9911796707
TMI Blog2012 (8) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication. 3. In Ground Nos.2 to 6, the assessee has basically challenged the estimation of profit by rejecting the books of accounts. Briefly, the facts are, the assessee is a joint venture company between Daelim Industrial Company (DIC in short) and Nagarjuna Constructions Co. Ltd., (NCCL). It was awarded a contract by National Highway Authority of India (NHAI) for development of 247.7 kms roads in three packages in the State of Gujarat. The assessee joint venture for the assessment year under dispute disclosed a total contract receipts of Rs.174.58 crores and after claiming expenses of Rs.159.78 crores and depreciation of Rs.7.05 crores declared a total income of Rs.8,14,92,286/-. During the scrutiny assessment proceedings, the AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actor to complete the work assigned to it by the Joint Venture and hand over completed work to the joint venture within the time schedule. It was also found by the AO that the expenses for labour, plant and machinery materials or other expenses including water, power have to be borne by the sub-contractor. Sub-contractor has also to bear misc., expenses like insurance, taxes and royalty etc., and other expenses of all statutory compliance. It was found by the AO that on total contract receipts of Rs.174.58 crores, sub-contract payment shown in the profit and loss a/c is Rs.99.67 crores. 4. As per the terms of sub-contract with DRAIPL for the bill of Rs.34 crores raised by DRAIPL assessee's receipt from NHAI is Rs.37.87 crores and for Rs.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of contract work from 10 to 20% and passing on the remaining amount to the sub-contractor. In this process, at the stage of awarding work itself to the sub-contractor, the Joint Venture is making profit to the tune of 10% to 20%. The CIT (A) therefore agreed with the inference drawn by the AO in rejecting the books of accounts and estimating the profit. However, considering the volume and nature of work, the CIT (A) estimated the profit at 10% and directed for allowing depreciation and interest from profits so determined. 6. We have heard rival contentions and perused the material on record and also considered the written submissions of the assessee. As is evident from the materials on record, the assessee Joint Venture has executed a maj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member decision of this Bench, we consider it reasonable to direct estimation of profit at 10% of the gross receipts without allowing any further deduction towards depreciation and interest. 7. In ground No.7, the assessee has challenged the order passed by the revenue authorities holding the status of the joint venture as an AOP and charging tax at the maximum marginal rate. 8. At the time of assessment proceedings, the AO found from the audit report as well as the return of income, the assessee has mentioned the status of Joint Venture as a firm. In the course of assessment proceedings, the assessee did not produce any document to show the existence of partnership between the constituents of the Joint Venture. The AO therefore held the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faulted. However, it is seen from the Article25(4) of DTAA between India and Korea extracted hereinabove that the aforesaid article provides that the foreign company should not be subjected to tax which is more burdensome than tax imposed on similar entities of the concerned State. We find force in the contentions of the learned AR for the assessee. However, it has also to be seen whether such nature of income is within the purview of DTAA between India and Korea. Since the CIT (A) has not at all considered this issue we restore this issue only to the file of CIT (A) who shall decide the same after giving an opportunity of being heard to the assessee. 11. In the result, the appeal filed by the assessee is treated as partly allowed for st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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