Appeal details
Counselvise Citation
[2017] 119 COUNSELVISE.COM (IT) 3481 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 2 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
15-09-2017
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2010-2011
Appeal Filed On
23-06-2014
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 DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ C.O. NO. 17/JP/2014 ARISING OUT OF ITA NO. 331/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. LTD., 1/81 RHB BHIWADI, TIJARA, ALWAR. CUKE VS. THE JCIT RANGE-2, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCR 2774 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.08.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 15/09/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT , JM. THIS CROSS OBJECTION NO. 17/JP/2014 ARISING OUT OF ITA NO. 331/JP/2014 BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. C IT (A), ALWAR DATED 17.02.2014 PERTAINING TO THE A.Y. 2010-11. 2. THIS CROSS OBJECTION WAS FIXED FOR HEARING IN PU RSUANCE OF THE ORDER PASSED IN M.A. NO. 32/JP/2017 ARISING OUT OF C.O NO. 17/JP/20 14 IN ITA NO. 331/JP/2014, WHEREIN THIS TRIBUNAL OBSERVED THAT, ONE OF THE GR OUND RELATED TO ALLOWANCE OF DEPRECIATION, FINANCIAL EXPENSES, BAD DEBTS AND THE DIRECTORS SALARY 2 ITA NO. 331/JP/2014 & C.O. NO. 17/JP/2014. RAJENDRA MITTAL CONSTRUCTION CO. PVT. LTD. FROM THE NET PROFIT RATE WAS NOT DECIDED. THEREFOR E, THE CROSS OBJECTION WAS FIXED FOR HEARING FOR THIS LIMITED PURPOSE. 3. GROUND NO. 1 OF THE ASSESSEES CROSS OBJECTION READS AS UNDER:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE APPLICATION OF SEC. 145(3). HE HAS FURTHER ERRED I N CONFIRMING THE TRADING ADDITION OF RS. 30,74,814/- BY APPLYING N.P . RATE OF 5% ON THE TURNOVER DECLARED BY THE ASSESSEE AS AGAINST N.P. R ATE OF 3.79% DECLARED BY THE ASSESSEE. HE HAS FURTHER ERRED IN NOT ALLOWING THE CLAIM OF DEPRECIATION, FINANCIAL EXPENSES, BAD DEBT S AND THE DIRECTORS SALARY FORM THE NET PROFIT RATE APPLIED BY HIM. 3.1 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAD DECIDED THE ISSUE OF APPLYING NET PROFIT AND THE DECISION OF TH E CIT(A) WAS CONFIRMED. LD. COUNSEL SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED THE CLAIM OF DEPRECIATION, FINANCIAL EXPENSES, BAD DEBTS AND DIR ECTORS SALARY FROM THE NET PROFIT APPLIED BY AO. LD. COUNSEL FOR THE ASSESSEE REITER ATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSION DATED 27/04/2016. 3.2 LD. COUNSEL HAS PLACED RELIANCE ON THE DECISION OF THE CASE OF DCIT VS. KIRODIMAL MODI IN ITA NO. 119/JP/2010 DT. 10.09.201 0 FOR A.Y. 2007-08. IN SUPPORT OF THE CONTENTION THAT DEPRECIATION PAID ALLOWABLE FROM THE NET PROFIT RATE APPLIED. 3.3 LD. D/R OPPOSED THE SUBMISSIONS. 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) DECIDED THIS ISSUE IN PARA 4.21 OF HIS ORDER READS AS UNDER:- 4.21 THUS, CONSIDERING THE PAST HISTORY OF THE APP ELLANT WITH REGARD TO THE PERCENTAGE OF NET PROFIT DECLARED AND ASSESSED BY T HE AO, THE AVERAGE NET PROFIT RATE (AY 2005-06 3.75%, AY 2006-07 4.0%, AY 2007-08 4.57, AY 2008- 09 5.57, AY 2009-10 3.86% - AFTER ADJUSTING ADDITIO N OF RS. 3 LACS) WOULD BE 3 ITA NO. 331/JP/2014 & C.O. NO. 17/JP/2014. RAJENDRA MITTAL CONSTRUCTION CO. PVT. LTD. 4.35%. ACCORDINGLY, CONSIDERING ALL THESE FACTORS AND OTHER DEFICIENCIES AS NOTED ABOVE, IT WOULD BE FAIR TO APPLY THE NET PROF IT RATE OF 5.00% TO THE TURNOVER DECLARED BY THE APPELLANT AT RS. 16,10,42, 167/-. THIS WOULD RESULT IN ESTIMATED NET PROFIT OF RS. 80,52,108/- AS AGAINST THE NET PROFIT OF RS. 49,77,294/-. ACCORDINGLY A TRADING ADDITION OF RS. 30,74,814/- MADE BY THE AO WOULD BE CONFIRMED AND THE APPELLANT WOULD GET A RELIEF OF RS. 65,52,476/- UNDER THIS HEAD. BESIDES THIS, THE APPE LLANT WOULD BE LIABLE TO TAX ON THE INTEREST INCOME OF RS. 3,16,339/- AND OTHER INCOME OF RS. 7,03,275/- DECLARED IN THE RETURN OF INCOME FILED. 3.5 THE CONTENTION OF THE ASSESSEE IS THAT THIS TRI BUNAL HAS NOT ADJUDICATED THE ISSUE RELATED TO ALLOWABILITY CLAIM OF DEPRECIATION , FINANCIAL EXPENSES, DIRECTORS SALARY AND BAD DEBTS, WHEN NET PROFIT IS APPLIED BY THE AS SESSING OFFICER, WE FIND THAT IN RESPECT OF BAD DEBTS IT IS OBSERVED BY THE LD. CIT( A) THAT NO SEPARATE ADDITION WAS MADE BY THE AO. THEREFORE, THE SUBMISSION OF THE A SSESSEE FOR ALLOWANCE OF BAD DEBT IS REJECTED. ANOTHER CONTENTION OF THE ASSESSE E IS THAT THE AO HAS ASSESSED THE INTEREST INCOME OF RS. 3,13,339/- SEPARATELY AND AT THE SAME TIME HAS NOT ALLOWED THE CLAIM OF INTEREST PAYMENT OF RS. 4,64,479/-. W E FIND MERIT INTO THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THE ASSE SSING OFFICER HAS ASSESSED INTEREST INCOME SEPARATELY, THEN THE EXPENDITURE IN THE NATURE OF INTEREST SHOULD HAVE ALSO BEEN ALLOWED. UNDER THESE FACTS, THE ASS ESSING OFFICER IS DIRECTED TO VERIFY THE GENUINITY OF THE EXPENDITURE OF THE INTEREST AN D IF HE FINDS THE EXPENDITURE IS GENUINE HE WOULD ALLOW THE SAME. 4 ITA NO. 331/JP/2014 & C.O. NO. 17/JP/2014. RAJENDRA MITTAL CONSTRUCTION CO. PVT. LTD. SIMILARLY, IN RESPECT OF DEPRECIATION AND DIRECTOR S SALARY ALSO, THE ASSESSING OFFICER WOULD VERIFY THE CLAIM AND DECIDE IN ACCORDANCE WIT H LAW. HENCE, THE GROUND NO. 1 OF THE CROSS OBJECTION IS PARTLY ALLOWED. 4. IN THE RESULT, ASSESSEES CROSS OBJECTION NO. 17 /JP/2014 PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 15 TH DAY OF SEPTEMBER 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 15/09/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. RAJENDRA MITTAL CONSTRUCTION CO. PVT. LTD., ALWAR 2. THE RESPONDENT- THE JCIT, RANGE-2, ALWAR 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (C.O. NO. 17/JP/2014 ARISING OUT OF I TA NO.331/JP/2014 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR
