Dy.CIT, Circle-1, Khammam V. M/s Madhusudan Engg,Works, Khammam Dist

ITA 1029/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77866 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARITA
• Keywords: Depreciation
• Section: 44AD; 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 1029/HYD/2013 ASSESSMENT YEAR 2008-09 THE DEPUTY CIT CIRCLE-1 KHAMMAM VS. M/S. MADHUSUDAN ENGG. WORKS, PALVANCHA PAN: AACFM8862E APPELLANT RESPONDENT APPELLANT BY: SMT. K. HARITA RESPONDENT BY: NONE DATE OF HEARING: 29.04.2014 DATE OF PRONOUNCEMENT: 29.04.2014 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), VIJAYAWADA DATED 5.4.2013 FOR ASSESS MENT YEAR 2008-09. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: (1) THE LD. CIT (A) ERRED BOTH IN LAW AND IN FACTS OF THE CASE. (2) THE ID. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE AO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE PROFIT AFTER CONSIDERING THE FACTS OF THE CASE OF THE ASSESSEE AND ALSO THE EXPENDITURE INCURRED BY THE ASSESSEE. (3) THE ID. CIT (A) FAILED TO NOTE THAT SECTION 145(3) EMPOWERS THE AO TO MAKE A BEST JUDGMENT ASSESSMENT AND IT IS LEFT TO AO ESTIMATE THE INCOME 2 ITA NO. 1029/HYD/2013 M/S. MADHUSUDAN ENGG. WORKS, PALVANCHA ================================= OF THE ASSESSEE TAKING INTO ACCOUNT THE TOTALITY OF PECULIAR FACTS OF EACH CASE DIFFERENTLY AND DISTINC TLY. (4) THE ID. CIT (A) ERRED IN ADOPTING THE PROFIT AT 8% FROM MAIN CONTRACT WORKS AND 5% FROM SUB- CONTRACTS AS AGAINST 12.5% FROM MAIN CONTRACT WORKS AND 8% FROM SUB CONTRACT WORKS ESTIMATED BY THE AO IN ACCORDANCE WITH THE RATES ADOPTED IN THIS LINE OF BUSINESS AND IN CONFORMITY WITH VARIOUS JUDICIAL PRONOUNCEMENTS. (5) THE LD. CIT(A) ERRED IN ESTIMATING THE INCOME AT 8% AND 5% RESPECTIVELY WHEREAS THE PERVIOUS INCUMBENT CIT(A) CONFIRMED ESTIMATION AT 12.5% AND 8% RESPECTIVELY IN OTHER SIMILAR CASES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM, WHICH CARRIES OUT CONTRACT WORKS, FILED ITS RETURN OF INC OME FOR ASSESSMENT YEAR 2008-09 ADMITTING TOTAL INCOME OF R S. 17,29,290/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT U/S. 143(3) WAS MADE DETERMINING THE TOTAL INCOME A T RS. 31,13,680/-. THE AO REJECTED THE BOOK RESULTS OF TH E ASSESSEE AS MAJORITY OF EXPENDITURE CLAIMED WAS EITHER NOT S UPPORTED BY PROPER VOUCHERS OR THE VOUCHERS PRODUCED ARE SEL F-MADE AND UNVERIFIABLE. BY RELYING ON THE DECISION OF TH IS TRIBUNAL IN THE CASE OF M/S. KNR CONSTRUCTIONS LTD. VS. DCIT, CIRCLE-2(2), HYDERABAD VIDE ITA NOS. 09/HYD/2007; 1141/HYD/2005 AND 548/HYD/2005, THE AO ESTIMATED THE INCOME FROM MAIN CONTRACTS AT 12.5% OF THE GROSS RECEIPTS AND ALLOWE D DEPRECIATION AND DEDUCTIONS U/S. 40(B) OF THE ACT. THE INCOME FROM SUB-CONTRACT WORKS WAS ESTIMATED AT 8% NET OF ALL EXPENDITURE. 4. ON APPEAL, THE CIT(A) HELD AS FOLLOWS: 3 ITA NO. 1029/HYD/2013 M/S. MADHUSUDAN ENGG. WORKS, PALVANCHA ================================= '5. I HAVE SEEN THE SUBMISSIONS MADE BY THE APPELLA NT, GONE THROUGH THE MANNER IN WHICH THE ASSESSMENT HAS BEEN MADE BESIDES PERUSING ALL OTHER MATERIAL AVAIL ABLE ON RECORD INCLUDING THE CASE LAWS RELIED UPON. IT M AY BE NOTED HERE THAT SUBSEQUENT TO THE CASE OF M/S KNR CONSTRUCTIONS LTD VS. DCIT, CIRCLE-2(2), HYDERABAD, MANY CASES HAVE BEEN DECIDED AND THE APPELLANT HAS RELIED ON SOME OF SUCH CASES, WHICH ARE MORE NEARER TO THE FACTS OF THE PRESENT CASE. IN ANY CASE, ONE HAS TO REMEMBER HERE THAT ANY ESTIMATION IS NET OF ALL EXP ENSES INCLUDING THAT OF DEPRECIATION. SINCE THE APPELLANT HAPPENS TO BE A FIRM, IT IS ELIGIBLE FOR DEDUCTIONS OF REMUNERATION TO WORKING PARTNERS AND INTEREST ON PARTNER'S CAPITAL. IT MAY FURTHER BE NOTED HERE THA T SINCE THE APPELLANT IS HAVING CONTRACT WORKS AND HE TOOK SUB CONTRACT WORKS ALSO FROM OTHERS, AS PER THE PRECEDE NTS OF THE JURISDICTIONAL TRIBUNAL. THE AO IS DIRECTED TO ESTIMATE INCOME AT 8% AND 5% ON CONTRACT WORKS AND SUB CONTRACT WORKS RESPECTIVELY.' 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN DISPUTE IS SQUARE LY COVERED BY THE COMMON ORDER OF THIS TRIBUNAL IN THE CASE M/S. C. ESWARA REDDY & CO. VS. THE ASST. CIT IN ITA NOS. 668, 670, 685 & 686/ HYD/2009. THE TRIBUNAL VIDE ORDER DATED 31.1.2011 HELD AS FOLLOWS: '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADM ITTEDLY THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT AND VOUC HERS. ON EXAMINATION OF THE BOOKS OF ACCOUNT WITH REFEREN CE TO THE VOUCHER PRODUCED, THE ASSESSING OFFICER FOUND THAT THE VOUCHER DOES NOT TALLY WITH THE CASHBOOK. WHEN THE VOUCHER DOES NOT TALLY WITH CASHBOOK, IN OUR OPINION, THE A SSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT PROPERLY. THER EFORE, THE BOOK RESULT WILL NOT REFLECT THE CORRECT PROFIT OF THE ASSESSEE. IN THESE CIRCUMSTANCES, IN OUR OPINION, THE ASSESSI NG OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNT. THEREFO RE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AU THORITY IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE P ROFIT. 7. NOW COMING TO THE ESTIMATION OF PROFIT. THE ASS ESSING OFFICER ESTIMATED THE PROFIT AT 12.5%. HOWEVER, TH E CIT(A) RESTRICTED THE SAME TO 8% IN RESPECT OF MAIN CONTRA CT AND 5% ON SUB-CONTRACT. WHEN THE BOOKS OF ACCOUNT WERE RE JECTED THE ONLY METHOD AVAILABLE TO THE ASSESSING OFFICER IS TO 4 ITA NO. 1029/HYD/2013 M/S. MADHUSUDAN ENGG. WORKS, PALVANCHA ================================= ESTIMATE THE PROFIT. THE PROFIT RATIO CANNOT BE A CONSTANT FACTOR FOR EACH AND EVERY YEAR. IN OTHER WORDS, PR OFIT RATIO WOULD FLUCTUATE DEPENDING UPON VARIOUS FACTORS SUCH AS THE PLACE OF EXECUTION OF CONTRACT, AVAILABILITY OF RAW MATERIAL, LABOUR AND ASSESSEE'S OWN FUNDS, ETC. THEREFORE, F OR THE PURPOSE OF ESTIMATING THE PROFIT, THE LOWER AUTHORI TIES MAY TAKE INTO CONSIDERATION THE PROFIT RATIO OF THE SIM ILARLY PLACED TRADERS IN THE SAME LOCALITY AND OTHER FACTORS SUCH AS AVAILABILITY OF LABOUR, DEMAND IN THE MARKET, ETC., AS DISCUSSED ABOVE. THEREFORE, THE PROFIT RATIO OF TH E OTHER ASSESSEES IN THAT LOCALITY MAY BE ONE OF THE FACTOR S TO BE TAKEN INTO CONSIDERATION. HOWEVER, THAT CANNOT BE THE SOLE CRITERIA FOR FIXING THE PROFIT RATIO FROM THE CONTR ACT BUSINESS. BY KEEPING THIS FACTUAL SITUATION IN MIND, LET US N OW EXAMINE WHETHER THE ESTIMATION OF PROFIT BY THE CIT(A) AT 8 % ON MAIN CONTRACT AND 5% ON SUB CONTRACT IS JUSTIFIED OR NOT . 8. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE CASE OF KRISHNAMOHAN CONSTRUCTIONS (SUPRA), K.C. REDDY ASSOCIATES (SUPRA), SRI SRINIVASA CONSTRUCTIO NS (SUPRA) AND M. BHASKAR REDDY (SUPRA). NO DOUBT THI S TRIBUNAL ESTIMATED THE PROFIT FROM 12.5% TO 8% DEPE NDING UPON THE FACTUAL SITUATION. THE LEARNED DR MADE AN ATTEMPT TO DISTINGUISH THE ORDER OF THIS TRIBUNAL IN M. BHA SKAR REDDY (SUPRA) ON THE GROUND THAT THE TURNOVER IS ONLY RS. 54,40,420. IT IS A WELL KNOWN FACT THAT WHENEVER THE TURNOVER INCREASES THE PROFIT RATIO WOULD GO DOWN. MERELY BECAUSE THE TURNOVER INCREASES THE PROFIT MAY NOT GO UP. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION IN THE DISTINCTION MADE BY THE LE ARNED DR TO SHOW THAT THIS TRIBUNAL ESTIMATED THE PROFIT AT 8% IN THE CASE OF M. BHASKAR REDDY (SUPRA) ONLY BECAUSE THE TURNOV ER WAS RS. 51,40,420. A BARE READING OF THE ORDER OF THIS TRIBUNAL IN M. BHASKAR REDDY (SUPRA) CLEARLY SHOWS THAT THIS TRIBUNAL AFTER CONSIDERING THE JUDGEMENT OF THE APEX COURT I N C. VELUKUTTY, 60 ITR 239 AND THE DECISION OF THE SPECI AL BENCH OF THIS TRIBUNAL IN ARIHANT BUILDERS PVT. LTD. VS. ACIT, 291 ITR 41 (SB) AND BY TAKING A CLUE FROM SECTION 44AD OF I.T. ACT THE PROFIT WAS ESTIMATED AT 8%. ADMITTEDLY SEC TION 44AD WOULD BE APPLICABLE IN RESPECT OF A CASE WHERE THE GROSS CONTRACT RECEIPT DOES NOT EXCEED RS. 40 LAKHS. WHE REVER THE GROSS CONTRACT RECEIPTS EXCEED RS. 40 LAKHS THE PRO VISIONS OF SECTION 44AD ARE NOT APPLICABLE. THEREFORE, THE PR OFIT CAN BE ESTIMATED EITHER AT LOWER THAN 8% OR ABOVE 8% DE PENDING UPON THE FACTUAL SITUATION. AS DISCUSSED EARLIER, FOR THE PURPOSE OF ESTIMATING THE PROFIT VARIOUS FACTORS SU CH AS THE PROFIT RATIO OF THE ASSESSEE IN THE EARLIER YEAR, P ROFIT RATIO OF THE SIMILARLY PLACED TRADERS IN THE SAME LOCALITY, DEMAND FOR THE PRODUCT, AVAILABILITY OF LABOURERS, RAW MATERIA LS, ETC., AND THE TIME GAP AVAILABLE FOR EXECUTING THE CONTRA CT WORK, ETC., HAVE TO BE TAKEN INTO CONSIDERATION. THEREFO RE, IN OUR OPINION, REFERENCE TO EARLIER ORDER OF THIS TRIBUNA L ALONE FOR THE PURPOSE OF ESTIMATING THE PROFIT AT 12.5% MAY N OT BE JUSTIFIED AT ALL. 5 ITA NO. 1029/HYD/2013 M/S. MADHUSUDAN ENGG. WORKS, PALVANCHA ================================= 9. IN FACT, IN THE CASE OF KRISHNAMOHAN CONSTRUCTI ONS IN ITA NOS. 116 AND 117/HYD/2007 FOR A.YS. 1993-94 AND 199 4-95 THE TRIBUNAL ESTIMATED THE PROFIT ONLY AT 8% EVEN T HOUGH THE PROFIT WAS ESTIMATED AT 12.5% FOR A.Y. 1992-92. TH IS ITSELF SHOWS THAT FOR EACH YEAR THE PROFIT HAS TO BE ESTIM ATED DEPENDING UPON THE FACTORS WHICH PREVAIL IN THE LOC ALITY. 10. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE CIT(A) AFTER REFERRING TO T HE DECISION OF THIS TRIBUNAL IN THE CASE OF KRISHNAMOHAN CONSTR UCTIONS (SUPRA) AND THE SPECIAL BENCH DECISION IN ARIHANT B UILDERS (SUPRA) ESTIMATED THE PROFIT AT 8% FOR MAIN CONTRAC T AND FOR SUB CONTRACT AT 5%. IT MAY NOT BE OUT OF PLACE TO MENTION THAT THIS TRIBUNAL UNIFORMLY ESTIMATING THE PROFIT FROM MAIN CONTRACT AT 8% TO 12.5% DEPENDING UPON THE FACTUAL SITUATION AND 5% TO 7% ON THE SUB CONTRACT DEPENDIN G UPON THE FACTUAL SITUATION. THEREFORE, IN OUR OPINION, ESTIMATION OF PROFIT AT 8% BY THE CIT(A) ON MAIN CONTRACT AND AT 5% ON SUB CONTRACT IS JUSTIFIED. WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 11. NOW COMING TO THE CLAIM OF THE ASSESSEE TOWARDS SEIGNIORAGE CHARGES. NO DOUBT THE SEIGNIORAGE CHAR GES ARE IN RELATION TO THE MATERIAL SUPPLIED BY THE GOVERNM ENT FOR EXECUTING THE WORK. THE APEX COURT IN THE CASE OF BRIJ BHUSHANLAL (SUPRA) CONSIDERED THIS ISSUE AND FOUND THAT THE MATERIAL SUPPLIED BY THE GOVERNMENT/CONTRACTOR WILL NOT HAVE ANY ELEMENT OF PROFIT. THEREFORE, THE SAME SH ALL BE REDUCED FROM THE CONTRACT RECEIPTS. IN VIEW OF THE JUDGEMENT OF THE APEX COURT THE SEIGNIORAGE CHARGES SHALL BE REDUCED FROM THE TOTAL CONTRACT RECEIPTS FOR THE PURPOSE OF ESTIMATING THE PROFIT. ACCORDINGLY WE DIRECT THE ASSESSING OF FICER WHILE COMPUTING THE TOTAL CONTRACT RECEIPTS THE SEIGNIORA GE CHARGES SHALL BE REDUCED FROM THE TOTAL CONTRACT RECEIPTS F OR THE PURPOSE OF ESTIMATING THE PROFIT. 12. NOW COMING TO THE DEPRECIATION. WE HAVE CAREFU LLY GONE THROUGH THE JUDGEMENT OF THE JURISDICTIONAL HIGH CO URT IN THE CASE OF INDWELL CONSTRUCTION (SUPRA). IN THE CASE BEFORE THE JURISDICTIONAL HIGH COURT AN ADDITION WAS MADE TOWA RDS INTEREST AND REMUNERATION PAID TO THE PARTNER WHEN THE PROFIT WAS ESTIMATED. THE JURISDICTIONAL HIGH COURT AFTER CONSIDERING THE PROVISIONS OF SECTION 29 AND 40 FOU ND THAT NO SEPARATE ADDITION SHALL BE MADE. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT DEPRECIATI ON SHALL BE ON THE WDV FROM THE PROFIT COMPUTED/ESTIMATED. THE REFORE, DEPRECIATION SHALL BE ALLOWED ON THE PROFIT COMPUTE D. 13. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS O F SECTION 44AD OF THE ACT. NOW DOUBT THIS PROVISION IS APPLIC ABLE FOR THOSE CASES WHERE THE TURNOVER/TOTAL CONTRACT RECEI PT DOES 6 ITA NO. 1029/HYD/2013 M/S. MADHUSUDAN ENGG. WORKS, PALVANCHA ================================= NOT EXCEED RS. 40 LAKHS. HOWEVER, BY FINANCE (NO. 2) ACT OF 2009 WITH EFFECT FROM 1.4.2011 THE LEGISLATURE REMO VED THE RESTRICTION OF THE TOTAL CONTRACT RECEIPTS OF RS.40 LAKHS. BY TAKING A CLUE FROM THE PROVISION OF SECTION 44AD AS IS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AND THE PROVISIONS WHICH ARE APPLICABLE WITH EFFECT FRO M 1.4.2011, WE FIND THAT THE DEDUCTION AVAILABLE U/SS . 30 TO 38 SHALL BE DEEMED TO HAVE BEEN ALREADY GIVEN FULL EFF ECT AND NO FURTHER DEDUCTION UNDER THOSE SECTIONS SHALL BE ALL OWED. DEPRECIATION IS ALLOWABLE U/S. 32 OF THE INCOME-TAX ACT. THEREFORE, AS PROVIDED IN SECTION 44AD NO FURTHER/S EPARATE DEDUCTION SHALL BE ALLOWED. IN VIEW OF THE ABOVE, IN OUR OPINION, THE CLAIM OF DEPRECIATION ON THE ESTIMATED INCOME IS NOT JUSTIFIED. THEREFORE, THE LOWER AUTHORITIES HA VE RIGHTLY REJECTED THE SAME. 14. NOW COMING TO THE PAYMENT OF INTEREST AND SALAR Y TO THE PARTNER. PROVISO TO SECTION 44AD(2) CLEARLY SAYS T HAT SALARY AND INTEREST PAID TO THE PARTNER SHALL BE DEDUCTED FROM THE INCOME COMPUTED UNDER SUB-SECTION (1) OF SECTION 44 AD SUBJECT TO LIMITATION U/S. 40(B) OF THE ACT. AS WE HAVE ALREADY OBSERVED, THOUGH THERE WERE RESTRICTIONS WI TH REGARD TO APPLICATION OF SECTION 44AD WHEREVER THE TOTAL C ONTRACT RECEIPTS EXCEED RS. 40 LAKHS, WITH EFFECT FROM 1.4. 2011 SUCH RESTRICTION WAS REMOVED BY THE LEGISLATURE. MOREOV ER, THE CO-ORDINATE BENCH THIS TRIBUNAL IN M. BHASKAR REDDY (SUPRA) AFTER TAKING A CLUE FROM SECTION 44AD ESTIM ATED THE PROFIT AT 8% OF THE CONTRACT RECEIPT. THEREFORE, B Y TAKING A CLUE FROM THE PROVISION OF SECTION 44AD AS IS APPLI CABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE PRO VISIONS WHICH WOULD COME INTO OPERATION WITH EFFECT FROM 1. 4.2011, IN OUR OPINION, THE PAYMENT OF INTEREST AND SALARY TO THE PARTNER SHALL BE ALLOWED SUBJECT TO LIMITATION SPEC IFIED IN SECTION 40(B) OF THE ACT FROM THE ESTIMATED INCOME. 15. WE HAVE CAREFULLY GONE THROUGH THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CO NSTRUCTION (SUPRA). THE ASSESSMENT YEAR UNDER CONSIDERATION B EFORE THE JURISDICTIONAL HIGH COURT WAS ASSESSMENT YEAR 1981- 82. SECTION 44AD WAS INTRODUCED IN THE STATUTE BOOK WIT H EFFECT FROM 1.4.1994. THEREFORE, THE JURISDICTIONAL HIGH COURT HAD NO OCCASION TO CONSIDER THE PROVISIONS OF SECTION 4 4AD AS IT IS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDE RATION AND AS IT WOULD BE APPLICABLE WITH EFFECT FROM 1.4. 2011. IN VIEW OF THE PROVISION OF SECTION 44AD AS IT IS APPL ICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE AME NDMENT MADE WITH EFFECT FROM 1.4.2011 IT IS OBVIOUS THAT T HE LEGISLATURE INTENDED TO ALLOW THE INTEREST AND SALA RY SEPARATELY FROM THE ESTIMATED INCOME. THEREFORE, T HE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE C ASE OF INDWELL CONSTRUCTIONS (SUPRA) MAY NOT BE OF ANY ASS ISTANCE TO THE REVENUE IN THIS CASE. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO ALLOW THE SALARY AND INTEREST PAID TO THE 7 ITA NO. 1029/HYD/2013 M/S. MADHUSUDAN ENGG. WORKS, PALVANCHA ================================= PARTNER SUBJECT TO THE LIMITATION PROVIDED IN SECTI ON 40(B) OF THE ACT. 16. IN THE RESULT, I.T.A. NO. 668/HYD/09 AND ITA NO . 670/HYD/09 ARE PARTLY ALLOWED AND I.T.A. NO. 685/HY D/09 AND ITA NO. 686/HYD/09 ARE DISMISSED. 6. BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHICH IS BASED ON EARLIER ORDER OF THE T RIBUNAL AND THE SAME IS CONFIRMED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 TH APRIL, 2014 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 29 TH APRIL, 2014 TPRAO COPY TO: 1. THE DEPUTY CIT, CIRCLE-1, 1 ST FLOOR, AAYAKAR BHAVAN, BEHIND KINNERASANI THEATRE, RAJIV GUNJ, KHAMMAM. 2. M/S. MADHUSUDAN ENGG. WORKS, H. NO. 19-1-37, BEHIND GANDHI SCHOOL, PALVANCHA, KHAMMAM DIST. 3. THE CIT(A), VIJAYAWADA. 4. THE CIT, VIJAYAWADA. 5. THE DR, A BENCH, ITAT, HYDERABAD.