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2018 (2) TMI 593 - AT - Income TaxEstimation of income of JV - Addition u/s. 40A(2)(b) - addition by computing the profit of the joint venture @4% of the gross receipts as the assessee - Held that:- In CIT vs. Oriental Structure Engineers Pvt. Ltd. [2015 (3) TMI 102 - DELHI HIGH COURT] has observed that in the case of JV of such kind Section 40A(2) is not applicable. There are other judicial findings in this regard arriving at the same conclusion which are reported as CIT vs. SMSL UANRCL (JV) [2015 (3) TMI 279 - BOMBAY HIGH COURT]. In all the above cases, it has been held that where the constituent participants make a JV to secure a contract, which is merely a pass through entity with minimal expenses, no tax liability cab be attributed by holding the subject entity JV as AOP. No net profit on % bases can be taxed as has been done in this case. Note that AR of the assessee in this case relied upon the order of the CIT(A) and DR relied upon the order of the AO. But the DR could not controvert the finding of the CIT(A) wherein he has followed the precedents of the Hon’ble High Court and Tribunal and Ld. DR also could not place any contrary decision before us. - Decided against revenue.
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