TaxTMI 
TaxTMI 
2012 (4) TMI 657
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for the purpose of bidding and obtaining contract works from National Highways Authority of India (NHAI). The joint venture agreement in the shape of MOU dated 19.10.2000 was later superseded by a joint venture agreement dated 11.5.2001, which was amended through another SJVA dated 12.5.2001. The joint venture was awarded a contract work for four laning and strengthening of the existing two lane sections between km 320 and km 390.75 on NH-2 (construction package V-C) in Jharkand (TNHP/8) by National Highways Authority of India (NHAI). The contract agreement for the works awarded by the NHAI was executed between the NHAI and the Joint Venture on 20.9.2001. As per the terms of the JVA dated 11.5.2001, the members were to share their interest in the contract works in the ratio of 51:49 between PCL and SUNCON. Later, both the members entered into SJVA on 28.2.2002 under which the work relating to the contract was divided between them. In this agreement, the members allocated the contract work between themselves in the ratio of 98% (PCL): 2% (SUNCON). It was agreed that for the works executed by them respectively, PCL would take 98% of the total receipts and SUNCON would take 2%. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Revenue is in appeal before us. 6. We find that similar issues came up for consideration before this Tribunal vide its order dated 4.11.2011 in the case of M/s Limak Soma Joint Venture, Hyderabad in ITA Nos.498 to 500/Hyd/2006 for the assessment years 2002-03 to 2004-05 wherein the Tribunal in Para No.6 has held as follows: "6..................We have considered the rival submissions carefully and have perused the orders of the assessing officer and the CIT(A) and the contents of the compilation filed by the assessee before us. We find that the income in the hands of the assessee-AOP has been estimated at 2% of the payment to individual members by invoking the provisions of S.145 of the Act. We find that the assessing officer has made the addition on estimate basis by observing that the payment made by the assessee-AOP to its members appears to be excessive and unreasonable, having regard to the fair market value of such services. The assessing officer has not placed on record any basis for such observation made by him. What is the fair market value of such services rendered by the members of the assessee-AOP to the joint venture has not been detailed by the assessing office....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the AOP. We find that the CIT(A) has given a finding that the appellant AOP did not execute any contract work in question and therefore, did not derive any income during the year and the additions made by the assessing officer could not be sustained. In the facts of the case, we hold that there is no mistake in the order of the CIT(A) in holding that the question of estimating profit does not arises and in deleting the addition made in the hands of the assessee. We hold that no case for disallowance/addition could be made under S.40A(2) by the Revenue and accordingly, there being no merit in the grounds of appeal of the Revenue, the same are rejected for all the three assessment years in appeal before us". 5. Respectfully, following the orders of the Co-ordinate Bench of this Tribunal, we hold that no case for disallowance/addition could be made u/s 40A(2) by the Revenue and since there being no merit on the grounds of the appeal of the Revenue, the grounds taken by the Revenue are rejected. 7. In the result, the appeal of Revenue is dismissed. ITA No.150/Hyd/2008 8. Brief facts of the case are that the assessee is an association of persons (AOP) consisting of M/s Progressi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Joint Venture by SJVA. He held that the contract receipts received from NHAI and subsequently passed on to individual members as per the SJVA amounted to expenditure incurred by the assessee in the execution of the contract work and such expenditure appears to be excessive and unreasonable and hit by the provisions of section 40A(2). He observed that no evidence has been furnished by the assessee to show that the two technical persons were deputed by STICCO as required under Schedule B of SJVA and that they, in fact, performed any services in execution of the contract work. He thus noted that the amount paid to STICCO cannot be held to be incurred wholly and exclusively for the purposes of business and, hence, the entire payment to STICCO requires to be disallowed. He observed that keeping in view the largeness of the work, the work done by the assessee offering the contract, risks and responsibilities assumed by the assessee, 2% of the aforesaid payment is treated as excessive and unreasonable and disallowable u/s 40A(2) of the Act. He further held that alternatively 2% of the receipts should be estimated as net income clear of all expenses of the assessee by invoking the provisi....