M/s Thukral Regal Shoes, Chandigarh V. ACIT, Chandigarh

CO 8/CHANDI/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9810 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: J S NAGAR
• Keywords: Business income

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACOCUNTANT MEMBER ITA NO. 385/CHD/2014 ASSESSMENT YEA R 2010-11 I.T.O. NANGAL V PRAG RAJ SHARMA, CONTRACTOR VPO KHAMERA TEHSIL ANANDPUR SAHIB DISTT. ROPAR ADNPS 7263H (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J.S. NAGAR RESPONDENT BY SHRI PARIKSHIT AGGARWAL DATE OF HEARING 15.9.2014 DATE OF PRONOUNCEMENT 23.9.2014 ORDER PER BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), CHANDIGARH DATED 23.1.2014 FOR ASSESSMENT YEAR 2010 -11 CHALLENGING THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF IT ACT. 2 BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE BUSINESS INCOME OF THE ASSESSEE WAS COMPUTED BY APPLYING AN ESTIMATED NET PROFIT RATE OF 8% TO THE TOTAL RECEIPTS. THE ASSESSING OFFICER NOTED THAT T HE ASSESSEE HAS DEBITED INTEREST PAID TO NBFCS OF RS. 22,38,949/- TO PROFIT AND LOSS ACCOUNT BUT HAD NOT DEDUCTED TAX A SOURCE FROM THIS INTEREST OUT GO AS HE WAS REQUIRED TO DO UNDER THE LAW. THE ASSESSING OFFICER ACCORDINGLY ADDED TOTAL INTEREST OF ABOVE AMOUNT TO THE INCOME OF THE ASSESSEE U/S 40(A)(IA) OF IT ACT TO THE ALREADY ESTIMATE BUSINESS INCOME. 3 IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT SINCE THE INCOME IS ESTIMATED BY APPLYING NET PROFIT RATE, THEREFORE NO FURTHER A DDITION SHOULD BE MADE. RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF DEVI PRASAD VISHWANATH PRASAD, 72 ITR 194, DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN CASE OF SANTOSH JAIN, 296 ITR 324 AND DECISION 2 OF ITAT HYDERABD BENCH IN THE CASE OF M/S HYCONS IN FRASTRUCTURE IN ITA NO. 1787/HYD/2011. THE LD. CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE BECAUSE ONCE NET PROFIT RATE IS APPLIED, NO FURTHER ADJUSTM ENT SHOULD BE MADE TO THE ESTIMATED PROFIT AND ACCORDINGLY HE DELETED THE AD DITION. 3 WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 4 THE LD. D.R FOR THE REVENUE RELIED ON THE ORDER O F THE ASSESSING OFFICER WITHOUT POINTING OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 5 THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED UPON THE JUDGMENT MADE BEFORE THE LD. CIT(A) AND ALSO UPON THE DECISION OF ITAT, HYDERABAD BENCH IN CASE OF TEJA CONSTRUCTIONS V ACIT, 129 TTJ(HYD)(UO)57 IN WHICH I T WAS HELD AS UNDER: ONCE ESTIMATION OF INCOME IS MADE, FURTHER DISALLO WANCE UNDER SECTION 40(A)(IA) FOR NON-DEDUCTION OF TDS IS NOT WARRANTED ; THAT APART, OF THE ASSESSEE HAS PAID THE IMPUGNED AMOUNT AND (THE AMOU NT IS)NOT PAYABLE AT THE END OF THE YEAR ON THE DATE OF BALANCE SHEET , THEN THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. ON GOING THROUGH THE ABOVE JUDGMENT WE FIND THAT TH E ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ABOVE JUDGMENT RELIED UPO N BY THE LD. CIT(A) AS WELL AS QUOTED ABOVE. SINCE THE BUSINESS INCOME OF THE ASSESSEE IS COMPUTED BY APPLYING NET PROFIT RATE OF 8%, NO FURTHER DISALLOW ANCE OUT OF EXPENDITURE CLAIMED SHOULD HAVE BEEN MADE. DEPARTMENTAL APPEAL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 6 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 23.9.2014 SD/- SD/- (T.R. SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23.9.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR