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2021 (1) TMI 992 - ITAT JAIPURNP rate determination - net result of trading operations of assessee JV - applying net profit rate of 8% on contract receipts by assuming that the contract work was executed by the assessee itself and not by its lead partner M/s KIEL though the payments made to it were not doubted - two entities joined together and formed a Joint Venture (JV) for making a bid for the supply and installation, testing & Commissioning of Signaling equipment - furnishing bills and supporting vouchers in respect of expenses claimed by KIEL - HELD THAT:- M/s KIEL is a separate legal entity and assessee had neither access to books of accounts of KIEL nor had authority to direct its office bearers to provide books of accounts to be produced before AO. Therefore, during the course of assessment proceedings, it was requested by the assessee before AO that direct enquiry may be made from KIEL by issuing notice u/s 133(6) of the Act and it may be directed to furnish books of accounts. No action was taken by AO and rather adverse inference was drawn against the assessee and it was presumed that assessee JV may have executed the project, which is quite contrary to the facts on record. Further without having any material in possession and also without bringing on record any comparable case, profit rate of 8% is applied. CIT(A) while upholding this exorbitant profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) of the Act and failed to appreciate the fact that such a high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL. Remedial action u/s 264 not taken by M/s KIEL - As has been observed by ld. CIT(A) making it as a ground for not following the earlier order of this bench of ITAT, in this regard, it is submitted that the return of income for AY 2010-11 was originally filed by M/s KIEL on 25.9.2010 and the same was revised on 23.3.2011 which is also available at page No. 16 of the paper book. As per Section 264 of the Act, application can be filed by the assessee within a period of one year from the communication of order in question. In the present case, since no order was passed in the case of M/s KIEL, thus there was no occasion with M/s KIEL to file any petition u/s 264 of the Act. Further the assessee has the option of filing of appeal, thus had pursued the appellate proceedings. Even under the identical circumstances, the Coordinate Bench has allowed the appeal in one of the group Joint Venture namely M/s Kiran Tirupati Mangla JV [2016 (5) TMI 1542 - ITAT JAIPUR] and therefore, under such circumstances, assessee was confident of getting the relief in appellate proceedings. Joint venture was entered into for getting the eligibility for participating in the tender and accordingly in the Joint Venture Agreement, specific role of the parties was defined i.e. the execution of entire contract work was to be done by KIEL that too from its own resources, manpower, equipment etc., and other party Eliop, SA would be responsible for providing the technical support. Since the receipts in the year were solely towards the execution of the work therefore, entire receipts were owned by M/s KIEL and profit earned thereon was offered by M/s KIEL for taxation in the return of income filed in due course after incorporation such income in its financial statements. Now making trading addition in the case of assessee on the same receipts again by holding the same as its income, amounts to double taxation of an income, therefore, in our view, the said act of the Revenue is contrary to the provisions of law. We allow the appeal of the assessee and direct to delete the addition so made and confirmed.
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