BBG Construction, Kolkata V. ITO, Ward - 33(2), Kolkata , Kolkata

ITA 500/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1834 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 22-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SOURAV KUMAR
• Keywords: Business income; Tax effect
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE SHRI P.M. JAGTAP, AM] I.T.A. NO. 500/KOL/2018 ASSESSMENT YEAR : 2012-13 BBG CONSTRUCTION..............................APPELLANT 2/1, BALLAV STREET, SHYAMBAZAR, KOLKATA 700 004. [PAN : AADFB 4960 D] ITO WARD 33(2) KOLKATA.....................RESPONDENT 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA 700 071. APPEARANCES BY: SHRI ANIL KOCHAR, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI SOURAV KUMAR, ADDL. CIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 24, 2018 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 05, 2018 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS) 13, KOLKATA DATED 19.01.2018 AND THE SOLITARY ISSUE INVOLVED THEREIN AS PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE THE TRIBUNAL RELATES TO THE ADDITION MADE BY THE A.O. BY CONSIDERING THE INTEREST INCOME OF RS. 5,46,890/- SEPARATELY AND NOT AS THE PART OF TOTAL TURNOVER WHILE COMPUTING THE INCOME OF THE ASSESSEE ON ESTIMATED BASIS BY APPLYING A NET PROFIT RATE. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM WHICH IS CARRYING ON THE BUSINESS AS A CIVIL CONTRACTOR. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.09.2012 DECLARING A TOTAL INCOME OF RS. 7,02,890/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, CERTAIN SPECIFIC DEFECTS WERE POINTED OUT BY THE A.O. IN THE BOOKS OF ACCOUNT AND OTHER RECORD MAINTAINED BY THE 2 I.T.A. NO. 500/KOL/2018 A.Y. 2012-13 BBG CONSTRUCTION ASSESSEE. ACCORDINGLY, HE REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME OF THE ASSESSEE FROM CONTRACTING BUSINESS BY APPLYING A NET PROFIT OF 8% ON THE TOTAL CONTRACT RECEIPTS OF RS. 1,22,92,342/-. THE INTEREST INCOME ON FDR AMOUNTING TO RS. 5,46,890/- HOWEVER WAS NOT CONSIDERED BY THE A.O. AS PART OF THE CONTRACT RECEIPTS AND THE SAME WAS ADDED BY HIM SEPARATELY WHILE DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 13,80,414/- VIDE AN ORDER DATED 10.11.2014 PASSED U/S 144 OF THE ACT. ON APPEAL, THE LD. CIT(A) UPHELD THIS ACTION OF THE A.O. BY OBSERVING THAT THE ASSESSEE COULD NOT ESTABLISH ANY NEXUS BETWEEN THE INTEREST INCOME ON FDR AND ITS BUSINESS. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PROPOSED ESTIMATION OF INCOME BY THE A.O. BY APPLYING A NET PROFIT RATE OF 8% WAS ACCEPTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE ASSUMPTION THAT THE INTEREST INCOME ON FDR WOULD BE CONSIDERED AS PART OF ITS BUSINESS TURNOVER. HE HAS CONTENDED THAT THE INVESTMENT IN FDR WAS MADE BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS AND THIS POSITION HAS BEEN ACCEPTED BY THE LD. CIT(A) WHILE DISPOSING THE APPEAL OF THE ASSESSEE FOR A.Y. 2010-11. HE HAS POINTED OUT THAT THE DECISION OF THE LD. CIT(A) FOR A.Y. 2010-11 ON THIS ISSUE HAS BEEN ACCEPTED BY THE DEPARTMENT. THE LEARNED DR, ON THE OTHER HAND, HAS CONTENDED THAT HE IS NOT AWARE OF THE DECISION OF THE LD. CIT(A) ON A SIMILAR ISSUE FOR 2010-11 WHICH MIGHT HAVE BEEN ACCEPTED BY THE DEPARTMENT DUE TO LOW TAX EFFECT. HE HAS POINTED OUT FROM THE RELEVANT PORTION OF THE 3 I.T.A. NO. 500/KOL/2018 A.Y. 2012-13 BBG CONSTRUCTION IMPUGNED ORDER OF THE LD. CIT(A) THAT THE ASSESSEE COULD NOT ESTABLISH ANY NEXUS BETWEEN THE INTEREST INCOME EARNED ON FDR AND ITS BUSINESS. KEEPING IN VIEW THE SUBMISSIONS MADE BOTH THE SIDES, I AM OF THE VIEW THAT THIS MATTER SHOULD GO BACK TO THE A.O. FOR GIVING THE ASSESSEE ONE MORE OPPORTUNITY TO ESTABLISH THE NEXUS BETWEEN THE INTEREST INCOME AND ITS BUSINESS SO AS TO SUPPORT AND SUBSTANTIATE ITS CLAIM THAT THE INTEREST INCOME SHOULD BE CONSIDERED AS PART OF THE BUSINESS TURNOVER FOR COMPUTING THE BUSINESS INCOME ON ESTIMATED BASIS BY APPLYING NET PROFIT RATE. ACCORDINGLY, I SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE.. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2018. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED: 05/09/2018 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. BBG CONSTRUCTION, 2/1, BALLAV STREET, SHYAMBAZAR, KOLKATA 700 004. 2. ITO WARD 33(2), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA