Sri Sai Mitra Estates, Sec'bad, Hyderabad V. ITO, Ward-10(3), Hyd, Hyderabad

ITA 1247/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6007 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P. RAVI SESHAGIRI RAO
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 40(b)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1247/HYD/2016 ASSESSMENT YEAR: 2008-09 M/S SRI SAI MITRA ESTATES, SECUNDERABAD. PAN ABBFS1883P VS. THE INCOME TAX OFFICER, WARD-10(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. RAVI SESHAGIRI RAO REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING : 22-03-2017 DATE OF PRONOUNCEMENT : 31-03-2017 ORDER THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER CIT(A)- 7, HYDERABAD DATED 22-03-2016, ON THE ISSUE OF ESTIM ATION OF INCOME. 2. BRIEFLY STATED, ASSESSEE IS A PARTNERSHIP FIRM, EN GAGED IN THE BUSINESS OF EXECUTION OF WORK CONTRACTS. DURING THE YE AR, ASSESSEE ADMITTED AN INCOME OF RS. 9,52,015/-, ASSES SEE HAS DONE CONTRACT WORKS TO AN EXTENT OF RS. 3,14,69,648/- (EXCLUDING MATERIAL RECOVERIES). A.O NOTICED THAT MOST OF THE EXP ENDITURE CLAIMS ARE NOT SUPPORTED BY PROPER BILLS AND SELF-MOD E VOUCHERS WERE PRODUCED IN SUPPORT AND SINCE THE SAME WERE NOT V ERIFIABLE, FOR THE REASONS STATED IN PARA 2.2 & 2.3, A.O REJECTE D THE BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME AT 10% OF GROSS RECEI PTS, THEREBY DETERMINING THE TOTAL INCOME AT RS. 31,46,965/-. 2 ITA NO. 1247/HYD/2016 M/S SRI SAI MITRA ESTATES, SECUNDERABAD.. 3. BEFORE THE LD. CIT(A), ASSESSEE SUBMITTED THAT IN THE BUSINESS OF WORK CONTRACTS, THE ITAT IS ESTIMATING 8% OF THE INCOME AND AFTER ALLOWING THE DEDUCTION TOWARDS REMUN ERATION AND INTEREST, THE INCOME DECLARED BY THE ASSESSEE IS MO RE THAN THE INCOMES BEING DETERMINED ON ESTIMATION BASIS. LD. CIT(A) HOWEVER, DID NOT AGREE WITH THE ASSESSEES CONTENTIONS BUT REDUCED THE ESTIMATION FROM 10% TO 9%. HE ALSO ALLOWED DEDUCTION U/S 40(B) TO BE ALLOWED AGAINST THE INCOME E STIMATED. 4. STILL AGGRIEVED ASSESSEE PREFERRED THE PRESENT APPE AL MAINLY CONTESTING THE ESTIMATION OF INCOME AT 9% AS AGAINST THE ESTIMATION OF PROFIT AT 8% IN OWN CONTRACTS AND AT 5% ON SUB- CONTRACTS, AS PER VARIOUS ORDERS OF THE ITAT. 5. LD. COUNSEL REITERATED THE SUBMISSIONS MADE THE BE FORE CIT(A) INCLUDING CASE LAW RELIED UPON WHILE LD. DR RELIED ON THE ORDERS OF CIT(A). 6. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM OF THE OPINION THAT THE ESTIMATION AT 9% IS ON HIGHER SIDE. THE ITAT IN THE CASE OF SHRI C. ESWARA REDDY & CO. VS ACIT IN ITA NO. 66 8/HYD/2009 AND IN ITA NO. 670/HYD/2009 DATED 31-01-2011 AND ALS O IN THE CASE OF SREC PROJECTS PVT LTD., VS DCIT IN ITA NOS. 974 TO 980/ HYD/2009 DATED 27-08-2010 HAVE HELD THAT INCOME ESTIMATI ON AT 8% ON PRINCIPAL CONTRACTS AND 5% IN SUB CONTRACTS TO BE REASONABLE. CONSIDERING THE DECISIONS OF THE CO-ORDI NATE BENCH, I DIRECT THE A.O TO ACCEPT AT 8% OF THE CONTRACT WORKS TO BE REASONABLE PROFIT FROM THE BUSINESS ACTIVITY AND THERE AFTER ALLOW 3 ITA NO. 1247/HYD/2016 M/S SRI SAI MITRA ESTATES, SECUNDERABAD.. THE DEDUCTION UNDER 40(B) WHICH WAS DIRECTED TO BE ALL OWED BY THE CIT(A), ON WHICH THERE IS NO APPEAL BY THE REVENUE. 7. IN THE RESULT, APPEAL OF ASSESSEE IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017. SD/- ( B. RAMAKOTAIAH) ACCOU NTANT MEMBER HYDERABAD, DATED: 31 ST MARCH, 2017 KRK 1) M/S SRI SAI MITRA ESTATES, C/O SRI S RAMA RAO, ADV FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO . 9 HIMAYATNAGAR, HYDERABAD 500 029. 2) ITO, WARD NO. 10(3), HYDERABAD. 3) CIT(A) -7, HYDERABAD 4) PR.CIT -7, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE