Sri Veera Vadivel Murugan Transport Agency, Hyderabad V. ITO., Suryapet

ITA 1919/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61944 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K VISWSANATHAM
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1919/HYD/2011 : ASSESSMENT YEAR 2008-09 SRI VEERA VADIVEL MURIUGAN TRANSPORT AGENCY, KODAD, NALGONDA DIST. ( PAN - AAPFS 9679 G ) V/S INCOME - TAX OFFICER, SURYAPET (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI K.VISWSANATHAM DATE OF HEARING 27.6.2012 DATE OF PRONOUNCEMENT 28.6.2012 O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) VII, HYDERA BAD DATED 25.8.2011, FOR THE ASSESSMENT YEAR 2008-09. 2. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPEA L READ AS FOLLOWS- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ESTIMATION OF INCOME AT 5% OF THE GR OSS RECEIPTS. THE LEARNED COMMISSIONER OF INCOME-TAX(AP PEALS) OUGHT TO HAVE SEEN THAT THE SAID ESTIMATION AT 5% I S MUCH HIGHER AND OUGHT TO HAVE REDUCED THE PERCENTAGE ADO PTED BY THE ASSESSING OFFICER. 3. THE LEARNED CIT(A) ERRED IN NOT ALLOWING DEDUCTI ON OF INTEREST AND REMUNERATION TO PARTNERS CLAIMED BY TH E APPELLANT IN VIEW OF THE PROVISIONS OF SEC.40(B) OF THE I.T. ACT. ITA NO.1919/HYD/2011 SRI VEERA VADIVEL MURUGAN TRANSPORT AGENCY, KODAD, NALGONDA DIST. 2 THUS, THE ONLY DISPUTE INVOLVED IN THIS APPEAL RELA TES TO ESTIMATED ADDITION MADE TOWARDS THE INCOME OF THE ASSESSEE, W HO IS ENGAGED IN SUPPLY OF VEHICLES FOR GOODS TRANSPORTATION. 3. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED OR DERS OF THE LOWER AUTHORITIES. WE FIND THAT THE ASSESSING OFFIC ER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE, ESTIMATED THE INCOME OF TH E ASSESSEE AT 5% OF THE TOTAL TURNOVER OF RS.6,54,15,734/- CLEAR OF AL L THE EXPENDITURE, AND ACCORDINGLY DETERMINED THE INCOME OF THE ASSESSEE A T RS.32,70,790. ON APPEAL, THE CIT(A) UPHELD THE ASSESSMENT THUS MADE BY THE ASSESSING OFFICER. IN THE PROCEEDINGS BEFORE US, THE ASSESS EE WITHOUT QUESTIONING THE REJECTION OF THE BOOKS OF ACCOUNT, PLEADED THAT THE ESTIMATION OF INCOME ADOPTING A RATE OF 5% IS ON HIGHER SIDE AND NEEDS TO BE REDUCED. IT IS ALSO SUBMITTED THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN NOT ALLOWING THE DEDUCTION IN TERMS OF S.40(B) ON ACCOU NT OF INTEREST AND REMUNERATION TO PARTNERS FROM SUCH ESTIMATED INCOME . ON CAREFUL CONSIDERATION OF THE TOTALITY OF FACTS AND CIRCUMST ANCES OF THE CASE, WE FIND THAT THE ESTIMATION OF INCOME OF THE ASSESSEE MADE BY THE ASSESSING OFFICER ADOPTING A RATE OF 5% IS ON HIGHER SIDE, AN D IT WOULD MEET THE ENDS OF JUSTICE IF THE INCOME IS ESTIMATED APPLYING A RATE OF 3%. IN DECIDING THE ISSUE AS ABOVE, WE CONSIDERED THE FACT THAT THE ASSESSEE DOES NOT OWN TRUCKS USED IN THE BUSINESS AND IS INC URRING HUGE INCIDENTAL EXPENDITURE. FROM SUCH INCOME ESTIMATED APPLYING RATE OF 3%, DEDUCTION TOWARDS INTEREST AND REMUNERATION TO PART NERS IN TERMS OF S.40(B) OF THE ACT MAY BE ALLOWED. WE ARE SUPPORTE D IN THIS BEHALF BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBU NAL IN ITA NO.668/HYD/2009 AND THEE OTHERS IN THE CASE OF M/S . C.ESWARA REDDY & CO., HYDERABAD, RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, WHEREIN THE TRIBUNAL, VIDE PARA 14 OF ITS ORDER DAT ED 31.1.2011, EVEN IN A CASE COVERED BY THE PROVISIONS OF S.44AD, HAS DIREC TED THE ASSESSING OFFICER TO ALLOW DEDUCTION TOWARDS SALARY AND INTER EST AND SALARY PAID TO ITA NO.1919/HYD/2011 SRI VEERA VADIVEL MURUGAN TRANSPORT AGENCY, KODAD, NALGONDA DIST. 3 PARTNERS, FROM OUT OF THE INCOME ESTIMATED IN TERMS OF S.44AD OF THE ACT. ACCORDINGLY, IMPUGNED ORDER OF THE CIT(A) IS SET AS IDE, AND THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCOME OF THE ASSESSEE. ACCORDINGLY, ASSESSEES GROUND NO.2 IS PARTLY ALLOWED AND GROUND NO3 IS ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 28.6.2012 SD/- SD/- (SAKTIJIT DEY) (D.KARUNAKARA RAO) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 28 JUNE 2012 COPY FORWARDED TO: 1. 2. 3 4. 5. SRI VEERA VADIVEL MURIUGAN TRANSPORT AGENCY, (KODAD , NALGONDA DIST) C/O. SHRI S.RAMA RAO,FLAT NO.102, SH IRYA'S ELEGANCE, NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 INCOME TAX OFFICER, SURYAPET, COMMISSIONER OF INCOME-TAX(APPEALS) VI COMMISSIONER OF INCOME-TAX V, HYDERABAD DEP ARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD B.V.S.