Purna Chandra Biswal, Cuttack V. ITO, Cuttack

ITA 174/CTK/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7185 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: R K DAS
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 174/CTK/2015 ASSESSMENT YEAR : 2009 - 2010 SRI PURNA CHANDRA BISWAL, JAKHAPURA, JAJPUR VS. ITO, WARD 1(2), CUTTACK PAN/GIR NO. ACLPB 1493 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI R.K.DAS, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 08 /03 / 2017 DATE OF PRONOUNCEMENT : 08 /03 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT( A) - CUTTACK, DATED 19.1.2015 , FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. GROUND NO.1 OF THE APPEAL READS AS UNDER: UNDER THE FACTS AND CIRCUMSTANCES, CONSIDERING THE NATURE OF WORK EXECUTED BY THE APPELLANT THE 8% ESTIMATION OF PROFIT ON GROSS TURNOVER IS EXCESSIVE. 3. AT THE TIME OF HEARING, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL AND, THEREFORE, SAME IS DISMISSED FOR WANT OF PROSECUTION. 2 ITA NO. 174/CTK/2015 ASSESSMENT YEAR :2009 - 2010 4. GROUND NO.2 OF THE APPEAL READS AS UNDER: THE LD CIT(A) ERRED IN LAW AS WELL AS IN FACTS ALLOWING THE DEPRECIATION FROM THE GROSS TURNOVER RATHER THAN THE ESTIMATED PROFIT. DEPRECIATION IS AN ALLOWANCE WHICH IS TO BE CHARGED AGAINST PROFIT AND NOT FROM THE GROSS TURNOVER. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER ESTIMATED THE PROFIT FROM CONTRACT WORK OF THE ASSESSEE AFTER REJECTING BOOK RESULTS OF THE ASSESSEE AT 8% OF THE GROSS RECEIPTS. 6. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION FOR DEPRECIATION FRO M THE INCOME OF THE ASSESSEE ESTIMATED AT 8% OF THE GROSS CONTRACT RECEIPTS. 6.1. THE CIT (A) DIRECTED THE ASSESSING OFFICER TO DEDU CT DEPRECIATION OF RS.19,46,166/ - FROM THE GROSS CONTRACT BILLS OF RS.3,11,28,314/ - AND ESTIMATE NET PROFIT @ 8% ON THE BALANCE AMOUNT. 7. BEING AGGRIEVED AGAINST THIS ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE ME. 8. LD AUTHORISED REPRESENTATIV E OF THE ASSESSEE RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S. SHRI RAM JHANWAR LAL VS ITO, BIKANER IN INCOME TAX APPEAL NO.10 OF 2006 ORDER DATED 3 RD JULY, 2008, WHEREIN, IT WAS HELD THAT WHERE THE ASSESSING OFFICER ADOPTED N ET PROFIT RATE IN MAKING ASSESSMENT TO THE BEST OF HIS JUDGMENT, ALLOWANCE 3 ITA NO. 174/CTK/2015 ASSESSMENT YEAR :2009 - 2010 OF DEPRECIATION THEREFROM IS REQUIRED TO BE MADE. HE ALSO RELIED ON CBDT CIRCUL AR NO.29D DATED 31.3.1965 AND SUBMITTED THAT IN THE SAID CIRCULAR, IT HAS BEEN PROVIDED THAT FOR ES TIMATING THE INCOME , DEDUCTION FOR INTEREST AND DEPRECIATION SHOULD BE SEPARATELY ALLOWED. 9. ON THE OTHER HAND, LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE DECISION OF VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF G.RAJA GOPALA RAO VS DCIT (2017) 78 TAXMANN.COM 61 (VISAKHAPATNAM) , WHEREIN, IT WAS HELD THAT SINCE THE ASSESSING OFFICER ADOPTED A REASONABLE RATE OF 8% ON GROSS CONTRACT RECEIPTS, FURTHER DEDUCTION TOWARDS DEPRECIATION COULD NOT BE ALLOWED AS IT WOULD RESULT INTO DETERMINATION OF TOTAL INCOME BELOW INCOME RETURNED BY THE ASSESSEE. 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, I FIND THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME SHOWING TOTAL INCOME OF RS.14,18,244/ - AFTER CLAIMING DEDUCTION UNDER CHAPTER VIA AT RS.1,00,000/ - . THE ASSESSING OFFICER DETERMINED THE INCOME AT 8% OF THE TOTAL RECEIPTS OF RS.4,11,06,911/ - AT RS.32,88,553/ - . THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S. SHRI RAM JHANWAR LAL VS ITO, (SUPRA) HAS HELD THAT WHERE THE ASSESSING OFFICER ADOPTED NET PROFIT RATE IN MAKING ASSESSMENT TO THE BEST OF HIS JUDGMENT, ALLOWANCE OF DEPRECIATION THEREFROM IS REQUIRED TO BE MADE. LD D.R. HAS RELIED ON THE DECISION OF VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE G.RAJA GOPALA R AO (SUPRA), WHEREIN, IT HAS BEEN HELD THAT WHEN THE ASSESSING OFFICER ADOPTED 4 ITA NO. 174/CTK/2015 ASSESSMENT YEAR :2009 - 2010 A REASONABLE RATE OF 8% ON GROSS CONTRACT RECEIPTS, FURTHER DEDUCTION TOWARDS DEPRECIATION COULD NOT BE ALLOWED AS IT WOULD RESULT INTO DETERMINATION OF TOTAL INCOME BELOW INCOM E RETURNED BY THE ASSESSEE. LD D.R. HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT BY DEDUCTING DEPRECIATION FROM THE ESTIMATED NET PROFIT OF 8% ON GROSS CONTRACT RECEIPTS OF THE ASSESSEE WOULD RESULT IN INCOME BEING ASSESSED BELOW THE RETURNED INCOME OF THE ASSESSEE. THEREFORE, THE DECISION OF VISAKHAKAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF IN THE CASE OF G.RAJA GOPALA RAO(SUPRA) IS NOT APPLICABLE IN THE PRESENT CASE. HENCE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DIRECT THE ASSESSING OF FICER TO ALLOW DEPRECIATION AGAINST THE NET PROFIT ESTIMATED BY APPLYING RATE OF 8% AND NOT FROM THE GROSS TURNOVER AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 11. GROUND NO.3 OF THE APPEAL READS AS UNDER: THAT THE CIT(A) ERRED IN LAW AS WELL AS IN FACTS, BY CONSIDERING THE OTHER RECEIPTS AMOUNTING TO RS.53,68,597/ - AS INCOME FROM OTHER SOURCES UNDISCLOSED OR OTHER INCOME AND NOT AS RECEIPTS FROM WORKS CONTRACT. 12. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER AFTER REJECTING THE BOOK RESULTS OF THE ASSESSEE ESTIMATED THE INCOME BY APPLYING PROFIT RATE AT 8% TO THE GROSS CONTRACT RECEIPTS OF RS.4,11,06,911/ - . 5 ITA NO. 174/CTK/2015 ASSESSMENT YEAR :2009 - 2010 13. O N APPEAL BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THIS AMOUNT INCLUDED RS.53,68,597/ - , WHICH ARE OTHER RECEIPTS FROM DIFFERENT PERSONS FOR EXECUTING WORK OF SMALL JOBS TH ROUGH LABOURERS AND MACHINERY AND PAYMENT FOR WHICH IS RECEIVED IN CASH. 14. T HE CIT(A) HELD THAT THE STATEMENT OF RECEIPTS OF RS.53,68,597/ - FROM DIFFERENT PERSONS AGAINST EXECUTION OF CONTRACT WORKS DID NOT CONTAIN ADDRESS OR PAN OF THE PERSONS AND THE NATURE OF WORK PERFORMED. THERE WAS NO DEDUCTION OF TDS FROM SUCH RECEIPTS. T HEREFORE, THE CIT(A) HELD THAT THE AMOUNT IS TO BE TREATED AS INCOME FRO M OTHER SOURCES UNDISCLOSED OR OTHER INCOME, WHICH SHOULD BE ADDED TO THE NET PROFIT ARRIVED AT FROM CONTRACT WORKS. 15. BEING AGGRIEVED AGAINST THE SAID ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL BEFORE ME. 16. LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MAD E BEFORE THE CIT(A). H E COULD NOT FILE ANY MATERIAL BEFORE ME TO DEMONSTRATE THAT THE AMOUNT OF RS.53,68,597 / - WAS THE RECEIPTS FROM SMALL JOBS DONE BY THE ASSESSEE. IN ABSENCE OF THE SAME, IN MY CONSIDERED VIEW, NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR. HENCE, SAME IS CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 17 IN THE R ESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 6 ITA NO. 174/CTK/2015 ASSESSMENT YEAR :2009 - 2010 ORDER PRO NOUNCED IN THE OPEN COURT ON 08 /03 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 08 /03 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SRI PURNA CHANDRA BISWAL, JAKHAPURA, JAJPUR 2. THE RESPONDENT. ITO, WARD 1(2), CUTTACK 3. THE CIT(A) CUTTACK CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//