Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 1414 - AT - Income TaxDisallowance of payment made made to M/s. Alishan Estates (P) Ltd - as per AO transaction is a sham transaction - AO treated the said amount as an expenditure by holding that the assessee should have deducted the tax at source - Held that:- As regards the sham transaction, at the outset, we do not support the order of the AO for the reasons that the transactions were made by a valid written contract/agreement on various terms and conditions with the two said parties, which are essential for such a joint venture project. This has not been denied by the AO. The AO has not pointed out any defect in the said agreement entered between the assessee and Alishan Estates Pvt. Ltd. In lieu of the said agreement dtd. 10/07/2005 M/s. Alishan Estates Pvt. Ltd was to procure pre-specified land for purchase, to make all the necessary legal arrangements for such land and to find out suitable buyer for the said land and profit was to be shared between the assessee and M/s. Alishan Estates P.Ltd in ratio 25 : 75. The profit includes loss as well. Had there been a loss whether the AO would have treated the said transaction as a sham transaction, obviously the answer is No. Since joint venture has earned a profit and same was shared between the said two parties. Therefore, we are of the view that the transaction is completely in lieu of joint venture agreement. The AO is not justified in treating the said payment made by the assessee to the joint venture partner, M/s. Alishan as an expenditure and no TDS is required to be deducted on the profit so shared between the said two joint venture partners. In the circumstances and facts of the present case the addition so made by the AO is without any basis and is purely on surmises and conjectures. - Decided against revenue
|