DCIT, CIRCLE - 3 (1), Trichy V. SHRI SRINIVASAN DEVENDRAN, Trichy

ITA 2675/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7253 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-09-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 18-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; TDS; FORM 26AS
• Section: 143(3); 208

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं डॉ एम एल मीना, लेखा सदèय के सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND Dr. M.L. MEENA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 2675/CHNY/2019 िनधाᭅरण वषᭅ /Assessment Year: 2016-17 The Deputy Commissioner of Income Tax, Circle -3(1), Trichy. v. Shri Srinivasan Devendran, No. 25, I.A.S. Nagar, Trichy – 620 013. PAN: ABSPD 3194P (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri M. Murali, CIT ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri S. Sridhar, Advocate and Shri N. Arjunraj, CA स ु नवाई कȧ तारȣख/Date of Hearing : 07.03.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 09.03.2022 आदेश /O R D E R PER BENCH: This appeal by Revenue is arising out of the order of the learned Commissioner of Income Tax (Appeals)-1, Trichy in ITA No.127/2018-19/CIT(A)-1/TRY, dated 08.07.2019. The assessment was framed by the ACIT, Circle 3(1), Trichy for assessment year 2016-17 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’), vide order dated 24.12.2018. 2 I.T.A. No.2675/Chny/2019 2. At the time of hearing, it is noticed that the appeal filed by Revenue is delayed by 3 days and Revenue has filed condonation petition stating that the delay was due to the fact that authorization to file appeal from PCIT, Trichy was received on 09.09.2019 and 11.09.2019 being closed holiday and due to survey action conducted in a case on 12.09.2019 & 13.09.2019, the appeal could not be filed on time and there was delay of 3 days. It was stated that the delay is neither willful nor wanton but due to closed holiday and pre & post survey works during that period. When this was confronted to ld.counsel for the assessee, he has not objected for condonation of delay. After hearing both sides, we find the cause as reasonable and hence, we condone the delay and admit the appeal. 3. The so called dispute in the appeal of Revenue is applicability of rate of profit on the contract receipts. For this Revenue has raised five grounds which need not to reproduce. 4. We have heard rival contentions and gone through the facts and circumstances of the case. The AO during the course of assessment proceedings noted that the assessee is a civil 3 I.T.A. No.2675/Chny/2019 contractor of TamilNadu P.W.D departments and specially engaged in road construction and is said to be procuring work through tender process in a competitive environment. The AO noted that all the payments are from various state government departments and receipts are available in Form 26AS of the Department and TDS deducted by the payer government departments. The assessee’s gross receipts are to the tune of Rs.74,53,84,939/- and he estimated profit rate @ 3% of the total contract receipts and declared net receipts at Rs.2,23,61,548/-. According to AO, the profit rate declared is lower and he estimated the profit rate @ 8% of his gross receipts and thereby computed the taxable income at Rs.5,96,30,795/-. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) after considering the profit rate declared and accepted in earlier years by the ITAT @ 5%, he directed the AO to consider the profit rate @ 6% but give benefit of depreciation in term of the decision of Hon’ble Supreme Court in the case of Awasthi Traders vs. CIT, [2016] 78 taxmann.com 208 (SC). Further, he directed that in case the AO want net profit minus depreciation then, he adopt the profit rate at 4% as against declared by the assessee at 3%. The CIT(A) after considering the Tribunal decision in assessee’s own case and profit estimated by CIT(A) in assessment year 2014-15 @ 6% directed as under:- 4 I.T.A. No.2675/Chny/2019 a) That turnover of assessee has increased more than 2.5 times since net profit margin was determined at 6% and this is a accepted fact that IRDC was in doldrums due to sluggish credit growth and high competition from other civil contractors. b) That if one was to add up interest & depreciation the profit would match the level of 6% set in the earlier years. 6.4 In light of case laws & detailed discussion given above, the net profit level is to be determined higher of either 6% and then giving benefit of depreciation as per hon’ble SC decision in M/s. Awasthi traders or at 4% (without depreciation) as against 3% declared by the assessee. 5. We noted that the assessee has given comparative figures and the Tribunal applied profit rate in assessee’s own case at 5% as under:- Year Turnover NP declared Percentage of NP declared Percentage applied in assessment done by AO Appeal effect 2009-10 123257523 6629223 5.38 13.7 5.78 by adhoc add of Rs.5 lakhs 2008-09 106227305 5338548 5.02 5.02 Accepted without scrutiny 2007-08 48834743 2389297 5.10 5.10 Accepted without scrutiny 2006-07 21090878 1056688 5.01 6 5% by ITAT 2005-06 12632146 471641 3.73 6 5% by ITAT 2004-05 24003129 852775 3.55 8 5% by ITAT It is only an issue of estimation of profit rate and at the time of hearing, the ld.counsel for the assessee stated that the AO has 5 I.T.A. No.2675/Chny/2019 already given effect to the order of CIT(A), wherein he accepted profit rate at 4% minus depreciation. The ld. Senior DR only requested for profit rate at 5% be accepted as in earlier years. We noted that there is no clarity whether the profit rate @ 5% is with depreciation or without depreciation. Hence, we find that the direction of CIT(A) given in para 6.4 for adoption of profit rate at 6% giving benefit of depreciation or net profit rate at 4%, is perfect already. As informed by ld.counsel for the assessee during the course of hearing that the AO while giving appeal effect to the order of CIT(A) has accepted profit rate at 4% of net of gross receipts, we find no infirmity in the same. The appeal of the Revenue is dismissed. 6. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the court on 9 th March, 2022 at Chennai. Sd/- Sd/- (डॉ एम एल मीना) (Dr. M.L. MEENA) लेखा सद᭭य /ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 9 th March, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.