TaxTMI 
TaxTMI 
2018 (4) TMI 1747
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....convenience and brevity. 3. At the first instance, I will deal with the appeal in ITA No. 7044/Del/2017. Following grounds have been raised in this appeal: "1. Whether the Ld. CIT(A) was right on facts and in law in deleting the addition of Rs. 44,29,401/- made by the Assessing Officer by computing the profit of the Joint Venture @4% of the gross receipts as the assessee had given the payment to the persons specified u/s 40A(2)(b) of the Income Tax Act, 1961. 2. That the appellant craves for the permission to add, delete or amend grounds of appeal before or at the time of hearing of appeal." 4. Facts of the case in brief are that the assessee filed the return of income on 27.11.2013 declaring an income of Rs. 1,23,32....
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....ue 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 Rs. 11,38,17,920/- net profit is only Rs. 1,23,316/- which is 0.1%. It is, therefore, clear that the motive of the assessee was to shift the profit from JV to M/s KEC International Limited. The payments made are excessive and unreasonable. In true terms the JV has only awarded the contract and all the transactions were passed through the accounts of JV(assessee) to M/s KEC International Limited and the assessee has charged only 0.1% which is very marginal as the work contract has been further given to associated party in view of section 40A(2)(b) of the Act. F....
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....d. I, therefore, uphold the impugned order on this score deleting the disallowance. 4.6 In the case of KEC Sidhartha Vs ITO in order dated 28.02.2017 the Hobble ITAT followed the order dated 21.11.2016(supra), In this case of KEC Sidhartha for A.Y. 2012-13 the addition made by the AO on the same issue was confirmed by me vide order dated 15.09.2016 in I.T Appeal No. 215/15-16. The order was reversed 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 th....
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....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 KECAsiakom 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....
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....nsidered 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 on record. None is present on behalf of the Revenue. In fact, there is no one 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 appeal....