M.K.S Engineering Company Private Limited, Jabalpur V. Assistant Commissioner Of Income Tax, Jabalpur

ITA 191/JAB/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1054 (ITAT-JABALPUR)
• Duration Of Justice: 5 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2013
• Court: TRIBUNAL
• Department Lawyers: V B SARGOR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO. 191/JAB/2013 A.Y. : 2007-08 M.K.S. ENGINEERING CO.PVT. LIMITED, JABALPUR VS ACIT, CIRCLE 2(10, JABALPUR APPELLANT RESPONDENT PAN NO. : AADCM1192R APPELLANT BY : SHRI V IJAY GUPTA, C. A. RESPONDENT BY : SHRI V. B. SARGOR, DR DATE OF HEARING : 2 6 . 0 5 .201 5 DATE OF PRONOUNCEMENT : 26 . 0 5 .201 5 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), JABALPUR, DATED 13.03.2013 FOR THE ASSES SMENT YEAR 2007-08. 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE :- 1. UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE LD . AO WAS NOT JUSTIFIED IN REJECTING BOOKS OF ACCOUNT AND ESTIMATING NET PROFIT @ 5% OF CONTRACT RECEIPT. IN CASE OF THE GROUND NO.1 IS DECIDED AGAINST THE APPELLANT. 2. UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LOWER AUTHORITIES WAS NOT JUSTIFIED IN NO T TAXING THE OTHER INCOME AS INCOME FROM BUSINESS -: 3: - 3 AND ADDING FULL OTHER INCOME RS. 11,70,741/- TO THE INCOME OF THE APPELLANT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED THE RETURN OF INCOME ON 30.10.2007. THE ASSES SEE COMPANY IS ENGAGED IN CONTRACT WORK. THIS YEAR THE GROSS RECEIPT WAS SHOWN AT RS. 12,78,58,536/- AS AGAINST THE GROSS RECEIPTS OF EARLIER YEAR OF RS. 8,74,38,017/- AND T HE ASSESSEE HAS SHOWN PROFIT OF RS. 48,09,268/- AS AGAINST THE PROFIT OF PRECEDING YEAR OF RS. 15,80,844/-. THE RATE OF PROF IT SHOWN IN THIS YEAR COMES TO 3.76 % AS AGAINST THE RATE OF PR OFIT OF PRECEDING YEAR 1.8 %. DURING THE ASSESSMENT PROCEED INGS, THE AO TRIED TO VERIFY ALL THE BILLS/VOUCHERS, MUSTER R EGISTERS, CASH BOOK, LEDGER BOOK AND OTHER DOCUMENTS AVAILABLE DUR ING THE COURSE OF ASSESSMENT. THE ASSESSEE HAS MADE PAYMENT ON SELF MADE VOUCHERS AND PAYMENT OF WAGES TO LABOURS ARE NOT SUBJECT TO FULL VERIFICATION. CONSIDERING THESE FAC TS, THE AO HAS REJECTED THE BOOK RESULT OF THE ASSESSEE AND ESTIMA TED THE NET PROFIT OF 5% RELYING UPON THE DECISION OF THE TRIBU NAL IN THE ASSESSEES OWN CASE. -: 4: - 4 4. THIS MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. DURING THE COURSE OF HEARING, THE LD. SEN IOR D.R. SUBMITTED THAT THE AO HAS FOLLOWED THE I.T.A.TS DE CISION IN THE CASE OF THE ASSESSEE HIMSELF AND THE ASSESSEE H AS ACCEPTED THE DECISION OF I.T.A.T. THEREFORE, HE DID NOT PRES S FOR GROUND NO.1 OF THE APPEAL. HENCE, THE GROUND NO.1 IS DISMI SSED. SECOND GROUND : 6. THE AO HAS REJECTED THE BOOK RESULT OF THE ASSESSEE AND THE AO HAS ALSO ADDED THE OTHER INCOME OF RS. 11,70,741/- TO THE INCOME OF THE ASSESSEE. THE OTHE R INCOME CONSISTS OF INTEREST AT RS. 6,31,315.57, RENT RS. 6 0,480/-, MATERIAL SALE AT RS. 4,54,380/-, INSURANCE CLAIM RS . 23,900/- AND MISC. BALANCE W/OFF RS. 665.86. THE AO HAS TRE ATED THIS INCOME AS A BUSINESS INCOME AND IT WAS ADDED IN THE CONTRACT RECEIPT. 7. THIS MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) H AS DISMISSED THE APPEAL. -: 5: - 5 8. DURING THE COURSE OF HEARING, THE LD. SENIOR D.R. SUBMITTED THAT THIS INCOME OF RS. 11,70,741/- IS TH E INCOME WHICH IS MAINLY ON ACCOUNT OF INTEREST ON FDR GIVEN AS SECURITY DEPOSIT FOR OBTAINING TENDERS/PAYMENTS. HE NCE, THE INTEREST ON THESE FDRS IS BUSINESS INCOME. THE ASSE SSEE HAS ALSO PURCHASED THESE FDRS BY UTILIZING THE BORROWED FUND ON WHICH THE INTEREST HAS BEEN PAID. THEREFORE, SET OF F OF INTEREST MAY BE GIVEN AGAINST THE INTEREST INCOME. THE ASSES SEE HAS ALSO EARNED THE INCOME ON MATERIAL SALE AND ARE BUS INESS RECEIPTS AND WAS TO BE DEDUCTED FROM THE SALE PRICE TO WORK OUT THE NET PROFIT. 9. CONSIDERING THESE ARGUMENTS OF THE ASSESSEE, WE RESTORE THIS ISSUE BACK TO THE FILE OF AO AND THE A O IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE AND THE NETTING OF INTEREST HAS TO BE ALLOWED, IF THE PROPER EVIDENCE IS ADDUCE D BY THE ASSESSEE BEFORE THE AO. THE AO IS FURTHER DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE IN RESPECT OF INTEREST. IN RE SPECT OF SALE OF MATERIALS, NECESSARY VERIFICATION MAY BE MADE AT TH E END OF THE AO AND IT MAY BE DECIDED AS PER LAW. -: 6: - 6 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 26 TH MAY , 2015. CPU* 496