M/s. Navin Constructions, Indore V. The I.T.O., Ujjain

ITA 245/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2839 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S DESHPANDE
• Keywords: Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH-I, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.245/IND/2010 AY: 2005-06 M/S. NAVIN CONSTRUCTION, 16/1, SOUTH TUKOGANJ, 202, NAVSAR APARTMENT, INDORE PAN AABFN 1636 J ..APPELLANT V/S. ITO-1(1), UJJAIN ..RESPONDENT APPELLANT BY : SHRI S.S. DESHPANDE, CA DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ORDER THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER O F THE LD. CIT(A)- UJJAIN, DATED 21.1.2010. DURING HEARING OF THIS APP EAL, I HAVE HEARD THE LD. RESPECTIVE COUNSELS AND CONSIDERED THE ARGU MENTS ADVANCED BY THEM. THE ONLY GROUND RAISED IN THE APPEAL PERTAINS TO MAINTAINING THE ADDITION OF RS.2,14,147/- ON ACCOUNT OF NET PROFIT OF THE ASSESSEE BY APPLYING THE NET PROFIT RATE AT 4.5%. 2. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT FIRSTLY, THE ADDITION SUSTAINED MADE BY THE LD. CIT(A) IS WI THOUT ANY BASIS AND 2 ALTERNATIVELY IT WAS CONTENDED THAT IT MAY BE RESTR ICTED TO A REASONABLE FIGURE. ON THE OTHER HAND, THE CONTENTIO N RAISED BY LD. SR. DR IS THAT THE LD. FIRST APPELLATE AUTHORITY HAS AL READY TAKEN A REASONABLE ESTIMATION, THEREFORE, NO FURTHER RELIEF BE GIVEN. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT THE ASSESSE E IS IN THE BUSINESS OF CONSTRUCTION OF CANAL AT MAHI PROJECT IN JHABUA DIS TRICT. THE ASSESSEE SHOWED THE GROSS RECEIPTS AT RS.1,34,09,391/- AGAIN ST THE RECEIPT OF RS.79,78,478/- SHOWN IN THE LAST YEAR WHICH IS SHOW ING INCREASE BY 68%. THE LD. ASSESSING OFFICER COMPUTED THE INCOME FROM CONTRACT BUSINESS BY ADOPTING NET PROFIT RATE OF 5% ON THE C ONTRACT RECEIPTS OF RS.1,34,09,391/- WHICH COMES TO RS.6,70,470/-. AS P ER THE ASSESSEE, WHILE WORKING OUT THE NET PROFIT, THE AMOUNTS OF RS .1,37,066/- (INTEREST TO PARTNERS) AND RS.90,000/- (REMUNERATIO N TO PARTNERS) WERE NOT TAKEN INTO CONSIDERATION. THE LD. COUNSEL FOR A SSESSEE CONTENDED THAT THE TOTAL PROFIT WILL WORK OUT TO RS.3,89,277/ - GIVING THE NET RATE OF PROFIT AT 2.90%. THE ASSESSEE HAS ALSO FURNISHED THE COPY OF PROFIT AND LOSS A/C FOR THE YEAR ENDED ON 31.3.2005 AND AL SO THE BALANCE- SHEET ALONGWITH LIST OF DEPRECIATION ON THE FIXED A SSETS. AGAINST THE ADOPTION OF 5% PROFIT, THE LD. CIT(A) REDUCED THE S AME TO 4.5% OF THE GROSS RECEIPTS RESULTING INTO NET PROFIT TO RS.6,03 ,423/-. ADMITTEDLY, IT 3 IS A CASE OF ESTIMATION OF PROFIT, THEREFORE, TO PU T AN END TO THE LITIGATION, THE ASSESSING OFFICER IS DIRECTED TO AD OPT THE NET PROFIT AT 4% AGAINST 4.5% SUSTAINED BY THE LD. CIT(A). HOWEVE R, IT IS CLARIFIED THAT, AS OBSERVED BY THE LD. CIT(A) ALSO, THE REMUN ERATION AND INTEREST TO PARTNERS IS ALLOWABLE OUT OF THE REMAINING INCOM E. THIS APPEAL OF THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED. FINALLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 .6.2010. SD/- (JOGINDER SINGH) JUDICIAL MEMBER DATED: 2.6.2010 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE