Shiva Traders, Etawah V. Dy. C.I.T., Firozabad

CO 48/AGR/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5827 (ITAT-AGRA)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 117/AGRA/2010 ASSTT. YEAR : 2005-06 D.C.I.T., CIRCLE 5, VS. M/S. SHIVA TRADERS, FIROZABAD. SHREE NAGAR, STATION ROAD, BHARTHANA, ETAWAH. (PAN : AABFS 7390 F) C.O. NO. 48/AGRA/2010 (IN ITA NO. 117/AGRA/2010) ASSTT. YEAR : 2005-06 M/S. SHIVA TRADERS, VS. D.C.I.T., CIRCLE 5, SHREE NAGAR, STATION ROAD, FIROZABAD. BHARTHANA, ETAWAH. (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI A.K. SHARMA, JR. D.R. FOR ASSESSEE : NONE ORDER PER P.K. BANSAL, A.M. : THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY ASSESSEE HAVE BEEN FILED AGAINST THE ORDER DATED 10.02.2010 OF CIT(A). 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE THE NOTICE FOR HEARING WAS SERVED UPON THE ASSESSEE THROUGH REGISTERED POST, ACKNOWLEDGEME NT OF WHICH IS AVAILABLE ON RECORD. NO ADJOURNMENT APPLICATION HAS COME ON RECORD. WE, THE REFORE, DECIDED TO DISPOSE OF THE APPEAL AND CROSS-OBJECTION AFTER HEARING THE LEARNED DR. 2 3. GROUND NO. 1 IN REVENUES APPEAL AND THE ONLY E FFECTIVE GROUND IN ASSESSEES CROSS OBJECTION CHALLENGE THE DECISION OF THE CIT(A) FOR DIRECTING THE ASSESSING OFFICER TO APPLY THE NET PROFIT RATE OF 8% ON THE CONTRACT RECEIPTS AS A GAINST 10% APPLIED BY THE ASSESSING OFFICER ON GROSS CONTRACT RECEIPTS. THE ASSESSING OFFICER OBSE RVED THAT IN THE CASES OF SUCH CONTRACTORS OF ROADS, THE NET PROFIT REMAINS AT 10% AND AFTER RELY ING ON THE ORDER OF CIT(A) DATED 07.05.2004 IN THE CASE OF M/S. TOMAR & BROTHERS, 843-A, MOTI JHEE L COLONY, ETAWAH AND SEVERAL DECISIONS OF ITAT BENCHES IN THE CASES OF CONTRACTORS AS MENTION ED AT PAGE 2 OF THE ASSESSMENT ORDER, HELD THAT NET PROFIT RATE OF 8% IS APPLICABLE IN THE CAS E OF ASSESSEE AND THUS, WORKED OUT THE INCOME OF RS.49,31,497/- ON THE GROSS CONTRACT RECEIPTS OF R S.4,93,14,971/- AS CREDITED IN THE PROFIT AND LOSS ACCOUNT SUBJECT TO DEPRECIATION AND INTEREST O N BORROWINGS. 4. WHEN THE MATTER WENT IN APPEAL BEFORE THE CIT(A) , THE CIT(A) DIRECTED THE ASSESSING OFFICER TO APPLY THE NET PROFIT RATE OF 6% ON THE G ROSS CONTRACT RECEIPTS. THE CIT(A) HAS OBSERVED THAT THE MOST COMPARABLE CASE SHALL BE THE CASE OF ASSESSEE HIMSELF. AS THE ASSESSMENT ORDER OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 HAS BE EN COMPLETED U/S. 143(3) AT THE NET PROFIT RATE OF 6.15%, THE CIT(A) HELD THAT IT WOULD BE JUS TIFIED TO APPLY THE NET PROFIT RATE OF 8% ON THE GROSS CONTRACT RECEIPTS. HE, THEREFORE, DIRECTED TH E ASSESSING OFFICER TO APPLY THE NET PROFIT RATE OF 8% ON THE GROSS CONTRACT RECEIPTS. 5. AFTER HEARING THE LEARNED DR, WE NOTED THAT THE LD. CIT(A) HAS RIGHTLY APPLIED THE NET PROFIT RATE OF 8% AFTER TAKING INTO CONSIDERATION THE TRADING RESULTS OF ASSESSEE ITSELF FOR PREVIOUS TWO YEARS AND SUBSEQUENT YEAR 2006-07. THE DEPARTM ENT HAS BROUGHT NO MATERIAL ON RECORD TO CONTROVERT THE FINDINGS REACHED BY THE CIT(A). IN O UR CONSIDERED OPINION, WE FIND NO GOOD 3 REASON TO INTERFERE WITH THE DECISION REACHED BY TH E CIT(A) ON THIS ACCOUNT IN VIEW OF THE TRADING RESULTS OF ASSESSEE ITSELF IN PREVIOUS AND SUBSEQUE NT YEARS. THUS, GROUND NO. 1 IN APPEAL BY REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE STA ND DISMISSED. 6. SO FAR AS THE GROUND NO. 2 IN APPEAL OF REVENUE IS CONCERNED, WE HEARD THE LEARNED DR AND CAREFULLY CONSIDERED HIS SUBMISSIONS. WE NOTED THAT THE ASSESSING OFFICER HAS ADDED THE INTEREST ON FDRS AMOUNTING TO RS.2,12,773/- IN ADDI TION TO INTEREST OF RS.74,148/- SHOWN BY THE ASSESSEE. WHEN THE ASSESSEE WENT IN APPEAL BEFORE T HE CIT(A), THE CIT(A) TREATED THE INTEREST ON FDRS TO BE THE INTEGRAL PART OF THE CONTRACT RECEIP TS AND ACCORDINGLY PERMITTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT @ 8% ON INTEREST ON FDRS ALSO INSTEAD OF ADDING THE INTEREST ON FDRS SEPARATELY. IN OUR OPINION, THE CIT(A) IS NOT CORRECT IN LAW AS THE ASSESSEE HAS EARNED INTEREST ON FDR WHICH IS A SEPARATE SOURCE OF INCOM E AND CANNOT BE REGARDED TO BE THE PART OF THE CONTRACT RECEIPTS. WE, THEREFORE, SET ASIDE THE ORD ER OF THE CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE. THUS, GROUND NO. 2 TAKEN IN REVENUES APPEAL STANDS ALLOWED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY A LLOWED AND THE CROSS-OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.05.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 6 TH MAY, 2011 *AKS/- 4 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR