DCIT, Jaipur V. RISHABH CONSTRUCTION PVT. LTD., Jaipur

ITA 498/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5589 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 03-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM KASHYAP
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Depreciation

Judgement Text

ITA NO. 498/JP/2014 THE DCIT, CENTRAL CIRCLE- 1, JAIPUR VS. M/S. RISHABH CONSTRUCTION (P) LTD. 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE:SHRI R.P.TOLANI, JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA-@ ITA NO. 498/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 THE DCIT CENTRAL CIRCLE- 1 JAIPUR CUKE VS. M/S. RISHABH CONSTRUCTION (P) LTD. S-53-54, SHOPPING CENTRE, JANTA COLONY, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCR 0445 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI PURSHOTTAM KASHYAP, ADDL. CIT - DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13 /01/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)- JODHPUR (CAMP AT JAIPUR ) DATED 30-04-2014 FOR THE ASSESSMENT YEAR 2007- 08 RAISING THEREIN SOLITARY GROUND AS UNDER:- (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) (CENTRAL), JODHPUR HAS ERRE D IN DIRECTING THE AO TO ALLOW THE CLAIM OF INTEREST AND DEPRECIATION OUT OF NET PROFIT ESTIMATED AT THE RATES OF 8% AS T HE APPLICATION OF NET PROFIT TAKES CARE OF ALL DEDUCTIONS INCLUDIN G INTEREST AND DEPRECIATION. ITA NO. 498/JP/2014 THE DCIT, CENTRAL CIRCLE- 1, JAIPUR VS. M/S. RISHABH CONSTRUCTION (P) LTD. 2 2.1 DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE CONTENDS THAT BOOKS OF ACCOUNT OF THE ASSESSEE STAN DS REJECTED U/S 145(3) OF THE ACT. THE AO MADE ESTIMATE OF NET PROFIT @ RATE OF 8% WITHOUT ALLOWING THE CLAIM OF DEPRECIATION AND FINANCE EXPENSES WHIC H HAVE BEEN REGULARLY ALLOWED TO THE ASSESSEE IN EARLIER YEARS. 2.2 THE LD. CIT(A) ACCORDED IMPUGNED RELIEF BY FOLL OWING OBSERVATION. 7.1 AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS APPLIED THE NET PROFIT RATE O F 8% ON CONTRACT RECEIPT OF RS. 32,61,13,998/- AND FURTHER HE DID NOT ALLOW THE CLAIM OF DEPRECIATION OF RS. 39,61,991/- AND FINANCE CHARGES OF RS. 1,21,45,138/-, THEREBY ASSESSED THE TOTAL INCOME AT RS. 72,87,664/- AS AGAINST NIL INCOME SHOWN BY T HE APPELLANT. IT IS THE CONSISTENT OPINION OF BOTH MY LD. PREDECESSOR AS WELL AS HONBLE ITAT JAIPUR BENCH, THE NET PROFI T RATE OF 8% SHOULD BE APPLIED IN THE APPELLANTS CASE TO WORK T HE NET PROFIT BUT SAME HAS TO BE APPLIED BEFORE DEPRECIATION AND OTHER FINANCE CHARGES. IN THIS REGARD, FINDING GIVEN BY M Y LD. PREDECESSOR IN JUST IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2006- 07 WOULD BE RELEVANT, WHICH ARE AS UNDER: - AFTER REJECTING THE BOOKS OF ACCOUNT, IT IS TO BE DECIDED THAT WHAT SHOULD BE ESTIMATED NET PROFIT RATE. SINC E, IN THIS CASE THE APPELLANT HAS SHOWN NET PROFIT RATE OF 7.68% BE FORE THE CLAIM OF INTEREST AND DEPRECIATION THEREFORE, KEEPI NG IN VIEW THE VARIOUS PATENT AND GLARING DEFECT IN THE BOOKS OF A CCOUNT IN MY CONSIDERED VIEW IT SHALL BE JUSTIFIABLE TO ADOPT NE T PROFIT RATE OF 8% BEFORE INTEREST AND FINANCIAL EXPENSES. THE ABOVE FINDINGS OF MY PREDECESSOR HAD FURTHER BE EN CONFIRMED BY HON'BLE ITAT JAIPUR BENCH, JAIPUR IN I TA NO. 581/JP/2009 BY OBSERVING THAT THEREFORE, IN VIEW OF THE ABOVE, ITA NO. 498/JP/2014 THE DCIT, CENTRAL CIRCLE- 1, JAIPUR VS. M/S. RISHABH CONSTRUCTION (P) LTD. 3 WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY APPLIED 8% NET PROFIT RATE BEFORE INTEREST AND FINANCIAL EXPENSES IN THE TOTAL CONTRACT RECEIPT. 7.2 SINCE THERE IS NO CHANGE IN THE BUSINESS WHICH BEING CARRIED OUT IN EARLIER, THEREFORE, THERE IS N O JUSTIFICATION FROM ANY DIVERSION FROM THE ABOVE FINDINGS. SO THE ASSESSING OFFICER IS DIRECTED TO APPLY NET PROFIT RATE OF 8% BEFORE INTEREST AND FINANCIAL CHARGES. IT WOULD BE MADE CLEAR THAT INTEREST AND DEPRECIATION IS TO BE ALLOWED FROM THE INCOME ASSES SED. THEREFORE, THE GROUND NO. 1 IS PARTLY ALLOWED AND G ROUND NO. 1.1 IS ALLOWED. 2.3 THUS THE LD. CIT(A) FOLLOWED THE EARLIER ORDERS OF THE ITAT IN ASSESSEE'S OWN CASE AS UNDER:- A.Y PERCENTAGE ALLOWED BY ITAT 2000-01 & 2001-02 ITAT ACCEPTED THE RESULT DECLARED BY THE ASSESSEE AT 6.56% BEFORE DEPRECIATION AND FINANCIAL CHARGES AND DIRECTED TO ALLOW THE SAME. 2003-04 & 2004-05 ITAT UPHELD THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE AND THE ADDITIONS HAD BEEN DELETED. 2005-06 ITAT ACCEPTED THE NET PROFIT RATE OF 6.978% OF THE CONTRACT RECEIPTS SUBJECT TO ALLOWABLE DEPRECIATION AND FINANCIAL EXPENSES. 2006-07 ITAT UPHELD THE ORDER OF THE LD. CIT(A) HOLDING NET PROFIT RATE AT 8% AND ALLOWING DEPRECIATION AND FINANCIAL CHARGES. SINCE THE LD. CIT(A) WHILE DECIDING THE APPEAL OF A SSESSMENT YEAR 2006-07 HAS FOLLOWED THE ORDER OF ITAT AND THERE IS NO INFI RMITY IN HIS ORDER. ITA NO. 498/JP/2014 THE DCIT, CENTRAL CIRCLE- 1, JAIPUR VS. M/S. RISHABH CONSTRUCTION (P) LTD. 4 2.4 THE LD. DR IS HEARD. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. CIT(A) HAS PASSED THE IMPUGNED ORDER FOLLOWING THE ITAT ORDER IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2006-07. CONSEQUENTLY, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS UPHELD. THUS SOLITARY GROUND OF THE REVENU E IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/01/2016. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER FNUKAD@ DATED:- 13 /01/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CENTRAL CIRCLE- 1, JAIPU R 2. IZR;FKHZ@ THE RESPONDENT- M/S. RISHABH CONSTRUCTION (P) LTD. JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.498/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR