selected for scrutiny and assessment was completed under section 143(3) on 24.11.2016. The assessing officer (AO) while passing the assessment order estimated the income of assessee @4% of gross receipt of ₹ 62,39,85,858/-. The assessing officer during the assessment noted that the assessee diverted the work contract to leading partner i.e. M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% and 10% of shares respectively. The second party is merely a facilitator. If JV earns more profit the 10% thereof goes to the second party. The AO assessed the income of the assessee as 4% of gross receipt. The reply of the assessee was not accepted by the AO. The AO on the basis of the gross receipt of of ₹ 62.39 crore estimated the income of the assessee @ 4% of receipt, thereby made additions of ₹ 2.19 Crore. 3. On appeal before Ld. CIT(A),the entire addition. The Ld. CIT(A) while deleting the addition held that in the case of M/s. KEC Sidharth, JV vs ITO the AO has made similar addition which was confirmed by Ld. CIT(A) and on further appeal before Tribunal the entire addition was deleted by Tribunal vide order dated 28th February, 2017. Thus the Ld. CIT(A) by following the order of Tribunal deleted the entire addition. Aggrieved by the order of Ld. CIT(A) the revenue has filed this appeal before Tribunal. 4. We have heard the submissions of Ld. Departmental representative (DR) for the revenue and Ld. Authorised Representative (AR) of the assessee and have gone through the orders of lower authorities. The Ld. DR for the revenue relied upon the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The leading partner M/s KEC International Ltd. was having 80% share and the remaining 20% share was with the other party. He further observed that the work contract was awarded to the assessee by the Railway Authority and the assessee further diverted its 99% contract work by simple letter dated 09.09.2010 for Champa- Jharsuguda stating therein back to back agreement to the aforesaid lead partner i.e. M/s KEC International Ltd. The AO was of the view that the assessee had shifted its real profit by making sub-contract and that the assessee was covered within the meaning of Section 40A(2)(b) of the Act. The AO made the addition of ₹ 44,29,401/- by observing as under: 7. Further, the analysis made below shows that the JV (assessee) has shifted the real profit by making Sub Contact. Revenue earned by assessee (JV) 11,38, 17,920 Expenses incurred by JV ob account of sub contract 11,37,06,154 Deemed Profit of JV 1,23,316 On a contract receipts of ₹ 11,38,17,920/- net profit is only ₹ 1,23,316/- which is 0.1%. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Hon'ble ITAT vide its order dated 28.02.2017. 4.7 The issue involved in the appellant's case is squarely covered by the aforesaid two decisions of the Hon'ble Jurisdictional ITAT Respectfully following the decision of the Hon'ble Jurisdictional ITAT in appellant's group cases, the addition made by the Assessing Officer is deleted. These grounds of appeal are allowed. 6. Now the department is in appeal. The ld. Sr. DR submitted that the AO rightly invoked the provisions of Section 40A(2)(b) of the Act as the expenses incurred by the assessee were excessive. She supported the assessment order passed by the AO. 7. In his rival submissions, the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the issue under consideration is squarely covered by the earlier orders of the ITAT in assessee s own case for the assessment years 2011-12 and 2012-13 in ITA Nos.2326 5943/Del/2016 respectively vide respective order dated 21.11.2016 and 28.02.2017 (copies are placed at page nos. 37 to 47 of the assessee s paper book). 8. I have considered the submissions of both the parties and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in his opinion ought to have earned rather than certain expenses incurred, I am of the considered opinion that the provisionsof 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 onrecord. None is present on behalf of the Revenue. In fact, there is noone to attend the proceedings 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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