TaxTMI 
TaxTMI 
2023 (10) TMI 843
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....assessee, without appreciating the fact that the assessee had not carried out any business activity on its own, but had awarded sub-contract for Rs. 14,86,52,041/-. 3. That on the facts of the case and under the law, no disallowance out of the expenses incurred / claimed under the head "Sub-Contract Expenses" at Rs 14,86,52,041/- is called for. The ld. A.O. had computed total income at Rs. 1,20,77,763/- by making disallowance at Rs. 1,18,92,163/- (which amount was worked out by applying rate of 8% on Rs. 14,86,52,041/-) and adding the same to the total income declared by the assessee. On appeal, the Id. CIT(A) had reduced such disallowance to Rs. 54,43,447/- (being the difference between Rs. 56,19,047/- representing the amount worked out by applying the rate of 3.78% on Rs. 14,86,52,041/- and Rs. 1,75,600/- representing the total income declared by the assessee). That on the facts of the case and under the law, the disallowance sustained by the Id CIT(A) to the extent of Rs. 54,43,447/-, is unjustified." 3. In ITA No. 4873/Del/ 2019, following grounds have been raised by the assessee: "1. That the penalty order passed by the ld AD u/s 271G on ....
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....had entered into an agreement to form a Joint Venture (JV) with the specific purpose of bidding for construction of 318 MLD 70 MGD Sewage Pumping Station etc. on design, build and operator basis at Kalyan Puri, Delhi. The contract was awarded by Delhi Jal Board to the assessee JV. TPPL had executed the work and raised bills for Rs. 15,02,04,381/- (Rs. 14,86,52,041/- plus Rs. 15,52,340/- being the Labour Welfare Cess) to the assessee JV. The assessee JV had raised bills for Rs. 15,52,33,963/- to Delhi Jal Board. As per the financial statements for F.Y. 2013-14, there was net profit of Rs. 1,70,416/-, which is shown as below: Contract Receipts 155233963 Expenses Sub-Contract Bills VAT/Sales Tax 150204381 155063547 Professional/Consultancy Fees 4657019 Audit Fees 139972 Bank Charges 56180 337 Printing & Stationery 400 Interest on TDS 5188 Sundry Balances written off 70 Net Profit 170416 The assessee JV had filed its ITR declaring total income of Rs. 1,75,600/- (Rs. 1,70,416/- plus Rs. 5,188/- being the amount disallowable). The AO had passed....
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.... 40A(2)(b) has no application to income aspect of the assessee JV in the facts of the instant case. The AO has not brought any comparable figures to disallow the expenditure, moreover with the structuring of the JV provisions of Section 40A(2)(b) are not attracted in the given facts and circumstances of the instant case. 9. Reliance is being placed on the judgment of the Hon'ble Delhi High Court in CIT Vs. Oriental Structural Engineers & Ors.(374 ITR 35) wherein it was held - "dismissing the appeals, that the concurrent findings were that the joint venture was formed only to secure the contract, in terms of which the scope of each joint venture partner's task was distinctly outlined. Further, the entire work was split between the two joint venture partners, they completed the task through sub-contracts and were responsible for the satisfaction of the National Highways Authority of India. Therefore, the Tribunal did not fall into error of law, in holding that the joint venture was not an association of persons liable to be taxed on that basis." 10. Hence, we hold that the Assessing Officer has fallen into error in determining the profit @ 8% and also invoking the provi....
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....document under section 92D. 271G. If any person who has entered into an international transaction or specified domestic transaction fails to furnish any such information or document as required by sub-section (3) of section 92D, the Assessing Officer or the Transfer Pricing Officer as referred to in section 92CA or the Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent of the value of the international transaction or specified domestic transaction] for each such failure." 16. Provisions of Section 273B are as under: "Penalty not to be imposed in certain cases. 273B. Notwithstanding anything contained in the provisions of clause (b) of sub- section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA, section 271GB, section 271H, section 271-I, section 271J, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or sub-section (1) or sub-sect....