M/s Dashmesh National Roadways, V. ACIT,

ITA 155/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0356 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 25-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A RAKSHIT
• Keywords: Depreciation
• Section: 44AD; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL: CIRCUIT BENCH : RANCHI [BEFORE HONBLE S/SHRI N. S. SAINI, AM AND GEORGE M ATHAN, JM] ITA NO. 155/RAN/2014 [AY: 2010-11] & C. O. NO.24/RAN/2014 [IN ITA NO. 161/RAN/2014 AY 2010-11] M/S. DHASHMESH NATIONAL ROADWAYS, HOTEL DEBONAIR COMPLEX, KALIMATI ROAD, SAKCHI, JAMSHEDPUR 831 001 PAN:AAEFD 0311P VS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4, JAMSHEDPUR (APPELLANT/CROSS OBJECTOR) (RESPONDENT) ITA NO. 161/RAN/2014 ASSESSMENT YEAR: 2010-11 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4, JAMSHEDPUR VS M/S. DHASHMESH NATIONAL ROADWAYS, HOTEL DEBONAIR COMPLEX, KALIMATI ROAD, SAKCHI, JAMSHEDPUR 831 001 PAN:AAEFD 0311P (APPELLANT) (RESPONDENT) ASSESSEE/CROSS OBJECTOR BY SHRI S. K. PODDAR WITH SHRI M. K. CHOUDHARY, ADVOCATES DEPARTMENT BY SHRI A. RAKSHIT, DR DATE OF HEARING: 28-10-2015 DATE OF PRONOUNCEMENT: 28-10-2015 O R D E R PER GEORGE MATHAN, JM: ITA NO.155/RAN/2014 IS AN APPEAL FILED BY THE ASSES SEE AND ITA NO.161/RAN/2014 IS AN APPEAL FILED BY THE REVENUE A GAINST THE ORDER OF THE LEARNED CIT(A), JAMSHEDPUR IN APPEAL NO.388/ JSR/2012-13 DATED 27-02-2014 FOR THE ASSESSMENT YEAR 2010-11. C . O. ITA NO.155 AND 161/RAN/2014 C. O. NO.24/RAN/2014 (AY: 2010-11) 2 NO.24/RAN/2014 IS THE CROSS OBJECTION FILED BY THE ASSESSEE IN THE REVENUES APPEAL IN ITA NO.161/RAN/2014. 2. SHRI S. K. PODDAR AND SHRI M. K. CHOUDHARY REPRE SENTED ON BEHALF OF THE ASSESSEE AND SHRI A. RAKSHIT, LEARNED DR REPRESENTED ON BEHALF OF THE REVENUE. 3. ITA NO.155/RAN/2014 [ASSESSEES APPEAL FOR AY:20 10-11]: IN THIS ASSESSEES APPEAL, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN ESTIMATING THE NET PROFIT OF THE ASSESSEE AT 3.5%. IT WAS ALSO THE SUBMISSION THAT THE ASSESSEE HAS CHALL ENGED THE ACTION OF THE LEARNED CIT(A) IN NOT ALLOWING THE INTEREST AND REMUNERATION TO THE PARTNERS OF THE ASSESSEE FIRM AS IS ALLOWABLE U/S 4 0(B)(2) OF THE ACT. IT WAS A SUBMISSION BY THE LEARNED AR THAT THE ASSE SSEE IS A PARTNERSHIP FIRM WHICH IS DOING BUSINESS OF TRANSPO RT CONTRACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCO UNT OF THE ASSESSEE WERE REJECTED AND THE NET PROFIT OF THE AS SESSEE WAS ESTIMATED AT 8%. IT WAS A SUBMISSION THAT ON APPEAL , THE LEARNED CIT(A) HAD ON THE BASIS OF THE ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR, DIRECTED THE AO TO ESTIMATE THE NE T PROFIT OF THE ASSESSEE AT 3.5%. IT WAS A SUBMISSION THAT HOWEVER, THE LEARNED CIT(A) DID NOT ALLOW THE INTEREST AND REMUNERATION TO THE PARTNERS OF THE ASSESSEE FIRM U/S 30(B) (2) OF THE ACT. IT WAS A SUBMISSION THAT THE NET PROFIT SHOWN BY THE ASSESSEE FOR THE IMMEDI ATELY EARLIER ASSESSMENT YEAR WAS IN THE RANGE OF 1.9% AFTER CONSIDERING DEPRECIATION; WHEREAS FOR THE RELEVANT ASSESSMENT T HE ASSESSEE HAS SHOWN MORE PERCENTAGE OF NET PROFIT. IT WAS A SUBMI SSION THAT ESTIMATION OF THE NET PROFIT AS MADE BY THE LEARNED CIT(A) WAS LIABLE TO BE DELETED AND THE ALTERNATIVE SUBMISSION WAS TH AT THE ASSESSEE MUST BE GRANTED THE BENEFIT OF INTEREST AND REMUNER ATION TO THE ITA NO.155 AND 161/RAN/2014 C. O. NO.24/RAN/2014 (AY: 2010-11) 3 PARTNERS AS PER THE PROVISIONS OF SECTION 40(B)(2) OF THE ACT. AT THIS POINT, IT WAS PUT TO THE LEARNED AR THAT AS PER THE ASSESSMENT ORDER THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT AND CONSEQUENTLY, IN VIEW OF THE PROVISIONS OF SECTION 184(5) OF THE ACT AS THE ASSESSMENT HAS BEEN COMPLETED U/S 144 OF THE ACT, THE INTEREST AND REMUNERATION TO THE PARTNERS ALLOWABLE U/S 40(B) (2) OF THE ACT WOULD NOT BE AVAILABLE TO THE ASSESSEE. IT WAS A SUBMISSION OF T HE LEARNED AR THAT THIS WAS A CASE WHERE THE PROVISIONS OF SECTION 144 A OF THE ACT HAD BEEN INVOKED BY THE AO AND THE ASSESSMENT HAD BEEN COMPLETED ON THE BASIS OF THE DIRECTIONS ISSUED BY THE LEARNED J CIT, RANGE-1, JAMSHEDPUR. IT WAS A FURTHER SUBMISSION THAT THE AS SESSMENT WAS NOT COMPLETED U/S 144 AS THERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 144 OF THE ACT. HE DREW OUR ATTENTION TO TH E PROVISIONS OF SECTION 145(3) OF THE ACT AND SUBMITTED THAT IT PRO VIDED FOR THAT THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED U/ S 144 OF THE ACT. IT WAS A SUBMISSION THAT THERE WAS NO VIOLATIO N OF ANY OF THE THREE CONDITIONS PRESCRIBED U/S 144(1) OF THE ACT. 4. IN REPLY, THE LEARNED DR SUBMITTED THAT IN THE R EVENUES APPEAL IN ITA NO.161/RAN/2014, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN REDUCING THE ESTIMATION OF THE NE T PROFIT RATE FROM 8% TO 3.5%. IT WAS A SUBMISSION THAT AS PER THE PRO VISIONS OF SECTION 44AD OF THE ACT, THE NET PROFIT OF THE ASSESSEE WAS LIABLE TO BE ESTIMATED AT 8%. IT WAS A SUBMISSION THAT IN VIEW O F THE PROVISIONS OF SECTION 184(5), NO INTEREST AND REMUNERATION WAS AL LOWABLE AS A DEDUCTION U/S 40B OF THE ACT. 5. IN RESPECT OF THE C. O. NO.24/RAN/2014 FILED BY THE ASSESSEE IT WAS SUBMITTED THAT THE SAME WAS ONLY IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A) IN RESPECT OF THE GROUNDS RAISED BY THE REVENUE. ITA NO.155 AND 161/RAN/2014 C. O. NO.24/RAN/2014 (AY: 2010-11) 4 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER SHOWS THAT THE TURNOVER OF THE ASS ESSEE IS IN EXCESS OF RS.7,57,00,000/-. THE PROVISIONS OF SECTION 44AD OF THE ACT APPLIES WHERE THE TURNOVER IS UP TO THE MAXIMUM OF RS.40,00 ,000/-. THE PROVISIONS OF SECTION 44AD OF THE ACT CANNOT BE APP LIED WHEN THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE MAINTAINED AND AUDITED; EVEN ASSUMING THAT SUCH BOOKS OF ACCOUNT ARE REJECTED BY THE AO. A PERUSAL OF THE ORDER OF THE LEARNED CITA) CLEARLY SHOWS THA T THE LEARNED CIT(A) HAS CONSIDERED THE FACT THAT THE HIGHEST NET PROFIT SHOWN BY THE ASSESSEE WAS 1.9% AFTER CONSIDERING DEPRECIATION. I N THE ASSESSEES CASE FOR THE RELEVANT ASSESSMENT YEAR, THE RATE OF GROSS PROFIT DISCLOSED BY THE ASSESSEE IS 9.6% ONLY. THE NET PRO FIT AS SHOWN BY THE ASSESSEE ON THE TURNOVER OF RS.7,57,00,000/- IS ABO UT RS.13,83,000/- WHICH IS ABOUT 1.82% AFTER CONSIDERING DEPRECIATION AND INTEREST AND SALARY TO THE PARTNERS. IN THE CIRCUMSTANCES, WE AR E OF THE VIEW THAT THE ESTIMATION OF THE NET PROFIT OF THE ASSESSEE AT 3.5% OF THE GROSS RECEIPTS AS HAS BEEN DONE BY THE LEARNED CIT(A) IS REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. COMING TO THE I SSUE OF CLAIM OF SALARY AND INTEREST TO THE PARTNERS, AS PER THE PRO VISIONS OF SECTION 40(B)(2) OF THE ACT, WE ARE OF THE VIEW THAT IN VIE W OF THE PROVISIONS OF SECTION 145(3), NO ALLOWANCE U/S 40(B)(2) OF THE AC T CAN BE ALLOWED TO THE ASSESSEE. CONSEQUENTLY, THE APPEAL OF THE ASSES SEE STANDS DISMISSED. 7. AS WE HAVE UPHELD THE ESTIMATION OF THE NET PROF IT BY THE LEARNED CIT(A) AT 3.5%, THE APPEAL FILED BY THE REVENUE IN ITA NO.161/RAN/2014 STANDS DISMISSED. ITA NO.155 AND 161/RAN/2014 C. O. NO.24/RAN/2014 (AY: 2010-11) 5 8. AS WE HAVE UPHELD THE ORDER OF THE LEARNED CIT(A ) THE CROSS OBJECTION FILED BY THE ASSESSEE IN C. O. NO.24/RAN/ 2014 STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.155/RAN/2014, THE APPEAL OF THE REVENUE IN ITA N O.161/RAN/2014 AND CROSS OBJECTION OF THE ASSESSEE FILED BY THE AS SESSEE IN C. O. NO.24/RAN/2014 STAND DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CLOSE OF HEARING ON 28-10-2015. SD/- SD/- ( N .S. SAINI ) ACCOUNTANT MEMBER (GEORGE MATHAN ) JUDICIAL MEMBER DATE : 28 .10 .1 5 LK DEKA/SR.PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER ITA NO.155 AND 161/RAN/2014 C. O. NO.24/RAN/2014 (AY: 2010-11) 6 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 28.10.15 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28.10.15 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 28.10.15 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 28.10. 15 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.10.15 S R.PS 6. DATE OF PRONOUNCEMENT 28.10.15 SR.PS 7. FILE SENT TO THE BENCH CLERK 28.10.15 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER