Dy. C.I.T., Circle - 5, Firozabad V. M/s Mahesh & Co., Dwarikapur, Firozabad

ITA 118/AGR/2010

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0342 (ITAT-AGRA)
• Duration Of Justice: 9 year(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2010
• Court: TRIBUNAL
• Keywords: Depreciation; Set aside

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. 118/AGRA/2010 ASSTT. YEAR : 2005-06 D.C.I.T., CIRCLE 5, VS. M/S. MAHESH & CO., FIROZABAD. KHAIRGARH, FIROZABAD. (PAN : AAJFM 6984 E) (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI VINOD KUMAR, 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 19.01.2010 OF CIT(A). 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE THE NOTICE FOR HEARING WAS SENT TO THE ASSESSEE THROUGH REGISTERED POST. NO ADJOURNMENT AP PLICATION HAS COME ON RECORD. WE, THEREFORE, DECIDED TO DISPOSE OF THE APPEAL AFTER HEARING THE LEARNED DR. 3. GROUND NO. 1 IN REVENUES APPEAL CHALLENGES THE DECISION OF THE CIT(A) FOR DIRECTING THE ASSESSING OFFICER TO APPLY THE NET PROFIT RATE OF 6 % ON THE CONTRACT RECEIPTS AS AGAINST 8% APPLIED BY THE ASSESSING OFFICER ON GROSS CONTRACT RECEIPTS . THE ASSESSING OFFICER OBSERVED THAT IN THE CASES OF SUCH CONTRACTORS OF ROADS, THE NET PROFIT REMAINS AT 10% AND AFTER RELYING ON THE ORDER OF CIT(A) DATED 07.05.2004 IN THE CASE OF M/S. TOMAR & BROTHERS, 843-A, MOTI JHEEL COLONY, ETAWAH AND SEVERAL DECISIONS OF ITAT BENCHES IN THE CASES OF CONTRACTORS AS MENTIONED AT PAGE 2 2 OF THE ASSESSMENT ORDER, HELD THAT NET PROFIT RAT E OF 8% IS APPLICABLE IN THE CASE OF ASSESSEE AND THUS, WORKED OUT THE INCOME OF RS.23,92,035/- ON T HE GROSS CONTRACT RECEIPTS OF RS.2,99,00,441/- INCLUDING SUPPRESSED CONTRACT RECEIPTS OF RS.9,49,0 11/-., BEING THE DIFFERENCE BETWEEN THE CONTRACT RECEIPTS SHOWN BY ASSESSEE AND THE AMOUNTS PAID/CREDITED BY TWO DIVISIONS OF PWD, FIROZABAD., SUBJECT TO DEPRECIATION. 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 KEEING IN VIEW THE LOSS IN CONTRACT RECEIPTS ON ACCOUNT OF ROYALTY PAYMENTS. H E HAS ALSO RELIED ON THE CASES RELIED BY THE ASSESSEE WHERE LOWER PROFIT RATES WERE APPLIED. HE, THEREFORE, GAVE RELIEF OF 2% IN THE NET PROFIT RATE APPLIED BY THE ASSESSING OFFICER. 5. AFTER HEARING THE LEARNED DR, WE NOTED THAT THE LD. CIT(A) HAS RIGHTLY APPLIED THE NET PROFIT RATE OF 6% AFTER TAKING INTO CONSIDERATION THE LOSS IN CONTRACT RECEIPTS INCURRED ON ACCOUNT OF ROYALTY PAYMENTS MADE BY THE ASSESSEE AND ALSO A FTER TAKING INTO ACCOUNT THE OTHER SUCH CASES RELIED ON BY ASSESSEE WHERE LOWER NET PROFIT RATES HAVE BEEN ADOPTED IN THE SIMILAR CIRCUMSTANCES. THE DEPARTMENT HAS BROUGHT NO MATERI AL ON RECORD TO CONTROVERT THE FINDINGS REACHED BY THE CIT(A). IN OUR CONSIDERED OPINION, W E FIND NO GOOD REASON TO INTERFERE WITH THE DECISION OF THE CIT(A) ON THIS ACCOUNT IN VIEW OF T HE UNDISPUTED FACT THAT THE ASSESSEE HAD MADE ROYALTY PAYMENT AS MENTIONED ABOVE. THUS, GROUND NO . 1 IN APPEAL BY REVENUE STANDS DISMISSED. 3 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.10,923/- SHOWN BY THE ASSESSEE. WHEN THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), THE CIT(A) TREATED THE IN TEREST ON FDRS TO BE THE INTEGRAL PART OF THE CONTRACT RECEIPTS AND ACCORDINGLY PERMITTED THE ASS ESSING OFFICER TO APPLY THE NET PROFIT ON INTEREST ON FDRS INSTEAD OF ADDING THE INTEREST ON FDRS SEPARATELY. IN OUR OPINION, THE CIT(A) IS NOT CORRECT IN LAW AS THE ASSESSEE HAS EARNED INTER EST ON FDR WHICH IS A SEPARATE SOURCE OF INCOME AND CANNOT BE REGARDED TO BE THE PART OF THE CONTRACT RECEIPTS. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE AS SESSING 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. ORDER PRONOUNCED IN THE OPEN COURT ON 30.05.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST MAY, 2011 *AKS/- 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