Case Law Details
Tapi JWil JV Vs ITO (ITAT Delhi)
ITAT Delhi held that disallowance under section 40A(2)(b) of the Income Tax Act on merely estimating that more income should have been earned from sub-contracting without bringing any comparable figures is unsustainable in law.
Facts- The assessee M/s TAPI Prestressed Products Ltd. (‘TPPL’) and M/s JITF Water Infrastructure Ltd. (‘JWIL’) had entered into an agreement to form a Joint Venture (JV) with the specific purpose of bidding for construction of 318 MLD 70 MGD Sewage Pumping Station etc. on design, build and operator basis at Kalyan Puri, Delhi. The contract was awarded by Delhi Jal Board to the assessee JV.
TPPL had executed the work and raised bills for Rs.15,02,04,381/- to the assessee JV. The assessee JV had raised bills for Rs.15,52,33,963/- to Delhi Jal Board.
The assessee JV had filed its ITR declaring total income of Rs. 1,75,600/-. The AO had passed the assessment order u/s 143(3) in the status of AOP, determining the total income at Rs. 1,20,77,763/- while making disallowance u/s 40A(2)(b) at Rs.1,18,92,163/-.
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