TMI Blog2018 (2) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... R also could not place any contrary decision before us. - Decided against revenue. - I.T.A. No. 7041/DEL/2017 - - - Dated:- 5-2-2018 - Shri H. S. Sidhu, Judicial Member Department by : Sh. Sampoorananand, Sr. DR Assessee by : Sh. KVS Krishnan, Adv ORDER This appeal by the Revenue is directed against the Order of the Ld. Commissioner of Income Tax (Appeals)-2, Gurgaon dated 01.9.2017 pertaining to assessment year 2013-14 on the following grounds:- 1. Whether the Ld. CIT(A) was right on facts and in law in deleting the addition of ₹ 46,26,375/- made by the AO by computing the profit of the joint venture @4% of the gross receipts as the assessee had given the payment to the persons specified u/s. 40A(2)(b) of the Income Tax Act, 1961. 2. Whether the Ld. CIT(A) was right on facts and in law in stating that JV is merely a pass through entity with minimal expenses, no tax liability can be attributed to JV as AOP. 3. That the appellant craves for the permission to add, delete or amend grounds of appeal before or at the time of hearing of appeal. 2. The brief facts of the case are the assessee has filed the return of income declaring NIL income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue authorities. I find that Ld. CIT(A) has discussed the issue in dispute elaborately at page no. 6 to 10 vide para no. 4.1 to 4.5. For the sake of convenience, I am reproducing herewith the relevant findings of the Ld. CIT(A) as under:- 4.1 In appellant's own case for the A.Y. 2011-12, the issue on the similar grounds is held to be in favour by CIT(A)-I, Gurgaon vide order dated 16.12.2015 in appeal no. 95/14-15. The CIT(A) has noted the facts in the appellant's case as under which are same for the year under consideration:- The appellant is a joint venture in the name of Kalindee Kartik JV. It has come into existence by a MOU signed on 09.11.2010 (copy enclosed) and subsequent agreement dated 11.03.2011 and registered on 14th March 2011 (copy enclosed). The JV participants are two entities namely, Kalindee Rail Nigam (Engineers Ltd)--80% and Karthik Nigam Pvt. Ltd - 20%. Return was filed for the Asst. Year 2011-12 on 28.09.2011 declaring an income of Nil. The assessee has claimed income from contract job at ₹ 1,86, 63, 005/- and equal amount shown as sub-contract expenses. Audit fees of ₹ 22,060/- has been claimed However, the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tender raised by South Eastern Railways. The work of both the JV partners is well defined in point no. 3 at page 3 of the JV agreement which is reproduced as under:- 3. The 'Parties' have resolved that the distribution of share, responsibilities, profits, losses and remuneration shall be as under:- a) Lead Partner's share: 80% Name: M/s Kalindee Rail Nirman (Engineers) Ltd Responsibilities: i) Schedules for part - I (Civil Engineering) ii) Schedule for Part - III (Signaling Works) (Part) iii) Schedule for Part - IV (Telecommunication Works) (Technical, Financial Other Obligations) b) Other Joint Venture Partner's Share: 20%; i) Schedule for part - II (Electrical Engineering) ii) Schedule for Part - III (Signaling Works) (Part) iii) Project Management iv) Material Management v) Site Management (Technical, Financial Other Obligations) Therefore from the above it is clear that the scope of each joint venture's task was distinctly outlined right from the inception of the contract. No member of the JV can rather assign or transfer the interest, right or liabilities of the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the facts are similar and therefore following precedence, the appeal of the appellant is allowed. 4.3 Further decision in the case of CIT vs. Oriental Structural Engineers P. Ltd. and KMS Constructions P. Ltd. [2015] 374 ITR 35 (Del) also supports the case of the appellant. In this case Hon'ble High Court has approved decision of Hon'ble ITAT (Delhi) which had recorded a finding that the joint ventures which have been formed only to secure the contract cannot be subjected to tax as Association of Person (AOP). The Hon'ble High Court elaborately discussed the case of Linde AG. Linde Engineering Division vs. DDIT [2014] 365 ITR 1 (Delhi) to come to this conclusion. 4.4 Further Hon'ble High Court (Delhi) in Income Tax Act no. 146/2010 decided on 11.02.2010 in this case of CIT vs. Oriental Structure Engineers Pvt. Ltd. has also 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] 372 ITR 425 (Bom). In all the above cases It has been held that where the constituent participants make a JV to secure a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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