ITO, Faridabad V. M/s National Containers Services, Faridabad

ITA 3364/DEL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1827 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 09-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 28-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJANA
• Assessee Lawyers: SHYAM SUNDER MANGLA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI R.S. SYAL, AM & SHRI C.M. GARG, JM ITA NO.3364/DEL/2011 ASSESSMENT YEAR : 2005-06 ITO, WARD-1(5), BLOCK I-B, CGO COMPLEX, NH-4, FARIDABAD. VS. NATIONAL CONTAINERS SERVICES, SHOP NO.57, 1 ST FLOOR, BATA FLYOVER, SOHNA ROAD, BALLABGARH, FARIDABAD. PAN: AAEFN0422D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHYAM SUNDER MANGLA, CA DEPARTMENT BY : SHRI P. DAM KANUNJANA, SR. DR DATE OF HEARING : 09.12.2015 DATE OF PRONOUNCEMENT : 10.12.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 6.4.2011 IN RELATION TO THE ASSESSMEN T YEAR 2005-06. ITA NO.3364/DEL/2011 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.12,03,615/- AND RS.1,53,238/-. 3. BRIEFLY STATED, THE FACTS OF THE DELETION OF ADD ITION OF RS.12,03,615 ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF `TRANSPORT. DURING THE YEAR UNDER CONSIDERATION, TOTAL RECEIPTS FROM F REIGHT WERE SHOWN AT RS.1,20,36,149/- INCLUDING LABOUR DETENTION CHARGES OF RS.1,53,238/-. NET PROFIT WAS COMPUTED AND SHOWN AT RS.25,879/-. THE AO GAVE VARIOUS OPPORTUNITIES TO THE ASSESSEE FOR PRODUCING BOOKS OF ACCOUNT AND DETAILS OF EXPENSES WHICH THE ASSESSEE FAILED TO AV AIL. THE AO, THEREFORE, APPLIED NET PROFIT RATE OF 10% ON THE GR OSS RECEIPTS SHOWN BY THE ASSESSEE AT RS.1,20,36,149/-. THIS RESULTED IN COMPUTATION OF INCOME FROM BUSINESS AT RS.12,03,615/-. THE LD. CIT(A) RE DUCED THE NET PROFIT RATE TO 2% AS AGAINST 10% APPLIED BY THE AO. THE RE VENUE HAS COME UP IN APPEAL BEFORE US. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS FOUND AS AN ADMITTED POSI TION THAT THE ASSESSEE DID NEITHER PRODUCE PROPER BOOKS OF ACCOUNT BEFORE THE AO NOR ANY ITA NO.3364/DEL/2011 3 EVIDENCE TO SUPPORT THE GENUINENESS OF EXPENSES CLA IMED. IN SUCH CIRCUMSTANCES, THE RECOURSE TO THE BOOKS OF ACCOUNT S FOR COMPUTING BUSINESS INCOME WAS OUT OF QUESTION. THE AO SIMPLY APPLIED NET PROFIT RATE OF 10% WITHOUT ANY BASIS, WHICH THE LD. CIT(A) REDUCED TO 2% AGAIN ON AD HOC . THIS SHOWS THAT BOTH THE LOWER AUTHORITIES HAVE PROCEEDED ON ESTIMATION OF INCOME DEVOID OF ANY LEG ALLY SUSTAINABLE BASIS. THE ASSESSEE IS INDISPUTABLY ENGAGED IN THE BUSINESS OF PLYING VEHICLES ON HIRE. WHEN THE CIRCUMSTANCES ARE SUCH THAT NO BOOKS OF ACCOUNT ARE MAINTAINED AND THE ASSESSEE WHO OWNS NO T MORE THAN TEN GOODS CARRIAGES, CAN SEEK TO BE GOVERNED BY THE SPE CIAL PROVISION CONTAINED IN SECTION 44AE OF THE ACT FOR COMPUTING PROFITS AND GAINS OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAG ES. SUB-SECTION (1) OF THIS SECTION STARTS WITH A NON-OBSTANTE CLAUSE AND PROVIDES THAT THE INCOME OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' SHALL BE DEEMED TO BE THE AGGREGATE OF THE PROFITS AND GAINS, FROM ALL THE GOODS CARRIAGES OWNED BY HIM IN THE PREVIOUS YEAR, COMPUTED IN ACCORDANCE WITH THE PROV ISIONS OF SUB- SECTION (2). IN TURN, SUB-SECTION (2) CONTAINS A ME ASURE FOR COMPUTING ITA NO.3364/DEL/2011 4 INCOME CHARGEABLE UNDER THIS SECTION. ON A SPECIFI C QUERY, THE LD. AR DID NOT READILY HAVE INFORMATION ABOUT THE NUMBER O F VEHICLES USED BY THE ASSESSEE IN THE TRANSPORT BUSINESS. BOTH THE S IDES AGREED THAT THEY WILL HAVE NO OBJECTION IF THE `BUSINESS INCOME IS COMPUTED IN TERMS OF SECTION 44AE IRRESPECTIVE OF THE NUMBER OF VEHICLES . UNDER THE GIVEN CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER ON T HIS SCORE AND REMIT THE MATTER TO THE FILE OF THE AO FOR COMPUTING INCO ME FROM THE ASSESSEES BUSINESS IN TERMS OF SECTION 44AE OF THE ACT. HOWEVER, IN NO CASE, THE INCOME SHOULD BE ALLOWED TO GO BELOW THE AMOUNT AS COMPUTED BY THE LD. CIT(A). 5. THE OTHER ASPECT OF THE ISSUE RAISED IN THIS APP EAL IS AGAINST THE DELETION OF ADDITION OF RS.1,53,238/- WHICH WAS SHO WN BY THE ASSESSEE IN ITS INCOME & EXPENDITURE STATEMENT AS: LABOUR D ETENTION CHARGES. THE LD. CIT(A) CHOSE NOT TO MAKE ANY SEPARATE ADDIT ION OF RS.1,53,238/- ON THE PREMISE THAT IT WAS PART OF THE INCOME FROM BUSINESS OF TRANSPORT. THIS FINDING RECORDED BY THE LD. CIT(A) HAS NOT BEE N CHALLENGED BY THE LD. DR. ITA NO.3364/DEL/2011 5 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT `LABOUR DETENTION CHARGES ARE ADMITTEDLY AN INTEGRAL PART OF RECEIPTS FROM FREIGH T AT A TOTAL SUM OF RS.1,20,36,149/- AS HAS BEEN AGREED BY THE LD. DR. SINCE WE HAVE DIRECTED THE AO TO APPLY THE PROVISIONS OF RULE 44A E, THERE CANNOT BE ANY SEPARATE ADDITION FOR SUCH `LABOUR DETENTION CH ARGES WHICH ARE PART AND PARCEL OF THE BUSINESS OF PLYING OF GOODS CARRI AGES. WE, THEREFORE, APPROVE THE VIEW TAKEN BY THE LD. CIT(A) ON THIS IS SUE. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.12.201 5. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 10 TH DECEMBER, 2015. DK ITA NO.3364/DEL/2011 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.