DCIT, Agra V. M/s Mago Construction Pvt.Ltd, Agra

ITA 326/AGR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7084 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 21-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 326/AGRA/2009 ASSTT. YEAR : 2003-04 D.C.I.T. 4 (1), AGRA . VS. M/S. MAGO CONSTRUCTIO N PVT. LTD., 14, KISHANGARH, IDGAH, AGRA. (PAN : AABCM 3946 M) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI VINOD KUMAR, JR. D.R. FOR RESPONDENT : SHRI SAHIB P. SATSANGEE, C.A. ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 29.05.2009 BY TAKING FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE N.P. RATE 10% TO 6.75% ON THE GROUNDS OF PAST HISTORY AN D INCREASING TURNOVER OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE AND IGNORING THE FINDINGS OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR A.Y. 200 1-02. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITIONS OF RS.65,155/- MADE ON ACCOUNT OF SALE OF CAR AND OF RS.1,08,341/- ON ACCOUNT OF INTEREST ON FDRS IGNORING THE FACT MENT IONED IN THE BODY OF THE ASSESSMENT ORDER. 2. GROUND NO. 1 RELATES TO REDUCING OF THE NET PROF IT RATE FROM 10% TO 6.75%. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSIN G OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S. 145(3) WHICH WAS CONFIRMED BY THE CIT (A). AGAINST THE REJECTION OF BOOKS OF ACCOUNTS, THE ASSESSEE HAS NOT COME IN APPEAL. THE ASSESSING OFFICER ESTIMATED THE GROSS PROFIT 2 @ 10% SUBJECT TO DEPRECIATION AND FINANCE CHARGES. HE ALSO ADDED THE INTEREST INCOME ON FIXED DEPOSITS AS WELL AS PROFIT ON SALE OF CAR SEPARATEL Y. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). T HE CIT(A) REDUCED THE GROSS PROFIT RATE FROM 10% TO 6.75% BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE AOS ORDER, THE ARS SUBMISS IONS AND THE FACTS OF THE CASE. THE APPELLANT HAS CONDUCTED WORK FOR THE MES DEPARTMENT WHEREIN FAIRLY STRINGENT VERIFICATION MEASURES HAVE BEEN LA ID DOWN SUCH AS CHECKING OF MATERIAL, LABOUR PAYMENTS ETC. HOWEVER, THE APPELLA NT HAS NOT BEEN ABLE TO PRODUCE ALL THE BOOKS AND RECORDS BEFORE THE ASSESS ING OFFICER AND I UPHOLD THE APPLICATION OF THE PROVISIONS OF SECTION 145(3) BY HIM. HOWEVER, LOOKING INTO THE PAST HISTORY OF THE APPELLANT AND THE FACT THAT THE CONTRACT RECEIPTS HAVE SUBSTANTIALLY INCREASED OVER THE EARLIER YEARS IT W OULD BE JUSTIFIABLE TO APPLY A NET PROFIT RATE OF 6.75% SUBJECT TO DEPRECIATION AND FI NANCIAL CHARGES AS ALREADY ALLOWED BY THE AO. THIS GROUND OF APPEAL IS, THEREF ORE, PARTLY ALLOWED. 4. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE PART IES AND HAVE CONSIDERED THE SAME. WE NOTED FROM THE CHART OF GROSS PROFIT FILED BY THE L EARNED AR , WHICH IS AVAILABLE AT PAGE 1 OF THE PAPER BOOK AND THE ORDER OF THE TRIBUNAL IN ITA NO .93/AGRA/2002 FOR THE ASSESSMENT YEAR 1998-99 IN THE CASE OF ASSESSEE, THAT IN THE ASSESS MENT YEAR 1998-99, THIS TRIBUNAL DELETED THE ADDITION MADE IN RESPECT OF GROSS PROFIT, AS THE AS SESSEE HAS RETURNED THE PROFIT @ 7.78%. THE OTHER INCOME HAS SEPARATELY BEEN ADDED. IN THE ASSE SSMENT YEAR 2004-05, THE ASSESSING OFFICER HAS APPLIED THE RATE OF 10%, BUT THE CIT(A) HAS RED UCED IT TO 6% SUBJECT TO DEPRECIATION AND FINANCE CHARGES. THE ADDITION IN RESPECT OF OTHER I NCOME, INTEREST ON FDRS AND SALE OF WASTE MATERIAL WERE ADDED SEPARATELY. IN VIEW OF THIS FAC T, WE ARE OF THE OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) IN REDUCING THE N ET PROFIT RATE FROM 10% TO 6.75% SUBJECT TO DEDUCTION OF DEPRECIATION AND FINANCE CHARGES. BUT WE MAY POINT OUT THAT INTEREST ON FIXED 3 DEPOSITS HAS TO BE ADDED SEPARATELY AMOUNTING TO RS .1,08,341/-. THE NET PROFIT RATE OF 6.75% WILL NOT BE APPLICABLE TO INTEREST ON FDRS. TO THAT EXTE NT, THIS GROUND OF REVENUE IS PARTLY ALLOWED. 5. SECOND GROUND RELATES TO THE DELETION OF ADDITIO N OF RS.65155/- MADE ON ACCOUNT OF SALE OF CAR. THE ASSESSEE HAS CREDITED PROFIT ON THE SAL E OF CAR AMOUNTING TO RS.65,155/- BEING SURPLUS OVER THE BOOK VALUE OF CAR. THE CAR IS BUSINESS ASS ET AND IS DEPRECIABLE. THE ASSESSING OFFICER ADDED THE PROFIT AND APPLIED THE NET PROFIT ON THE SAME ALSO. THE CIT(A) DELETED THE ADDITION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE NOT ED ON THE BASIS OF THE WORKING GIVEN BY THE ASSESSEE THAT THE BLOCK RELATED TO THE CAR SINC E NO MORE REMAINS IN EXISTENCE AND THE CAR HAD WRITTEN DOWN VALUE AT RS.2,31,837/-. IT WAS SOLD FO R RS.2,30,000/- DURING THE YEAR. THUS, THE ASSESSEE INCURRED LOSS OF RS.1837.81. THE PROFIT ON THE SALE OF CAR, THEREFORE, HAS TO BE EXCLUDED WHILE COMPUTING THE INCOME FROM BUSINESS AMOUNTING TO RS.65,155/-. THE ASSESSEE HAS RIGHTLY EXCLUDED THE SAME PROFIT FROM THE SALE OF CAR. IN O UR OPINION, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND, THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE. 7. THE NEXT ISSUE IN GROUND NO. 2 TAKEN BY THE REVE NUE RELATED TO THE INTEREST ON FDR. THE ASSESSING OFFICER ADDED THE INTEREST ON FDR OF RS.1 ,08,341/- SEPARATELY WITH THE PRESUMPTION AS IF IT HAS NOT BEEN ACCOUNTED FOR IN THE PROFIT AND LOSS ACCOUNT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) NOTED THAT THE ASSESSEE HAS SHOW N NET BANK INTEREST IN THE PROFIT AND LOSS ACCOUNT AMOUNTING TO RS.1,25,503/-. THUS, THE INTER EST RECEIVED BY THE ASSESSEE AMOUNTING TO RS.1,08,341/- STANDS DULY CREDITED IN THE BOOKS OF ASSESSEE. THE REVENUE BEING AGGRIEVED HAS COME IN APPEAL BEFORE US. 4 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THE SAME. WE NOTED THAT THE CIT(A) HAS GIVEN FINDING OF FACT. NO CONTRARY EVIDENCE WAS BROUGHT ON RECORD OR PRODUCED BEFORE US BY THE LD. DR, WHICH MAY PROVE THAT THE ASSESSEE HAS N OT CREDITED THE INTEREST ON FDR IN HIS BOOKS. IN VIEW OF THIS, NO INTERFERENCE IS CALLED FOR. THU S, THIS GROUND OF REVENUE STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 8.4.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH APRIL, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY