ACIT, Circle-2(2),Hyderabad, Hyderabad V. Hycons Infrastructure Ltd., Hyd, Hyderabad

ITA 518/HYD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0319 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Keywords: Business income; Revised return

Judgement Text

ITA NO.518 OF 2015 HYCON INFRASTRUCTURE LTD HYDERAB AD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.518/HYD/2015 (ASSESSMENT YEAR: 2010-11) ASSTT. COMMISSIONER OF INCOM E TAX, CIRCLE 2(2) HYDERABAD VS. M/S HYCONS INFRASTRUCTURES LIMITED HYDERABAD PAN: AACCA 8494 R (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAMAKRISHNA BANDI, D R FOR ASSESSEE : SHRI MOHD. AFZAL DATE OF HEARING : 21.07.2015 DATE OF PRONOUNCEMENT : 29 .07.2015 O R D E R PER SAKTIJIT DEY, J.M. THE AFORESAID APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 10.02.2015 OF THE LD CIT (A)-II, HY DERABAD DELETING THE ADDITIONS MADE ON ACCOUNT OF DISALLOWA NCE U/S 40(A)(IA) OF THE ACT FOR A.Y 2010-11. 2. BRIEFLY, THE FACTS ARE ASSESSEE IS ENGAGED IN TH E BUSINESS OF EXECUTION OF CIVIL CONTRACT WORKS. FOR THE A.Y UNDE R CONSIDERATION, ASSESSEE FILED ITS ORIGINAL RETURN O F INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF RS.73,55,880 U NDER THE NORMAL PROVISION AND RS.76,00,617 U/S 115JB. SUBSEQ UENTLY ASSESSEE FILED A REVISED RETURN OF INCOME ON 17.01. 2011 DECLARING INCOME OF RS.81,37,410 UNDER NORMAL PROVISIONS AND BOOK PROFIT AT RS.79,91,356 U/S 115JB. ITA NO.518 OF 2015 HYCON INFRASTRUCTURE LTD HYDERAB AD PAGE 2 OF 4 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO PRODUCE ITS BOOKS OF AC COUNTS, BILLS/VOUCHERS ETC., HOWEVER, AS OBSERVED BY HIM, T HOUGH REPRESENTATIVE OF ASSESSEE APPEARED, BUT HE DID NOT PRODUCE BOOKS OF ACCOUNTS BILLS/VOUCHERS. THEREFORE, AO FIN DING NO OTHER ALTERNATIVE, PROCEEDED TO COMPLETE THE ASSESSMENT T O THE BEST OF HIS JUDGMENT BY ESTIMATING THE PROFIT OF ASSESSEES CONTRACT BUSINESS BY APPLYING THE RATE OF 12.5%. WHILE DOING SO, AO ALSO MADE DISALLOWANCE U/S 40(A)(IA) FOR NON DEDUCTION O F TAX AT SOURCE ON VARIOUS PAYMENTS MADE BY THE ASSESSEE WHI CH ACCORDING TO THE AO WAS SUBJECT TO TDS. ACCORDINGLY HE MADE DISALLOWANCE OF RS.12,12,85,756. 4. BEING AGGRIEVED OF SUCH DISALLOWANCE, ASSESSEE P REFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. IN COU RSE OF HEARING OF THE APPEAL, IT WAS CONTENDED BY THE ASSESSEE THAT O NCE AO REJECTS THE BOOK RESULTS AND PROCEEDS TO ESTIMATE T HE PROFIT BY APPLYING CERTAIN PERCENTAGE, IT IS NOT OPEN FOR HIM TO MAKE OTHER STATUTORY DISALLOWANCES LIKE DISALLOWANCE U/S 40(A) (IA) OF THE ACT. IN SUPPORT OF SUCH CONTENTION, ASSESSEE RELIED UPON THE DECISION OF THE HON'BLE AP HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT (232 ITR 76). OF COURSE, ASSESSEE RELYING U PON A DECISION OF ITAT IN ITS OWN CASE ALSO CHALLENGED THE RATE OF PROFIT ADOPTED BY AO. ON THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE LD CIT (A) CALLED FOR A REMAND REPORT FROM THE AO. AS OBSERVED BY THE LD CIT(A), IN THE REMAND REPORT AO OBSERVED THA T IN ACCORDANCE WITH THE JUDICIAL DISCIPLINES, THE ISSUE MAY BE DECIDED BY FOLLOWING THE DECISION OF THE HON'BLE JU RISDICTIONAL HIGH COURT. THUS, ON THE BASIS OF THE SUBMISSIONS M ADE BY THE ITA NO.518 OF 2015 HYCON INFRASTRUCTURE LTD HYDERAB AD PAGE 3 OF 4 ASSESSEE AND ALSO THE COMMENTS OF THE AO IN THE REM AND REPORT, LD CIT (A) DELETED THE ADDITION MADE U/S 40(A)(IA) OF THE ACT WITH THE FOLLOWING OBSERVATIONS: 10. THE REVISED GROUND NO.2 PERTAINS TO ESTIMATING OF PROFIT AND THE REVISED GROUND NO.3 PERTAINS TO MAKI NG ADDITION OF RS.12,12,85,756 U/S 40(A)(IA). THE ORDE R OF THE AO, SUBMISSIONS OF THE APPELLANT, REMAND REPORT AND ORDER OF THE HON'BLE ITAT WERE GONE THROUGH. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE ITAT, HYDERABAD IN APPELLANT'S OWN CASE, THE GROUNDS OF APPEAL NO..2 AND 3 OF REVISED GROUNDS OF APPEAL ARE ALLOWED. THE AD IS DIRECTED TO ALLOW THE SAME FOLLO WING THE DECISION OF HON'BLE ITAT, HYDERABAD. HOWEVER, AFTER DUE EXAMINATION OF THE OTHER INCOME OF RS.LL,11,675/- WHICH THE APPELLANT HAS SOUGHT TO CL AIM O;':--DSS RECEIPT IS NOT ACCEPTABLE UNDER BUSINESS INCOME. THE APPELLANT HAD NOT FURNISHED ANY DETAILS EITHER AT AO LEVEL [AS BROUGHT OUT IN 5.3.2 OF AO S REMAND REPORT ON PAGE 5 OF THIS ORDER] OR AT THE APPELLATE LEVEL. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. ON A PERUSAL OF TH E ASSESSMENT ORDER, IT IS EVIDENT THAT AFTER REJECTING THE BOOKS OF ACCOUNTS AO HAS PROCEEDED TO ESTIMATE THE PROFIT OF THE ASSESSE E AT 12.5%. THE LD CIT (A) TAKING INTO NOTE THE FACT THAT IN AS SESSEES OWN CASE FOR A.Y 2006-07, THE ITAT FOLLOWING THE DECISI ON OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF IN DWELL CONSTRUCTIONS VS. CIT (SUPRA) HAS DIRECTRED TO ESTI MATE THE PROFIT AT 8% AND NOT TO MAKE SEPARATE DISALLOWANCE U/S 40( A)(IA) OF THE ACT AFTER ESTIMATION OF INCOME HAS DELETED THE ADDI TION U/S 40(A)(IA). ON A CAREFUL READING OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF INDWELL CONSTR UCTIONS VS. CIT (SUPRA), IT IS NOTED THAT THE HON'BLE HIGH COURT HA S HELD THAT ONCE ASSESSEES BOOKS OF ACCOUNTS ARE REJECTED AND PROFIT IS ITA NO.518 OF 2015 HYCON INFRASTRUCTURE LTD HYDERAB AD PAGE 4 OF 4 ESTIMATED AT A CERTAIN PERCENTAGE, THEN THE ALLOWANCES/DISALLOWANCES REQUIRED TO BE MADE ARE DE EMED TO HAVE BEEN MADE. IN OTHER WORDS, ONCE PROFIT IS EST IMATED AFTER REJECTING BOOKS OF ACCOUNTS, IT TAKES CARE OF ALL ALLOWANCES/DISALLOWANCES, HENCE THERE IS NO NEED FO R ALLOWING FURTHER DEDUCTION OR MAKING SEPARATE DISALLOWANCES. IN FACT, THE AO HIMSELF IN THE REMAND REPORT HAS ACCEPTED THE AF ORESAID LEGALPOSITION. THAT BEING THE CASE, THE DECISION OF THE LD CIT (A) BEING IN CONSONANCE WITH THE PRINCIPLES LAID DOWN B Y THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CO NSTRUCTIONS VS. CIT (SUPRA) AS ALSO THE DECISION OF THE ITAT IN ASS ESSEES OWN CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A). ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD CIT (A) BY DISMISSING THE GROUNDS. 6. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. S D/ - S D/ - (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH JULY, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 2(2) HYDER ABAD 2. M/S HYCON INFRASTRUCTURE LTD., C/O SRI VISHAKA TIMB ER & SAW MILLS, S.Y NO.183, MASJID BAND, KONDAPUR, HYDER ABAD 500084 3. CIT(A) -2 HYDERABAD 4. CIT -2 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER