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2017 (11) TMI 123 - HC - Income TaxTDS on sharing of profit with joint venture partner - addition u/s 40(a)(ia) - sham transaction - Held that:- Upon analyzing the Memorandum and other materials on record, the Commissioner accepted the assessee’s stand that the said sum was not expenditure incurred by the assessee to attract the provisions of Sections 194H or 194J of the 1961 Act. As a consequence, the question of disallowance of payment by applying the provisions of Section 40(a) (ia) could not arise. These findings by the Commissioner are based on appreciation of materials on record. The Tribunal also concurred with the findings of the Commissioner. The Tribunal, in its decision under appeal, observed that the assessing officer did not point out any defect in the “settlement/contract”. There is no cloud on remittance of the said sum to Alishan, which has been referred to as a paper company by the assessing officer. But the Revenue has not been able to establish any defect or fault in the transaction itself between the assessee and Alishan. The transaction of purchase and sale of the land by the assessee pursuant to the MOU is not in dispute. Doubt has been sought to be raised on lopsided profit sharing arrangement, which according to the Revenue, is a colourable device adopted for evading tax. But as we have already observed, the first and the second appellate bodies, upon appreciation of evidence did not find any reason to negate the transaction as sham, which would have rendered assessee’s explanation unsatisfactory. We do not find any perversity in the findings of the Commissioner or the Tribunal - Decided against revenue
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