Kalyani Majoor Saha. Sanshta Maryadit, Nashik V. Income-tax Officer,

ITA 290/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1611 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT DUA
• Assessee Lawyers: SANKET MILIND JOSHI
• Section: 143(3)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM / ITA NO.290/PN/2015 ! ' ' / ASSESSMENT YEAR : 2011-12 KALYANI MAJOOR SAHA. SANSTHA MARYADIT, AT POST TINGARI, TAL. SATANA, DIST. NASHIK . / APPELLANT PAN: AAAAK7301D VS. THE INCOME TAX OFFICER, WARD 3(4), MALEGAON . RESPONDENT / APPELLANT BY : SHRI SANKET MILIND JOSHI / RESPONDENT BY : SHRI AMIT DUA DATE OF HEARING : 27.06.2016 / DATE OF PRONOUNCEMENT: 30.06.2016 # / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-I, NASHIK, DATED 27.01.2015 RELATING TO ASSESSMENT YEA R 2011-12 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION CLAIMED BY THE APPELLANT SOCIETY U/S.80P(2)(VI) OF THE ACT. ITA NO.290/PN/2015 KALYANI MAJOOR SAHAKARI SANSTHA MARYADIT 2 2) ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN UPHOLDING THE REJECTION OF BOOK RESULTS AND IN CONFIRMING THE ESTIMATION OF THE A.O. OF NET PROFIT AT RS.32,53,148/- @ 15% OF CONTRACT RECEIPTS. 3) ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT IS A LABOUR CO-OPERATIVE SOCIETY , ENGAGED IN THE ACTIVITY OF PROVIDING EMPLOYMENT TO THE LABOURERS A ND HAS MAINTAINED THE BOOKS OF ACCOUNTS WHICH HAVE BEEN DULY AUDITED; IN VIEW OF THE ABOVE FACTS THE APPELLANT SOCIETY IS ELIGIBLE FOR D EDUCTION U/S.80P(2)(A)(VI) OF THE ACT. 4) ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ALL THE LABOURERS ARE MEMBERS OF THE APPELLANT SOCIETY. 3. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE, AT THE OUTSET, POINTED OUT THAT THE GROUNDS OF APPEAL RAISED FOR C LAIMING THE DEDUCTION UNDER SECTION 80P(2)(VI) OF THE ACT ARE NOT PRESSED. CON SEQUENTLY, THE GROUNDS OF APPEAL NO.1, 3 AND 4 WERE NOT PRESSED AND HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 4. THE ISSUE IN THE GROUND OF APPEAL NO.2 IS AGAINS T THE ESTIMATION OF INCOME IN THE HANDS OF THE ASSESSEE @ 15% OF THE CO NTRACT RECEIPTS RESULTING IN WORKING OUT THE NET PROFIT OF RS.32,53,148/-. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT IS NOT PRESS ED BUT WAS STRONGLY OPPOSING THE ESTIMATION OF INCOME BY ADOPTING A HIGHER RATE OF PERCENTAGE, ESPECIALLY IN THE CASE OF THE ASSESSEE WHERE HE WAS EXECUTING THE REPAIRS OF ROADS/BUILDINGS OF THE GOVERNMENT. IN THIS REGARD, HE POINTED OUT THAT THE EXCEPT FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2011-12 WHERE THE NET PROFIT WAS ESTIMATED @ 15% AS AGAINST THE DECLARATION OF THE ASSESSEE AT 0 .33%, IN ALL OTHER YEARS, THE NP RATES DECLARED BY THE ASSESSEE HAVE BEEN ACCEPTE D. IN A.Y. 2013-14 ON GROSS RECEIPTS OF RS.168.08, THE NET PROFIT OF 0.67 % HAS BEEN APPLIED TO WORK OUT THE INCOME IN THE HANDS OF THE ASSESSEE. HE, F URTHER, POINTED OUT THAT THE HONBLE ALLAHABAD HIGH COURT IN CIT VS. TARGET CONS TRUCTION CO. LTD., 231 ITA NO.290/PN/2015 KALYANI MAJOOR SAHAKARI SANSTHA MARYADIT 3 TAXMAN 55 (ALL-HC) HAD UPHELD THE ORDER OF THE TRIB UNAL IN ESTIMATING THE INCOME IN THE HANDS OF THE ASSESSEE @ 5%, WHERE THE ASSESSEE COMPANY WAS ENGAGED IN THE CONSTRUCTION OF ROADS, ETC.. FURTHE R, RELIANCE WAS PLACED ON THE SPECIAL BENCH DECISION OF THE DELHI BENCH IN DCIT V S. ALLIED CONSTRUCTION, (2007) 105 ITD 1 (SB) (DELHI) WHEREIN ALSO THE ESTI MATION OF INCOME WAS MADE IN THE HANDS OF THE ASSESSEE AND IT WAS HELD THAT T HE SAME SHOULD BE ON REASONABLE BASIS TAKING INTO ACCOUNT THE RESULTS SH OWN BY THE ASSESSEE IN THE PAST. 6. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE, ON THE OTHER HAND, STRONGLY PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 7. BRIEFLY, IN THE FACTS OF THE CAST, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DEDUCTIO N UNDER SECTION 80P(2). HOWEVER, THE ASSESSEE WAS CO-OPERATIVE SOCIETY WHIC H IS FORMED BY PERSON MARGINAL FOR THE COLLECTIVE DISPOSAL OF LABOUR. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOCIETY HAS EXECUTED WO RK TAKEN FROM GOVERNMENT ON ACCOUNT OF REPAIR OF ROADS/BUILDINGS. AS PER AU DIT REPORT, THE GROSS RECEIPTS FOR THE YEAR WERE SHOWN AT RS.2,06,80,256/- ON WHIC H THE ASSESSEE HAD DECLARED GROSS PROFIT OF RS.18,38,256/- DECLARING G P RATE OF 0.68%. THE FIRST ISSUE WHICH AROSE IN THE CASE OF THE ASSESSEE WAS C LAIMING THE DEDUCTION UNDER SECTION 80P(2)(A)(VI) OF THE ACT WHICH WAS DE NIED TO THE ASSESSEE AND THE SAME HAS BEEN ACCEPTED BY ASSESSEE. THE ASSESS ING OFFICER ALSO REJECTED THE BOOKS OF ACCOUNT AS THEY WERE NOT PROPERLY MAIN TAINED AND ESTIMATED THE INCOME IN THE HANDS OF THE ASSESSEE BY APPLYING NET PROFIT @ 15% ON THE CONTRACT RECEIPT RESULTING IN ADDITION OF RS.32,53, 148/-. ITA NO.290/PN/2015 KALYANI MAJOOR SAHAKARI SANSTHA MARYADIT 4 8. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE HAS NOT PRESSED THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT BUT IS AGGRI EVED BY THE ESTIMATION OF NET PROFIT @ 15%. 9. ON THE PERUSAL OF RECORD, ITS TRANSPIRES THAT FO R THE YEAR UNDER CONSIDERATION AS AGAINST THE RECEIPTS OF RS.206.80 LAKHS, THE ASSESSEE HAD DECLARED NET PROFIT OF RS.0.68 LAKHS, AND HAD DECLA RED NP RATE OF 0.33%. FOR THE EARLIER YEARS I.E. ASSESSMENT YEAR 2009-10 THE NP RATE WAS DECLARED BY 0.62%, IN ASSESSMENT YEAR 2010-11 AT 0.29%, IN ASSE SSMENT YEAR 2012-13 AT 0.39% AND IN ASSESSMENT YEAR 2013-14 ON GROSS PROFI T OF RS.168.08 LAKHS NET PROFIT RATE OF 0.67% HAD BEEN DECLARED. THE SAID A SSESSMENT FOR ASSESSMENT YEAR 2013-14 WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AND NET PROFIT DECLARED BY THE ASSESSEE WAS ACCEPTED IN TOTO . THE ASSESSEE HAS ALSO FURNISHED ON RECORD DETAILED CHART IN RESPECT OF OT HER SOCIETIES WHICH WERE LABOR CO-OPERATIVE SOCIETY, WHICH WERE ALSO ENGAGED IN TH E SIMILAR BUSINESS WHEREIN THE NET PROFIT RATES HAVE BEEN DECLARED ON A LOWER MARGIN FROM YEAR TO YEAR. IN NONE OF THE CASES, THE NET PROFIT MARGIN HAS BEEN A S HIGH AS 15%. THE ASSESSEE ADMITTEDLY IS CARRYING ON THE CIVIL CONTRA CT WORK FOR GOVERNMENT AGENCY BY WAY OF REPAIRS OF ROADS AND BUILDINGS AND THE BUSINESS RESULTS SHOWN BY THE ASSESSEE ARE NOT COMPARABLE TO THE PER SONS WHO ARE ENGAGED IN THE CONSTRUCTION AND DEVELOPMENT OF BUILDING OF HOU SING OR COMMERCIAL PROJECT. HENCE, THERE IS NO SANCTITY FOR ADOPTING THE NET PR OFIT RATE @ 15%. FURTHER, THE HONBLE ALLAHABAD HIGH COURT IN CIT VS. TARGET CONS TRUCTION CO. LTD. (SUPRA) WHILE ADJUDICATING THE CASE OF ROAD CONTRACTORS HAD LAID DOWN THE PROPOSITION THAT THE NET PROFIT RATE OF 5% AS ESTIMATED BY THE ITAT SHOULD BE APPLIED. ADMITTEDLY, WHEN AN ESTIMATION HAS TO BE MADE IN TH E HANDS OF ANY OF THE ASSESSEE, FAIR ESTIMATE SHOULD BE MADE KEEPING IN M IND THE NATURE OF ACTIVITY CARRIED ON BY THE SAID PERSON AND ALSO TAKING INTO CONSIDERATION THE PAST OR THE FUTURE RESULTS SHOWN BY THE ASSESSEE IN THIS REGARD . THERE IS NO MERIT IN ITA NO.290/PN/2015 KALYANI MAJOOR SAHAKARI SANSTHA MARYADIT 5 ESTIMATING THE NET PROFIT IN THE CASE OF THE ASSESS EE @ 15% ESPECIALLY IN VIEW OF THE PAST AND FUTURE RESULTS SHOWN BY THE ASSESSE E FROM YEAR TO YEAR WHERE THE ASSESSEE IS AN ASSOCIATION OF LABOURERS WHO, IN TURN, WERE TAKING UP THE GOVERNMENT CONTRACT FOR THE REPAIR OF ROADS/BUILDIN GS. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER IS DIRECTE D TO COMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE BY APPLYING NET PROFIT OF 5%. THE ASSESSEE IS NOT ENTITLED THE CLAIM OF DEDUCTION UNDER SECTION 80P(2 )(A)(VI) OF THE ACT. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE AS SESSEE ARE, THUS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE, 2016. SD/- (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 30 TH JUNE, 2016 . ! #$%&'()(& / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ' ' # () THE CIT(A)-I, NASHIK; ' ' # THE CIT-I, NASHIK &'( ))*+, ' *+ , , - . // / DR SMC, ITAT, PUNE; (01 2 / GUARD FILE. #! / BY ORDER & ) // TRUE COPY // 345 )! *6 / SR. PRIVATE SECRETARY ' *+ , ITAT, PUNE