TaxTMI 
TaxTMI 
2023 (10) TMI 843
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....ad 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 08.02.2017 is liable to be quashed, because it was not passed in accordance with law. I....
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....n 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 the assessment order dated 29.12.2016 u/s 143(3) in the status of AOP, determining the total income at Rs. 1,20,77,763/- while making disallowance u/s 40A(2)(b) at Rs. 1,18,92,163/-. The AO had formed a view that the as....
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....d 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 provisions of Section 40A(2)(b) and the ld. CIT(A) has also erred in determining the profit of the assessee @ 3.78% equal to the profit of one of the parties to the JV. ITA No. 4873/Del/2019 Penalty u/s 271G: 11. Facts of the case are as under: The assessee M/s TAPI Prestressed Products Ltd....
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.... 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-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause fo....