GUPTA K.N. CONSTRUCTION CO., Jaipur V. DEPUTY COMMISSIONER OF INCOME TAX, Jaipur

CO 04/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4097 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 27-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: S L JAIN DHK
• Keywords: Depreciation

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 09/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. THE DCIT, CIRCLE-7, JAIPUR. CUKE VS. M/S. GUPTA K.N. CONSTRUCTION, A-34, GANESH NAGAR, SHYOPUR ROAD, SANGANER, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADFG 4615 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 04/JP/2018 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 09/JP/2018) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. M/S. GUPTA K.N. CONSTRUCTION, A-34, GANESH NAGAR, SHYOPUR ROAD, SANGANER, JAIPUR. CUKE VS. THE DCIT, CIRCLE-7, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADFG 4615 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. JAIN (ADVOCATE) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25.10.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 26/10/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 13 TH OCTOBER, 2017 OF LD. CIT (A)-3, JAIPUR FOR THE ASSESSMENT YEAR 2013-14. THE REVENUE HAS RAISED TH E FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT (A) HAS ERRED IN RESTRICTING THE NP RATE @ 6% IN PLACE 11% AS 2 ITA NO. 09/JP/2018 & CO NO. 04/JP/2018 M/S. GUPTA K.N. CONSTRUCTION CO., JAIPUR. APPLIED BY THE AO INVOKING THE PROVISIONS OF SECTIO N 145(3) OF THE INCOME TAX ACT, 1961 SUBJECT TO DEPRECIATION IN TEREST AND REMUNERATION TO THE PARTNERS. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, WITHDRAW OR INSERT ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS REGARDING THE ADDITION MADE BY THE AO BY APPLYING NP AT 11% WAS RESTRICTED BY THE LD. CIT (A) BY APPLYING NP RATE AT 6%. 3. WE HAVE HEARD THE LD. D/R AS WELL AS THE LD. A/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT IN THE ASSESSEES APPEAL AGAINST THE IMPUGNED ORDER AND SUSTAINING THE ADDITION BY THE L D. CIT (A) AT NP RATE OF 6% WAS CONSIDERED BY THIS TRIBUNAL VIDE ORDER DATED 20 TH JUNE, 2018 IN ITA NO. 1024/JP/2017. THE TRIBUNAL HAS CONSIDERED THIS ISS UE IN PARA 3.4 AS UNDER :- 3.4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WORK DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS PERFORMED CI VIL WORK CONSTRUCTION WORK FOR VARIOUS STATE GOVERNMENT DEPA RTMENT LIKE JDA, PWD, RIICO ETC. THE ASSESSEE IS A PARTNERSHIP FIRM AND IT HAS CLAIMED DEPRECIATION OF RS. 24,12,851/- AND INTEREST TO THI RD PARTIES OF RS. 29,22,964/- AND REMUNERATION TO PARTNERS OF RS. 40. 00 LACS IS CLAIMED WHICH RESULTED INTO THE NET INCOME OF RS. 29,29,969 /-. IT IS NOTED THAT THE AO HAD APPLIED THE 11% NET PROFIT ON GROSS CONT RACT RECEIPT. HOWEVER, THE LD. CIT (A) HAS ESTIMATED THE NET PROF IT RATE @ 6% SUBJECT TO ALLOWABILITY OF DEPRECIATION, INTEREST T O PARTNER AND REMUNERATION PAID TO PARTNER. DURING THE COURSE OF HEARING, THE LD. AR 3 ITA NO. 09/JP/2018 & CO NO. 04/JP/2018 M/S. GUPTA K.N. CONSTRUCTION CO., JAIPUR. OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF THE ASSESSEE IN DBIT NO. 187/2 016 DATED 21.11.2017 WHEREIN THE HONBLE HIGH COURT HAS CONFI RMED THE NET PROFIT @ 5.5% BY OBSERVING AS UNDER :- 6. AFTER THE MATTER WAS ARGUED, NOW MR. S.L. JAIN COUNSEL FOR RESPONDENT HAS APPEARED. THE MATTER WAS ADMITTE D ON 9 TH NOVEMBER, 2016 AND WHEN THE MATTER WAS ADJOURNED ON 14 TH NOVEMBER, 2017, AT THE REQUEST OF ASSESSEE, WE MADE IT CLEAR THAT THE COURT WILL PROCEED WITH THE MATTER AS THIS IS ONE OF THE OLDEST MATTER PENDING BEFORE THE JAIPUR BENCH. HOWE VER, HE HAS SOUGHT TO RELY UPON THE DECISION OF THIS COURT IN C ASE OF COMMISSIONER OF INCOME TAX VS GUPTA K.N. CONSTRUCTI ON CO. [2015] 371 ITR 325 (RAJ.) DECIDED ON 18 AUGUST 2017 AND THE JUDGEMENT OF TRIBUNAL DATED 4 TH MARCH, 2016 WHERE THE TRIBUNAL AFTER CONSIDERING THE AFORESAID JUDGEMENT HELD THE NET PROFIT @ 11% IS ON HIGHER SIDE AND APPLIED NET PROFIT @ 5.5% . 7. IN THAT VIEW OF THE MATTER, IT WILL NOT BE USEFU L FOR THE PARTIES TO ADJOURN THE MATTER. 8. HENCE, IN VIEW OF THE ABOVE, THE ISSUE IS ANSWER ED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 9. THE APPEAL STANDS DISMISSED. SINCE THE HONBLE RAJASTHAN HIGH COURT HAS CONFIRME D THE APPLICATION OF NET PROFIT RATE @ 5.5% IN THE CASE OF THE ASSESS EE, THEREFORE, WE RESPECTFULLY FOLLOW THE DECISION OF JURISDICTIONAL HIGH COURT (SUPRA) AND APPLY THE NET PROFIT RATE OF 5.5%. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. THEREFORE, THE COMMON ISSUE RAISED BY THE DEPARTMEN T IN THE PRESENT APPEAL STANDS DISPOSED OFF VIDE ORDER DATED 20 TH JUNE, 2018 OF THE ASSESSEES APPEAL WHEREBY THE TRIBUNAL HAS ACCEPTED THE NP AT 5.5% AS AGAINST 6% APPLIED BY THE LD. CIT (A). IN VIEW OF THE FINDING OF THE TRIBUNAL VIDE ORDER DATE D 20 TH JUNE, 2018 IN ASSESSEES APPEAL, THE GROUND RAISED BY THE REVENUE IN THIS AP PEAL STANDS DISMISSED. 4 ITA NO. 09/JP/2018 & CO NO. 04/JP/2018 M/S. GUPTA K.N. CONSTRUCTION CO., JAIPUR. C.O. NO. 4/JP/2018 : 4. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT THE LEARNED CIT (A), JAIPUR WAS FULLY JUS TIFIED IN APPLYING NET PROFIT RATE OF 6% SUBJECT TO DEPRECIATION INTER EST AND REMUNERATION TO PARTNERS. 2. THAT THE LEARNED CIT (A), JAIPUR HAS ERRED IN LA W AND FACTS IN NOT ALLOWING THIRD PARTY INTEREST FROM NET PROFIT D ETERMINED BY APPLYING NET PROFIT THEORY. 5. GROUND NO. 1 IS IN SUPPORT OF THE ORDER OF THE L D. CIT (A) AND FURTHER THAT ISSUE WAS ALREADY DECIDED IN THE APPEAL OF THE ASSE SSEE, HENCE IT BECOMES INFRUCTUOUS. GROUND NO. 2 OF THE CROSS OBJECTION IS REGARDING TH IRD PARTY INTEREST. 6. WE NOTE THAT THIS ISSUE WAS ALSO CONSIDERED BY T HE TRIBUNAL WHILE DECIDING THE ASSESSEES APPEAL. THEREFORE, THE GROUND NO. 2 ALSO BECOMES INFRUCTUOUS. 7. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS O BJECTION OF THE ASSESSEE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26/10/2 018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 26/10/2018. DAS/ 5 ITA NO. 09/JP/2018 & CO NO. 04/JP/2018 M/S. GUPTA K.N. CONSTRUCTION CO., JAIPUR. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT, CIRCLE-7(1), JAIPUR. 2. THE RESPONDENT M/S. GUPTA K.N. CONSTRUCTION CO ., JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 09/JP/2018 & CO NO. 04/JP/20 18) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 6 ITA NO. 09/JP/2018 & CO NO. 04/JP/2018 M/S. GUPTA K.N. CONSTRUCTION CO., JAIPUR.