M/s Maa Mangala Transport, Dhenkanal V. ITO, Dhenkanal

ITA 313/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65076 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 04-05-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: N GUPTA
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 313/CTK/2012 ( / ASSESSMENT YEAR 2008 - 09) M/S.MAA MANGALA TRANSPORT, NARANPADA, KUALO, PARJANG, DIST.DHENKANAL. PAN: AAOFM 6919 J - - - VERSUS - INCOME - TAX OFFICER, WARD 1, DHENKAN A L. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI N.GUPTA, AR / FOR THE RESPONDENT: / SHRI . S.C.MOHANTY, DR / DATE OF HEARING: 08.08.2012 / DATE OF PRONOUNCEMENT: 24 .08.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE AGITATES THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE ESTIMATION OF INCOME OF THE ASSESSEE BEING A TRANSPORT CONTRACTOR AT 5.06% AS AGAINST DECLARED BY THE ASSESSEE AT 2.6%. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR AND STARTED BUSINESS FOR THE FIRST TIME IN THE F.YR. 2007 - 08 RELEVANT TO ASST. YEAR 2008 - 09 . THE MAJORITY OF WORK OF THE ASSESSEE WAS WI TH THE COMPANY RANA SPONGE LTD., FOR WHICH TDS WAS MADE ON THE RECEIPTS. THE RETURN OF INCOME WAS SUBMITTED IN TIME AFTER COMPLETING THE AUDIT U/S 44AB OF THE L.T.ACT 1961. THIS RETURN WAS SELECTED FOR SCRUTINY UNDER C ASS. THE ASSESSEE THROUGH ITS A/ R APPEARED BEFORE THE A.O. WITH VARIOUS DOCUMENTS, WHICH HAS BEEN MENTIONED IN THE ASST. ORDER. HOWEVER I.T.A.NO. 313/CTK/2012 2 DUE TO SOME UNAVOIDABLE CIRCUMSTANCES , THE CASH BOOK ETC. COULD NOT BE PRODUCED ON THE GIVEN DATE AND A.O. COMPL ETED THE ASSESSMENT ON ESTIMATION. WHILE ESTIMATING THE INCOME A.O. DISCUSSED THE CASE OF ANOTHER TRANSPORT CONTRACTOR VIZ. M/S SHREE TRANSPORT OF REMUAN AND ESTIMATED THE NET INCOME @ 5.06% WHICH IS MUCH HIGHER THAN THE DECLARED PROFIT IN THE AUDITED ACCO UNTS BY THE ASSESSEE @ 1 .64%. 3. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE LEARNED CIT(A) D URING THE COURSE OF HEARING IT WAS ARGUED THAT ESTIMATING THE NET PROFIT @ 5.06% IS MUCH HIGHER WHEN ITAT CUTTACK BENCH HAS ADOPTED THE ESTIMATED PROFIT IN SIMILAR CASES @ 3%. THE COPY OF ORDER OF ITAT IN THE CASE OF M/S BHUKTA TRANSPORT, IN ITA NO. 171/CTKI2007 DATED 12/09/2008 WAS FILED IN ITS CONFIRMATION. BUT LEARNED CIT(A) STATED THAT THE CASE CITED BY A.O. IS A BETTER COM PARABLE CASE AND SUPPORT THE ORDER PASSED BY THE A.O. HENCE THIS APPEAL HAS BEEN FILED BEFORE THE TRIBUNAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE PRESENT APPEAL THE ONLY ISSUE IS ESTIMATION OF PROFIT. LEARNED CIT(A) HAS OPINED THAT THE CASE CITED BY A.O. IS A BETTER COMPARABLE CASE. BUT NEITHER A.O. NOR THE LEARNED CIT(A) HAS DISCUSSED WHY THE PROFIT DECLARED BY THE OTHER ASSESSEE (M/S SHREE TRANSPORT) WILL BE ACCEPTED AS A YARDSTICK FOR THIS CASE ALSO. THE A.O. HAD NOT COMPARED THE TRANSPORT EXPENSES WHICH IS A VITAL ISSUE IN A TRANSPORT BUSINESS. THE ASSESSEE WAS NEW TO THE BUSINESS AND IT WAS JUST FIRST YEAR OF ITS BUSINESS. IT HAD NO LORRY OF ITS OWN AND HAD TO PROCURE LORRY ON HIRE FROM THE OPEN MARKET. THIS HAD RESULTED LOW PROF IT. IT IS NOT KNOWN WHETHER THE OTHER ASSESSEE POSSESS OWN LORRY AND WHAT ELEMENT OF TRANSPORT EXPENSES WERE INCURRED. IT IS NOT FAIR TO COMPARE BOTH THE CASES IN THE SAME YARDSTICK JUST BECAUSE BOTH DO THE TRANSPORT BUSINESS. BESIDES THE PLACE OF I.T.A.NO. 313/CTK/2012 3 OPERATIO N IS NOT THE SAME IN BOTH THE CASES. HENCE THE PE RCENTAGE OF PROFIT ADOPTED BY AO IS NOT PROPER IN THIS CASE. SINCE THE ASSESSEE DID NOT GET ANY OPPORTUNITY TO DISCUSS ABOUT THE RATE OF PROFIT BEFORE THE A.O., IT TOOK UP THE MATTER BEFORE THE LEARNED CIT(A ). IT WAS POINTED OUT THAT IN THIS TRANSPORT BUSINESS, THE RATE OF PROFIT CANNOT BE SAME IN AL L CASES. FOR THAT THE ORDER OF I TAT CUTTACK BENCH IN THE CASE OF M/S BHUKTA TRANSPORT, (IN (TA NO. 171/CTK12007 DATED 12/09/2008) WAS FILED. IN THIS CASE, HONBLE ITAT HAD CONFIRMED THE ORDER OF THE A.O. WHO HAD ESTIMATED THE RATE OF PROFIT AT 3% ON TRANSPORT BUSINESS RELYING ON THE ORDER OF ITAT, CUTTACK BENCH IN THE CASE OF M/S PA RID A TRANSPORT, WHEREIN THE HONBLE ORISSA HIGH COURT DECISION IN THE CASE OF LARSEN & TOUBRO LTD. WAS DISCUSSED FOR ESTIMATING THE PROF IT. 5. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HIS PART OF SUBMISSIONS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MA TERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THIS BENCH OF ITAT IN THE CASE OF M/S.BHUKTA TRANSPORT V. INCOME - TAX OFFICER (SUPRA) WHEN 3% NET PROFIT WAS HELD TO BE ACCEPTED FURTHER RELYING ON THE DECISION OF TH IS BENCH OF ITAT IN THE CASE OF M/S.PARIDA TRANSPORT FOR THE ASSESSMENT YEAR 2001 - 02. WE ARE INCLINED TO HOLD THAT THE TRANSPORT BUSINESS AS CONTRACTOR COULD NOT RESULT IN A 5% MARGIN BEING A SERVICE PROVIDER. THE VALUE OF SERVICE COULD NOT BE COMPUTED IN MONEY VALUING INSOFAR AS THE DIRECT EXPENSES HAVE BEEN CLAIMED BY THE ASSESSEE WHEN THE ASSESSEE HIMSELF HAS OWN TRUCKS CLAIM DEPRECIATION THEREON. ON SUCH TYPES OF BUSINESS, THE INCOMES CHARGED BY THE ASSESSEES ARE KNOWN TO THE PAYEES. THEREFORE, WE DO NO T FIND THAT THE I.T.A.NO. 313/CTK/2012 4 CASE LAWS CITED AT THE BAR DO HAVE A MEANING INSOFAR AS 3% NET INCOME FROM TRANSPORT CONTRACT BUSINESS HAS BEEN DIRECTED TO BE ACCEPTED. HOWEVER, IN THE VIEW OF THE FACTS AND CIRCUMSTANCES BROUGHT ON RECORD BY THE AUTHORITIES BELOW, WE ARE INCLINED TO HOLD 4% PROFIT REASONABLE BEFORE ALLOWING SALARY AND INTEREST TO THE PARTNERS THIS BEING THE FIRST YEAR OF ASSESSEES BUSINESS AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING. IN VIEW OF THE ABOVE, THE IMPUGNED ORD ER OF THE LEARNED CIT(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE PROFIT @4% AND THEREAFTER ALLOW SALARY AND INTEREST PAID TO THE PARTNERS AND RE - DO THE ASSESSMENT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. S D/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 24 .08.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.MAA MANGALA TRANSPORT, NARANPADA, KUALO, PARJANG, DIST.DHENKANAL. 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1, DHENKANAL. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECR ETARY. I.T.A.NO. 313/CTK/2012 5 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 13.08.2012 . 2. DATE ON WHI CH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1 4 .08.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK (MONDAY) 27.08.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. T HE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..