The DCIT, Central Circle-1, Surat V. Ashirwad Corporation, Surat

ITA 1915/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2065 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-04-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Assessee Lawyers: KK SHAH

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.1915/AHD/2010 [ASSTT.YEAR : 2008-2009] DCIT, CENT.CIR.1 SURAT. /VS. ASHIRWAD CORPORATION 3 RD FLOOR, DEEPA COMPLEX ADAJAN ROAD, SURAT. PAN : AALFA 2043 C ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI T. SANKAR, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI K.K. SHAH 5 1 &(*/ DATE OF HEARING : 18 TH APRIL, 2013 678 1 &(*/ DATE OF PRONOUNCEMENT : 10-5-2013 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT : THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2008-2009, IS DIREC TED AGAINST THE ORDER OF THE CIT(A)-II, AHMEDABAD. 2. THE ONLY GROUND OF THE APPEAL OF THE REVENUE IS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITIO N OF RS.94,65,000/- FOR SHORT DISCLOSURE OF PROFIT EARNE D FROM ITA NO.1915/AHD/2010 -2- THE PROJECT ASHIRWAD PALACE BY RESTRICTING THE NET PROFIT MARGIN TO 15% OF ON-MONEY INSTEAD OF 16% ESTIMATE D BY THE AO IGNORING THAT THE FOLLOWING FACTORS JUSTIFIE D HIGHER NET PROFIT MARGIN ESTIMATED BY THE AO IN COMPARISON TO THE NET PROFIT MARGIN OF 15% HELD TO BE CORRECT IN DECI SIONS OF VARIOUS COURTS GOVERNMENT INITIATIVES AND REFORMS IN REALTY SECTORS, GROWING INDIAN ECONOMY, GROWTH OF I.T./ITES SEGMENT, GROWING URBANIZATION, RAPID EXPA NSION IN TIER-I, TIER-II CITIES, DROP IN HOME LOAN INTERE ST RATES, INCREASING INCOME LEVELS OF RAPIDLY RISING MIDDLE C LASS ETC. 3. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . HE SUBMITTED THAT THERE WAS NO JUSTIFICATION FOR THE C IT(A) TO RESTRICT THE NET PROFIT MARGIN TO 15% OF ON-MONEY INSTEAD 16% ESTIMATED BY THE AO FOR VARIOUS REASONS DETAILED BY THE AO IN THE ASSESSMENT ORDER. HE HAS FILED WRITTEN SUBMISS IONS BEFORE US, IN SUPPORT OF THE CASE OF REVENUE. HE RELIED VARIO US DECISIONS IN SUPPORT OF HIS PLEA THAT A CAREFUL STUDY OF THE DEC ISIONS SHOWS THAT APPELLATE AUTHORITIES SHOULD DESIST FROM APPLYING A DIFFERENT NET PROFIT RATE WHERE THE AO HAS APPLIED THE RATE ON A LOGICAL AND NON-ARBITRARY BASIS. HE SUBMITTED THAT IN THIS CAS E THE FINDING OF THE AO HAVE NOT BEEN CONTROVERTED EITHER BY THE ASS ESSEE OR BY THE CIT(A). 4. THE LEARNED AR OF THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT T HE CIT(A) HAS PASSED A WELL REASONED SPEAKING ORDER ON THIS I SSUE, AND THE NET PROFIT RATE OF 15% HAS BEEN APPLIED BY THE DEPA RTMENT IN NUMBER OF SUCH CASES, AND THERE IS NO JUSTIFICATION FOR APPLYING A HIGHER RATE OF PROFIT. HE RELIED ON THE ORDER OF T HE CIT(A). ITA NO.1915/AHD/2010 -3- 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS HELD THAT NET PROFIT RATE OF 16% WAS NOT JUSTIFIED. HE HAS CITED DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF NARE SH B. AGARWAL HUF AND MANGATULAL HARLALKAR HUF WHEREIN TH E NET PROFIT OF 15% IS HELD AS REASONABLE. LIKEWISE IN T HE CASE OF S.P. ENTERPRISES, ITAT, AHMEDABAD HAS APPLIED THE NET PR OFIT RATE AT 15%. THE CIT(A) HAS FURTHER RECORDED THAT IN THE C ASE OF SHREENATH CORPORATION, THE AO HIMSELF HAS APPLIED R ATE OF 15%. THE CIT(A) HAS CITED CERTAIN OTHER ORDERS WHEREIN T HE NET PROFIT OF 15% HAS BEEN APPLIED AND CONFIRMED BY THE TRIBUN AL. WE FIND THAT THERE IS NO MATERIAL BROUGHT ON RECORD ON BEHA LF OF THE REVENUE TO JUSTIFY APPLICATION OF HIGHER NET PROFIT RATE AT 16%. HOWEVER, CONSIDERING THE ARGUMENTS OF THE LEARNED D R THAT THERE WAS A DROP IN HOME LOAN INTEREST RATES, AND THERE W ERE REFORMS IN REALITY SECTORS AND DUE TO GROWTH OF IT/ITES SEGMEN TS ETC., AND CONSIDERING THAT THERE WERE GOOD MARKET CONDITIONS DURING THE RELEVANT PERIOD, WE HOLD THAT ENDS OF JUSTICE SHALL BE MET, IF AN ADDITION OF RS.15 LAKHS IS SUSTAINED OUT OF ADDITIO N OF RS.94,65,000/- DELETED BY THE CIT(A), AND ACCORDING LY, GROUND NO.1 OF THE REVENUE IS PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&' %&' %&' %&'( (( ( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT