2020 (9) TMI 59

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.... 3. Assessee is company stated to be engaged in the business of Civil Construction Contracts. Assessee filed its return of income for A.Y 2011-12 declaring total income of Rs. 'Nil'. The case was selected for scrutiny and thereafter, the assessment was framed u/s 143(3) vide order dated 28.02.2014 and the total income was determined at Rs. 92,80,400/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 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 additi....

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....5,65,581/- were of revenue in nature and accordingly granted relief. With respect to the balance expenses of Rs. 13,56,645/-, he held it to be of capital in nature and accordingly upheld its disallowance. Aggrieved by the order of CIT(A), assessee is now before us. 6. Before us, Ld AR pointed to the expenses which have been disallowed by CIT(A) as noted in the order of CIT(A). He fairly submitted that he does not dispute the disallowance of Rs. 37,000/- on account of penalty and to that extent the disallowance be confirmed. However with respect to disallowance of Rs. 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 bo....

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....IT(A) to that extent. As far as the aggregate disallowance of Rs. 13,19,645/- (Rs. 8,67,245 + 4,52,400) is concerned, from the details of the bills placed in the paper book, it is seen that the bills for the expenses indicate it to be for the repairs, supply of consumables, recalibration of the machinery. It is not the case of the Revenue that by incurring of the impugned expenditure any new asset has 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 i....

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....ggrieved by the order of AO, assessee carried the matter before CIT(A), who upheld the order of AO. Aggrieved by the order of CIT(A), assessee is now before us. 12. Before us, Ld AR reiterated the submissions made before lower authorities and further submitted that assessee had entered into a joint venture agreement with Harish Chandra India Ltd (HCIL) known as HCIL & PEPL JV. The JV was 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% ....

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....t that assessee had entered into a JV with HCIL for the construction of road in Bihar. From the copy of MOU entered into by both the JV partners which is placed on record, Learned AR has demonstrated that both the parties were individually responsible for their respective share of services to the client and they individually assumed the risks. 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. 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 repre....