TMI Blog2021 (1) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... d that assessee JV may have executed the project, which is quite contrary to the facts on record. Further without having any material in possession and also without bringing on record any comparable case, profit rate of 8% is applied. CIT(A) while upholding this exorbitant profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) of the Act and failed to appreciate the fact that such a high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL. Remedial action u/s 264 not taken by M/s KIEL - As has been observed by ld. CIT(A) making it as a ground for not following the earlier order of this bench of ITAT, in this regard, it is submitted that the return of income for AY 2010-11 was originally filed by M/s KIEL on 25.9.2010 and the same was revised on 23.3.2011 which is also available at page No. 16 of the paper book. As per Section 264 of the Act, application can be filed by the assessee within a period of one year from the communication of order in question. In the present case, since no order was passed in the case of M/s KIEL, thus there was no occasion with M/s KIEL to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t arbitrary, unjust, untenable and bad in law, deserve to be deleted. 1.2. That, ld. CIT(A) has grossly erred in upholding addition of ₹ 1,18,96,853/- by disregarding the submission of assessee that entire contract was executed by JV partner M/s Kiran Infra Infra Engineers Ltd., whom such contract receipts have been transferred and who has in fact duly declared entire receipts in its profit loss account, which fact is not even disputed by ld.CIT(A). Appellant prays that by furnishing Return of Income and Financial statements of Kiran Infra Engineers Ltd., wherein such receipts have been declared, assessee has discharged its onus of proving contract expenses as genuine, thus addition confirmed by ld.CIT(A) deserves to be deleted. 1.3. That, ld.CIT(A) has further erred in upholding addition by confirming allegation that assessee could not furnish bills and supporting vouchers in respect of expenses claimed by Kiran Infra Engineers Ltd by ignoring the fact that he himself has collected all the financials of M/s Kiran Infra in the appellate proceedings of assessee by making direct enquiry by issuing notice u/s 133(6) thus the addition made deserves to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trading operations of assessee JV was loss of ₹ 550/-. Assessee, under bonafide belief that since total income was below maximum amount not chargeable to tax, did not file Return of Income nor claimed the credit of TDS of ₹ 30,85,720/-. Subsequently, case of assessee was reopened by issuance of notice u/s 148 of the Income Tax Act, 1961. In response to such notice, assessee furnished return of income declaring loss of ₹ 550/-. Details and explanation as required by AO were furnished and assessment was completed by the AO vide order dated 27.12.2017 by assessing total income of assessee at ₹ 1,18,96,853/- by applying net profit rate of 8% on contract receipts by assuming that the contract work was executed by the assessee itself and not by its lead partner M/s KIEL though the payments made to it were not doubted. 4. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions of both the parties and well as material placed on record, upheld the order of the A.O. Against which the assessee is in further appeal before the ITAT. 5. In this appeal, the assessee s main grievance is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e joint venture agreement, the work awarded to assessee was to be fully and totally executed by the lead party to Joint Venture i.e. KIEL and accordingly M/s KIEL (lead partner) executed the entire work and appellant JV transferred the entire receipts of the year at ₹ 14,87,10,667/- to M/s KIEL the executant company in its books of accounts and treated such receipts as its business receipts and after claiming the deduction of the expenditure involved, the gross income of ₹ 88,76,377.40 was declared on this receipt in its Financial statements, copies of which were submitted to Id. AO as well as to ld. CIT(A) (APB 16-34 relevant pages 17, 25 and 34). However, ld.AO did not accept the submission made by assessee by observing as under: - That assessee could not produce books of accounts and supporting bills and vouchers of M/s KIEL thus claim of assessee remained unverified and unproved; - That the assessment in case of KIEL was completed u/s 143(1) thus the income declared by it remained unverified by the department. - That assessee has not declared such receipts in its return of income nor got it's accounts audited. - That in subsequent assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through JV, which would have inter alia included notional charges for various resources held by JV partners and utilized for the execution of projects, it was mutually decided by KIEL and ELIOP, the other consequent of the JV, that entire receipts would be taken by the lead partner i.e. KIEL, who ultimately executed the work after incurring all the expenses and also paid to ELIOP towards technical support services provided by it. In support of such contention, assessee furnished Cost Control account (contract wise summary of contract receipts and expenses) maintained by KIEL (APB 34) wherein M/s KIEL has duly declared entire receipts of ₹ 14,87,10,667/- in its books of accounts and after claiming expenses towards such contractual receipts, has declared profit to the tune of ₹ 88,76,377.40 from impugned project, which gives a profit rate of around 6% and due taxes were paid on that by it. It is further submitted that both the assessee as well as KIEL are under same tax slab, therefore there was no loss to revenue in the event the work receipts were declared by KIEL. At this juncture, attention of the hon'ble bench is invited to the decision of Hon'ble J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IEL and entire receipts from such execution have been declared by M/s KIEL. In this regard reliance is placed on the following: 374 ITR 35 CIT Vs. Oriental Structural Engineers Pvt. Ltd. (Delhi) 372 ITR 429 CIT Vs. SMSL-UANRCL (JV) (Bom.) 37 DTR 49 Hyundai Rotem Co., In Re (AAR) He has further submitted that further the concept of real income is applied in the case as the assessee has not earned any income eligible for payment of tax. In this regard he has relied on the decision of the Hon'ble Supreme Court in case of CIT V/s. Shoorji Vallabhdas and Co.[1962] 046 ITR 0144. He has also relied on the decision of the Hon'ble Karnataka High Court in case of CIT (Asst.) V/s. Industrial Credit and Development Syndicate Ltd.120061 285 ITR 0310. The ld AR has also relied on the decision of the Hon ble Supreme Court report in 225 ITR 746 Godhara Electricity Co. Vs. CIT (SC) In view of above, it is submitted that in the present case all the receipts related to work as well as profit earned were only belonged to M/s. KIEL and have been duly accounted in the book of accounts of M/s. KIEL and taxes have been paid. Now after the lapse of almost 7 years, by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) and failed to appreciate the fact that such a high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL. Regarding the remedial action u/s 264 not taken by M/s KIEL, as has been observed by ld. CIT(A) making it as a ground for not following the earlier order of this bench of Hon'ble ITAT, it is submitted that the return of income for AY 2010-11 was originally filed by M/s KIEL on 25.9.2010 (APB 20) and the same was revised on 23.3.2011(APB 16). As per section 264, application can be filed by the assessee within a period of one year from the communication of order in question. In the present case, since no order was passed in the case of M/s KIEL, thus there was no occasion with M/s KIEL to file any petition u/s 264. Further the appellant has the option of filing of appeal wherein it has every hope of success thus it had pursued the appellate proceedings. Here it is also relevant to state that as under identical circumstances, hon'ble Bench has allowed the appeal in one of the group Joint Venture namely M/s Kir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was formed for participating in the bids invited by M/s Rail Vikas Nigam Ltd. for the Supply, Installation, Testing and Commissioning of Signalling Equipment with Route Setting Panel. Interlocking at 21 stations in connection with MG (Meter Gauge) to BG (Broad Gauge) Gauge Conversion on Samdari - Bhildi (223.44 Km) of North Western Railway. (Copy of Joint Venture Agreement which is placed at page No. 6-8 of the paper book). 8. We observe that the contract was awarded after objective analysis of the tender submitted and the work executed is subject to the critical inspection and supervision by the Railways Authorities requiring frequent re-doing of the job as any failure in signalling system involves precious public life. Safety and the infallibility of the Indian Railway signalling system is a well known feature thus the job entails very high technical competence and is always material intensive i.e. the cost of material involved in the works is very high and quite substantial in comparison to other elements of cost like labour etc. The material involved in such jobs is of special grade and requires constant development for obtaining specially designed products which makes it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided by KIEL and ELIOP, the other consequent of the JV, that entire receipts would be taken by the lead partner i.e. KIEL, who ultimately executed the work after incurring all the expenses and also paid to ELIOP towards technical support services provided by it. From perusal of the record, we also observe that the assessee furnished Cost Control account (contract wise summary of contract receipts and expenses) maintained by KIEL which is at page No. 34 of the paper book, wherein M/s KIEL has duly declared entire receipts of ₹ 14,87,10,667/- in its books of accounts and after claiming expenses towards such contractual receipts, has declared profit to the tune of ₹ 88,76,377.40 from impugned project, which gives a profit rate of around 6% and due taxes were paid on that by it. 11. From perusal of record, we observe that ld AR has drawn our attention towards the decision of the Coordinate Bench of this Tribunal dated 19/05/2016 in the case of ITO Vs M/s Kiran Tirupati Mangla JV in ITA No. 753/JP/12, wherein similar activity was carried out and AO had taxed the entire receipts in the hands of JV though the work was executed by one of the constituent i.e. Kiran Infra Eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment is incomprehensible as on one hand it accepted the assessment in the hands of Kiran Infra, then it desired to tax assessee as a logical consequence Kiran Infra approached under a statutory provision of law to revise the order u/s 264. Sec. 264 being a statutory remedy is to be exercised with judicious approach. If the CIT rejects the petition it also implies that department accepts the assessment in the hands of Kiran Infra. In this situation ld. CIT(A) is justified in deleting the assessment in the hands of the assessee as tantamount to double taxation. Assessee s predicament is discernible since the petition U/s 264 had been rejected, time to file the revised return had already expired on 31.03.2010 and the income stood taxed in the hands of M/s Kiran Infra Engineering Ltd. This left the assessee in a precarious situation of denying the legal remedy; consequently the impugned appeal became necessary. The department cannot insist on unjust enrichment by taxing twice the same income in the pretext of some technicalities. In view of the facts, circumstances and various judgment authorities cited above on these issues, we see no infirmity in the order of ld. CIT(A) in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. The Hon'ble Karnataka High Court in case of CIT (Asst.) V/s. Industrial Credit and Development Syndicate Ltd.120061 285 ITR 0310 has held that only real income alone is taxable. The relevant observations of the Hon'ble court are as under: Income-tax-General principles--Income--Definition--Inclusive-But to be construed by natural connotation--Real income alone taxable. The inclusive definition of the word income in section 2(24) of the Income-tax Act, 1961 adds several artificial categories to the concept of income, but on that account, the expression does not lose its natural connotation. It has to be construed as comprehending only such things which are income according to the natural import of the term. It is the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted, they cannot be so interpreted as to tax the subject twice over to the same tax..... If any double taxation is involved, the Legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over. The above referred cases make it clear that there is no prohibition as such on double taxation provided that the legislature contains a special provision in this regard. Now, the only question remains to be decided is whether in fact there is a specific provision for including the income earned from the Sikkim lottery ticket prior to 01.04.1990 and after 1975, in the income-tax return or not. We have gone through the relevant provisions but there seems to be no such provision in the IT Act wherein a specific provision has been made by the legislature for including such an income by an assessee from lottery ticket. In the absence of any such provision, the assessee in the present case cannot be subjected to double taxation. Furthermore, a taxing Statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargic and indifferent in granting refunds and giving reliefs due to the assessees under the Act. Dilatoriness or indifference in dealing with refund claims (either under section 48 or due to appellate, revisional, etc. orders) must be' completely avoided so that the public may feel that the Government are actually prompt and careful in the matter of collecting taxes and granting refunds and giving reliefs. 3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should- (a) draw their attention to any refunds or reliefs to which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was presumed that assessee JV may have executed the project, which is quite contrary to the facts on record. Further without having any material in possession and also without bringing on record any comparable case, profit rate of 8% is applied. Ld. CIT(A) while upholding this exorbitant profit rate has observed that in the case of M/s KIEL the profit rate of 8% is applied in its assessment completed u/s 143(3) of the Act and failed to appreciate the fact that such a high rate of profit as applied was deleted in appellate proceedings in the case of M/s KIEL. 16. We also observe that regarding the remedial action u/s 264 not taken by M/s KIEL, as has been observed by ld. CIT(A) making it as a ground for not following the earlier order of this bench of ITAT, in this regard, it is submitted that the return of income for AY 2010-11 was originally filed by M/s KIEL on 25.9.2010 which is at page No. 20 of the paper book and the same was revised on 23.3.2011 which is also available at page No. 16 of the paper book. As per Section 264 of the Act, application can be filed by the assessee within a period of one year from the communication of order in question. In the present case, since n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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