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2012 (8) TMI 587 - AT - Income TaxBest judgement assessment - rejection of books of account - low profits - assessee being Joint Venture executing major portion of work awarded to it by NHAI through sub-contractor - deduction of 10 to 20% from the gross value of work and paying the remaining amount to the sub-contractor at the stage of awarding work to the sub-contractors - Held that:- It is evident that joint venture is making profit without executing any work. Therefore, considering such modus operendi, profit disclosed at 4.68% is abnormally low compared to the actual profit derived from such type of work. It is also a fact found on record that the assessee’s final accounts were qualified by a report of an Auditor which raises a doubt regarding correctness of the accounts. Hence, AO was justified in rejecting the books of account. Estimation of profit at 10% of the gross receipts without allowing any further deduction towards depreciation and interest is directed. Status of the joint venture held as an AOP charging tax at the maximum marginal rate - Held that:- Assessee has failed to produce any evidence to show the existence of partnership between the members of the joint venture. Therefore, treating the joint venture as AOP cannot be faulted. However, it is seen from the Article25(4) of DTAA between India and Korea that the foreign company should not be subjected to tax which is more burdensome than tax imposed on similar entities of the concerned State. Thus, sole issue of determining whether such nature of income is within the purview of DTAA between India and Korea is restored to the file of CIT(A)
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