Commissioner of Income Tax-III. V. M/s. SREC Projects Private Limited

ITTA/584/2011

AI Insights

The case involves an appeal by the Commissioner of Income Tax against M/s. SREC Projects Private Limited concerning the assessment year 2000-01. The primary legal contention was whether the Income Tax Appellate Tribunal was justified in excluding receipts from sub-contract works and government-supplied materials from the gross receipts for profit estimation, and whether the profit estimation rate of 10% was reasonable compared to the 12.5% rate adopted by the Assessing Officer. The Tribunal had relied on a precedent from a similar case, A.Venkateswarlu & Co., which had been upheld by the High Court. The High Court dismissed the appeal, agreeing with the Tribunal's decision and finding no legal errors in the profit estimation method used.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 679491 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 02-08-2013
• Assessment Year: misc
• Other Referred Cases: A.Venkateswarlu & Co. in I.T.A.No.766/Hyd/2008
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: B SARMA
• Keywords: Cost of Material; Estimation of Profits; Income Tax; Sub-contract works; Exclusion of Receipts

Judgement Text

"HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A.No.584 of 2011 Date: 02-08-2013 Between: Commissioner of Income Tax-III, I.T. Towers, A.C. Guards, Hyderabad. … Appellant And M/s. SREC Projects Private Limited, Flat No.203, Nilgiri, Aditya Enclave, Ameerpet, Hyderabad. … Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A.No.584 of 2011 JUDGMENT: (Per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is preferred against the judgment and order of the learned Tribunal dated 27-08-2010 in I.T.A.No.974/Hyd/2009 in relation to the assessment year 2000-01 and is sought to be admitted on the following suggested questions of law: i. The order of the Tribunal to the extent went against the Department is contrary to law, material on record and probabilities of the case. ii. the facts and circumstances of the case, whether the Income Tax Appellate Tribunal is justified in law in granting relief to the Respondent assessee to exclude the receipts from sub-contract works and cost of material supplied by the Government from the gross receipts while estimating the profits and holding that the estimation of profits at the rate of 10% as reasonable without considering the fact that the income of the Respondent assessee determined after giving effect to its orders would be below the income returned by the Respondent assessee? iii. In the facts and circumstances of the case, whether the finding of the Tribunal that the estimation of income at the rate of 10% of gross receipts would be reasonable instead of 12.5% adopted by the Assessing Officer without following the decisions of co-ordinate benches in the cases relied by the Revenue, is not erroneous, perverse in law and liable to be set aside? 2. We have heard Mr. B. Narasimha Sarma, learned standing counsel for income tax, and have gone through the impugned judgment and order of the learned Tribunal. 3. It appears that the learned Tribunal has decided the issue of exclusion of recoveries in the gross receipt, relying on a judgment of the Tribunal in the case of A.Venkateswarlu & Co. in I.T.A.No.766/Hyd/2008 dated 23-01-2009. It is also informed by Mr. B. Narasimha Sarma, learned standing counsel for Income Tax, that the appeal filed against the aforesaid judgment of the Tribunal in the case of A. Venkateswarlu & Co was dismissed by this Court. Therefore, we are of the view that nothing is to be decided on this issue, as the same has attained finality. 4. The other issue is with regard to the estimation of rate of profit without relying on the books of accounts. This sort of exercise is a discretionary one. We do not want to substitute or exercise the discretion accordingly. We do not find any illegality or irregularity in the judgment and order of the Tribunal. No point of law is involved in this matter for adjudication. 5. The appeal is, accordingly, dismissed. There will be no order as to costs. Miscellaneous Petitions pending, if any, shall stand closed. _________________ K.J. SENGUPTA, CJ _________________ K.C. BHANU, J Date: 02-08-2013 YCR "