ITAT rules against double taxation, deletes unjustified addition in favor of assessee.

The ITAT allowed the appeal of the assessee, directing the deletion of the addition of Rs. 1,18,96,853. The ITAT held that taxing the same income in the hands of both the JV and Kiran Infra Engineers Ltd. amounted to double taxation, which is impermissible. The ITAT concluded that the receipts related to work executed by Kiran Infra Engineers Ltd. were properly accounted for in its books, and taxes were paid on the resulting profit. The AO's actions were deemed unjustified, leading to the deletion of the addition in favor of the assessee.

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Issues Involved:
1. Confirmation of addition of Rs. 1,18,96,853/- by applying a profit rate of 8% on contract receipts of Rs. 14,87,10,667/-.
2. Allegation that the assessee could not furnish bills and supporting vouchers for expenses claimed by Kiran Infra Engineers Ltd.
3. Double taxation of the same income in the hands of both the Joint Venture (JV) and Kiran Infra Engineers Ltd.

Issue-wise Detailed Analysis:

1. Confirmation of Addition of Rs. 1,18,96,853/- by Applying a Profit Rate of 8%:
The main grievance of the assessee was the confirmation of the addition of Rs. 1,18,96,853/- by applying an 8% profit rate on contract receipts of Rs. 14,87,10,667/-. The assessee argued that the entire contract was executed by the JV partner Kiran Infra Engineers Ltd. (KIEL), and the receipts were transferred to KIEL, who declared them in its profit and loss account. The assessee contended that it had neither received any income nor incurred any expenditure except for bank charges of Rs. 550/-. The AO, however, assessed the total income of the assessee at Rs. 1,18,96,853/- by assuming that the contract work was executed by the assessee itself. The CIT(A) upheld this addition, leading to the current appeal.

2. Allegation of Non-furnishing of Bills and Supporting Vouchers:
The AO alleged that the assessee could not produce books of accounts and supporting bills and vouchers of KIEL, leading to the claim of expenses remaining unverified. The CIT(A) concurred with the AO's findings, noting that the assessment of KIEL was completed under section 143(1), and the income declared by KIEL remained unverified by the department. The assessee argued that it had no power to compel KIEL to produce its books of accounts and suggested that the AO could have issued summons under section 131 to KIEL. The AO, however, did not take this step.

3. Double Taxation of the Same Income:
The assessee argued that taxing the income in the hands of the JV, when it had already been taxed in the hands of KIEL, amounted to double taxation, which is against settled principles of law. The assessee cited various judicial precedents, including the decision of the Coordinate Bench in the case of ITO Vs M/s Kiran Tirupati Mangla JV, where it was held that since the entire receipts were owned and declared by one of the constituents of the JV, no addition could be made in the hands of the JV. The ITAT observed that the AO ignored the details and evidence provided by the assessee and proceeded to make additions without rebutting these documents or bringing any contrary evidence on record.

Conclusion:
The ITAT concluded that the entire receipts related to the work executed by KIEL were duly accounted for in KIEL's books of accounts, and taxes were paid on the resultant profit. The ITAT held that the AO's action of taxing the same income in the hands of the JV amounted to double taxation, which is not permissible in law. The ITAT allowed the appeal of the assessee and directed the deletion of the addition of Rs. 1,18,96,853/-.

Order:
The appeal of the assessee was allowed, and the addition of Rs. 1,18,96,853/- was directed to be deleted. The order was pronounced in the open court on 19th January 2021.

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