LATALA CONSTRUCTION CO., Jaipur V. ADDL. CIT, Jaipur

ITA 55/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5515 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Keywords: Business income; Depreciation; Rule of consistency
• Section: 143(3); 244A; 234B; 145

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 55/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. M/S LATALA CONSTRUCTION COMPANY, B-19, TRANSPORT NAGAR, JAIPUR. CUKE VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABFL 1873 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 114/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-5, JAIPUR. CUKE VS. M/S LATALA CONSTRUCTION COMPANY, B-19, TRANSPORT NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABFL 1873 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 195/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5, JAIPUR. CUKE VS. M/S LATALA CONSTRUCTION COMPANY, B-19, TRANSPORT NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABFL 1873 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT 2 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16/11/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/01/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. APPEALS FOR A.Y. 2009-10 ARE CROSS APPEALS ONE FI LED BY THE ASSESSEE AND THE ANOTHER BY THE REVENUE ARISE AGAIN ST THE ORDER DATED 27/11/2012 PASSED BY THE LD CIT(A)-II, JAIPUR AND A PPEAL FOR A.Y. 2011- 12 FILED BY THE REVENUE ARISES AGAINST THE ORDER DA TED 22/12/2014 PASSED BY THE LD CIT(A)-II, JAIPUR. THE EFFECTIVE GRO UNDS OF ALL THE THREE APPEALS ARE AS UNDER:- GROUNDS OF ASSESSEES APPEAL ITA NO. 55/JP/2013(AY 2009-10):- 1. THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE IN THE ORDER U/S 143(3) DATED 07/03/2008 ARE BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTIO N AND VARIOUS OTHER REASONS AND HENCE THE SAME KINDLY BE DELETED. 2.1 RS. 30,98,811:- THE LD CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN INVOKING SEC. 145(3) OF THE ACT. THE PROVISION SO INVOKED BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, THE SAME MAY KINDLY BE QUASHED. CONSEQUENTLY THE TRADING ADDITION OF RS. 30,98,811/- KINDLY BE DELETED IN FULL. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE 3 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT 2.2. RS. 30,98,811/-: THE LD CIT(A) FURTHER ERRED I N LAW AS WELL AS ON THE FACTS OF THE CASE IN APPLYING THE NP RATE OF 6.28% (AFTER DEPRECIATION, INTEREST & REMUNERATION TO PARTNERS) AS AGAINST NP RATE OF 5.16% DECLARED BY THE ASSESSEE AND 8% APPLIED BY THE A.O. (AFTER TO DEPRECIATION, INTEREST & REMUNERATION TO PARTNERS). THE ADDITION SO MADE AND PARTLY CONFIRMED BY THE LD CIT(A) IS TOTALLY CONTRAR Y TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITION MAY KINDLY BE DELETED IN FULL. 3. THE LD A.O. FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING INTEREST OF RS. 8,91,033/- U/S 234B OF THE ACT, INTEREST OF RS. 55,595/- U/S 234D OF THE ACT AND IN WITHDRAWING INTEREST GRANTED OF RS. 1,04,059/- U/S 244A OF THE ACT. THE APPELLANT TOTALLY DENIES ITS LIABILITY OF CHARGING. THE INTEREST SO CHARGED/WITHDRAWN, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. GROUND OF REVENUES APPEAL ITA NO. 114/JP/2013 (AY 2009-10):- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN:- (I) ADOPTING N.P. RATE OF 6.28% AS AGAINST THE N.P. RATE OF 8% APPLIED BY THE A.O. NOTWITHSTANDING THE FACT THAT REJECTION OF BOOKS OF ACCOUNT WAS UPHELD BY THE LD CIT(A). (II) TREATING THE INCOME FROM HIRE CHARGES & INTERES T AS PART OF P&L ACCOUNT AND NOT TREATING SEPARATELY AS INCOME FROM OTHER SOURCES. 4 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT GROUND OF REVENUES APPEAL ITA NO. 195/JP/2015 (AY 2011-12):- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING THE TRADING ADDITION OF RS. 19,46,824/- MADE BY THE A.O. BY APPLYING N.P. RTE OF 15%. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 19,46,289/- U/S 40(A)(IA) FOR N ON DEDUCTION OF TDS U/S 194H ON BANK GUARANTEE COMMISSION MADE BY THE A.O. 2. THE GROUND NO. 1 OF ASSESSEES APPEAL AS WELL AS R EVENUES APPEAL FOR A.Y. 2009-10 ARE REVOLVING AROUND REJECTION OF BOOKS U/S 145(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND APPL IED 8% NP RATE IN A.Y. 2009-10 AND 15% NP RATE IN A.Y. 2011-12 AND TH E REVENUES APPEALS IN BOTH THE ASSESSMENT YEARS ARE AGAINST DE LETION MADE BY THE LD CIT(A) AGAINST THE INCOME ASSESSED BY THE ASSESSI NG OFFICER. THE ASSESSEE IS A CIVIL CONTRACTOR. RETURN FOR A.Y. 200 9-10 WAS FILED ON 30/09/2009 AT RS. 1,43,29,880/- AND RETURN FOR A.Y. 2011-12 WAS FILED ON 29/09/2011 AT RS. 29,17,190. ALL THE CASES WERE S CRUTINIZED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT. IN A.Y. 20 09-10, THE LD ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAD SH OWN NET PROFIT OF RS. 1,43,29,883/- ON TURNOVER OF RS. 27,66,24,588/-. BE SIDES THIS THE ASSESSEE HAD SHOWN INCOME FROM HIRE CHARGED OF RS. 9 ,10,000/- AND 5 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT TRADE DISCOUNT OF RS.9,02,392/- IN TRADING ACCOUNT. IN A.Y. 2011-12, THE ASSESSEE HAD SHOWN NET PROFIT OF RS. 29,17,201 @ 3.4 % ON GROSS RECEIPT OF RS. 8,57,89,385/-. THE LD ASSESSING OFFIC ER FURTHER IN BOTH THE YEARS HAS HELD THAT THE ASSESSEE HAD NOT MAINTAINED DAY TO DAY STOCK REGISTER, CONSUMPTION REGISTER, OPENING AND CLOSING INVENTORY AND ALSO HAD NOT MAINTAINED ANY DETAILS, VOUCHERS, REGISTERS , PAYMENT SHEETS AND MUSTER ROLL. THE MANUFACTURING EXPENSES INCLUDE LABO UR WAGES, VARIOUS MATERIALS PURCHASED, TRANSPORTATION AND TRUCK. THE A SSESSEE HAD ALSO NOT MAINTAINED ANY SITEWISE RECORD IN RESPECT OF WORK CARRIED OUT BY IT AT DIFFERENT SITES DURING THE YEAR. IN ABSENCE OF STOC K REGISTER, IT IS NOT POSSIBLE TO VERIFY THE CONSUMPTION OF VARIOUS MATER IAL, LABOUR, WORK DONE, THEREFORE, THE NET PROFIT SHOWN BY THE ASSESSE E IN BOTH THE YEARS ARE NOT AMENABLE TO VERIFY. THE LD ASSESSING OFFICER ON THE BASIS OF DEFECTS POINTED OUT IN ASSESSMENT ORDER HAD HELD TH AT IN ASSESSEES CASE, NO CORRECT PROFIT CAN BE DEDUCED, THEREFORE, HE APPLIED SECTION 145(3) OF THE ACT AND PROPOSED 8% NP RATE FOR A.Y. 2009-10 AND 15% NP RATE FOR A.Y. 2011-12. IN A.Y. 2009-10, THE LD A SSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD SHOWN INTEREST INCOME OF RS. 19,73,753/- EARNED ON FDRS, WHICH HAS NOT BEEN SHOWN SEPARATELY BY IT. THE ASSESSEE HAD ALSO NOT FILED ANY DETAIL OF EX PENSES WHATEVER THE 6 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT INCOME SHOWN TO HAVE BEEN EARNED BY IT FROM RENT OF MACHINE, THEREFORE, THE AMOUNT OF RS. 9,10,000/- WAS ALSO ADD ED TO THE INCOME OF THE ASSESSEE SEPARATELY. BOTH THE INCOMES I.E. I NTEREST AND RENT FROM MACHINE WERE TREATED AS INCOME FROM OTHER SOURCES BY THE ASSESSING OFFICER. 2.1 IN A.Y. 2011-12, THE LD ASSESSING OFFICER HAD C OMPARED THE NET PROFIT RATE FOR A.Y. 2009-10 AND 2010-11 WITH A.Y. 2 011-12 AND ALSO ANALYSED THE EXPENDITURE CLAIMED BY THE ASSESSEE DU RING THE A.Y. 2011- 12, WHICH WAS FOUND BY HIM AT HIGHER SIDE. THE ASSESSE E HAS SHOWN INTEREST INCOME IN A.Y. 2011-12 AT RS. 6,27,176/-, WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES, WHICH HAS BEEN INCLUDED BY THE ASSESSEE IN BUSINESS RECEIPT. THE ASSESSING OFFICER FINALLY CALCULATED THE INCOME ON THE BASIS OF NET PROFIT @ 8%. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O IN A.Y. 2009-10 HAS HELD THAT BOOK RESULTS REJECTION U/S 145(3) FOR BOTH THE ASSESSMENT YEARS ARE NOT IN DISPUTE. THEREFORE, THE LD CIT(A) AP PROVED INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THEY FURTHE R HELD THAT THE 7 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT APPELLANT HAS SHOWN NET PROFIT RATE @ 5.16% ONLY IN A.Y. 2009-10 WHEREAS ON MUCH LESSER CONTRACT RECEIPT OF RS. 17,41 ,01,295/- IN A.Y. 2008-09, THE ASSESSEE HAD SHOWN NET PROFIT RATE @ 5. 14%, WHICH WAS 6.28% IN A.Y. 2007-08, WHICH WAS AFTER CLAIMING REDU CTION OF DEPRECIATION, INTEREST AND REMUNERATION TO THE PART NER. AFTER CONSIDERING VARIOUS CASE LAWS AND PAST HISTORY OF THE ASSESSEE, SHE APPLIED N.P. RATE OF 6.28% INSTEAD OF 5.16% SHOWN BY THE APPELLANT IN A.Y. 2009-10. AS MUCH HIGHER NP HAD BEEN DISCLOSED IN EARLIER YEAR O N LOWER CONTRACT RECEIPTS THAT TOO AFTER REDUCING/CONSIDERING DEPREC IATION, INTEREST AND REMUNERATION TO PARTNERS. THE ESTIMATION OF NET PRO FIT @ 6.28% IN A.Y. 2009-10 AFTER REDUCING/CONSIDERING DEPRECIATION, IN TEREST AND REMUNERATION TO THE PARTNERS AS IN CONSONANCE WITH T HE HONBLE ITATS ORDER IN THE CASE OF THE APPELLANT. THIS BRINGS NET PROFIT OF RS. 1,74,28,694/- AS AGAINST THAT SHOWN OF RS. 1,43,29,8 83/- BY THE APPELLANT IN A.Y. 2009-10 AND ALSO AGAINST THE PROF IT OF RS. 2,22,02,158/- CALCULATED BY THE ASSESSING OFFICER. THIS RESULT IN ADDITION OF RS. 30,98,811/- AND NO FURTHER DEDUCTION ON ACCO UNT OF DEPRECIATION, INTEREST AND REMUNERATION WAS ALLOWED. THIS NET PROFIT WAS ESTIMATED BY THE LD CIT(A) ON NET CONTRACT RECEIPT OF RS. 27,75,2 6,980/-, WHICH DID NOT INCLUDE HIRE CHARGES INCOME AND INTEREST INCOME TOTALING TO RS. 8 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT 28,53,755/- AND THIS NP HAD BEEN ESTIMATED BY HER WI TH REFERENCE TO THE NP SHOWN BY THE APPELLANT HIMSELF AFTER REDUCIN G DEPRECIATION, INTEREST AND REMUNERATION TO THE PARTNER. THE HIRE C HARGES AND INTEREST INCOME WAS TREATED AS INCOME FROM OTHER SOURCES BY T HE LD CIT(A) IN A.Y. 2009-10. 3.1 IN A.Y. 2011-12, THE LD CIT(A) HAS HELD THAT NE T PROFIT RATE OF 13.73% BEFORE DEPRECIATION, INTEREST AND REMUNERATI ON TO PARTNERS IN THIS YEAR IS ALMOST SAME AS IN A.Y. 2010-11, WHICH I S MUCH HIGHER THAN THE RATE OF 10.21% IN A.Y. 2009-10 AND 10.32% IN A. Y. 2008-09. IN VIEW OF THE HONBLE ITAT AND CIT(A) ORDER, THE BOOK R ESULT WERE ACCEPTED BY THE LD CIT(A), ACCORDINGLY ADDITION WAS D ELETED. 4. NOW IN A.Y. 2009-10, THE ASSESSEE IS AGAINST CONF IRMING THE ADDITION OF RS. 33,98,811/- CONFIRMED BY THE LD CIT (A) UNDER THE HEAD DISALLOWANCE OF PF & ESI FOR RS. 54,264/- WHEREAS RE VENUE IS AGAINST REDUCING THE NP RATE FROM 8% TO 6.28% AND TREATING THE INCOME FROM HIRE CHARGES AND INTEREST AS BUSINESS INCOME. IN A. Y. 2010-11, THE REVENUE WAS AGAINST NOT CONFIRMING THE ADDITION @ 15% NP RATE AND DISALLOWANCE U/S 40(A)(IA) AT RS. 19,46,279/- FOR NO N-DEDUCTION OF TAX U/S 194H OF THE ACT ON BANK GUARANTEE COMMISSION. TH E AR OF THE ASSESSEE HAS SUBMITTED FOR A.Y. 2009-10 THAT THE AS SESSEE HAS SHOWN 9 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT NP RATE @ 5.11% AFTER INTEREST, DEPRECIATION AND REM UNERATION TO THE PARTNER AS AGAINST NP RATE @ 5.09% IN PRECEDING YEAR I.E. A.Y. 2008-09. THE TURNOVER ALSO INCLUDED OVER RECEIPTS ON ACCOUNT OF TRADE DISCOUNT RECEIPT OF RS. 9,02,392/-, RENT OF MACHINE OF RS. 9 ,10,000/- AND INTEREST ON FDR RS. 19,43,753/-. HOWEVER, THE NP BEFORE INTER EST, DEPRECIATION AND REMUNERATION HAS BEEN WORKED OUT @ 10.24%. THE LD ASSESSING OFFICER REJECTED THE BOOK RESULT U/S 145(3) AND APP LIED NP RATE @ 8% AND ALSO HAD NOT BEEN ALLOWED DEDUCTION ON ACCOUNT O F INTEREST, DEPRECIATION AND REMUNERATION AND INTEREST ON FDR A ND RENT OF MACHINE WAS TREATED AS INCOME FROM OTHER SOURCES. HE HAS ALS O DISALLOWED RS. 54,264/- ON ACCOUNT OF DEPOSIT OF EMPLOYEES CONTRIB UTION TOWARDS PF U/S 36(V)(A). THE LD AR FURTHER SUBMITTED THAT WHEN B OOK RESULT IS REJECTED U/S 145(3) THEN THE LD ASSESSING OFFICER S HOULD HAVE ESTIMATED THE INCOME FAIRLY, SECTION 145 OF THE ACT DOES NOT CONFER BLIND POWER UPON THE ASSESSING OFFICER TO ESTIMATE THE INCOME O N WHATEVER FIGURE BUT THE PAST HISTORY OF THE CASE IS TO BE CONSIDERE D AND THIS ESTIMATION SHOULD NOT BE ARBITRARY, CAPRICIOUS AND WILD ESTIMAT ION. HE FURTHER ARGUED THAT THE HONBLE RAJASHTAN HIGH COURT IN THE CASE OF CIT VS. GOTAN LIME KHANIZ UDYOG (SUPRA), IF BOOKS ARE REJEC TED U/S 145, IT IS NOT NECESSARY THAT IN EACH AND EVERY CASE ADDITION IS REQUIRED TO BE 10 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT MADE. HE FURTHER RELIED ON THE DECISION IN THE CASE OF M/S RISHAB CONSTRUCTION (P) LTD. 38 TW 8 (JP) WHEREIN IT HAS BEE N HELD THAT TRADING RESULTS SHOULD NOT BE DISTURBED WHERE BOOK RESULTS ARE BETTER THAN THE LAST YEAR EVEN PROVISIONS OF SECTION 145 IS APPLICA BLE. HE FURTHER ARGUED THAT THE ASSESSEE TRADING RESULTS ARE BETTER THAN T HE LAST YEAR AS APPELLANT HAS SHOWN NET PROFIT @ 5.11% COMPARED TO 5. 09% INCLUDING INTEREST ON FDR AND RENT ON MACHINE AFTER INTEREST, SALARY AND DEPRECIATION. THE HONBLE ITAT HAS CONSIDERED THIS IS SUE IN ASSESSEES OWN CASE IN A.Y. 2007-08 IN ITA NO. 165/JP/2006 ORDE R DATED 21/09/2007. IN CASE OF ASSESSEE IN A.Y. 2007-08, TH E HONBLE ITAT HAS ALLOWED THE DEDUCTION OF INTEREST, DEPRECIATION AND REMUNERATION TO THE PARTNER, THE SAME IS APPLIED IN CASE OF NET PROFIT DECIDED BY THE LD CIT(A), INCOME WOULD BE LESS THAN RETURNED INCOME. THE REFORE, THE FINDING OF THE LD CIT(A) AT PAGE NO. 13 ON THIS ASP ECT IS FAIRLY INCORRECT AND ALSO HER OBSERVATION THAT ASSESSING OFFICER WAS NOT SPECIFIED ABOUT THE DECLARED NP RATE IN A.Y. 2007-08 AND THE APPELL ANT TRIED TO LOOK THAT THE DECLARED NP AS MUCH HIGHER, IS MISLEADING AND B ASELESS. THE LD AR FURTHER RELIED ON THE DECISION IN THE CASE OF CIT VS AMRAPALI JEWELS (P) LTD. (2012) 65 DTR 196 (RAJ.) FOR NET PROFIT RATE. H E FURTHER ARGUED THAT THE INTEREST INCOME OF RS. 19,43,753/- ON FDR AND R S. 9,10,000/- FROM 11 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT RENT OF MACHINE IS PART OF BUSINESS RECEIPT. THE FDR WERE PLACED WITH VARIOUS GOVERNMENT DEPARTMENTS. THE APPELLANT IS BOU ND TO FURNISH PERFORMANCE SECURITY AND TO PLACE VARIOUS FDRS ON A CCOUNT OF GUARANTEES. THE APPELLANT HAD DECLARED HIRE CHARGES INCOME AND INTEREST INCOME IN P&L ACCOUNT AS BUSINESS INCOME F OR LAST SEVERAL YEARS BY CHANGING THE HEAD INCOME FROM OTHER SOURCES, WOUL D DISTURB THE SIMPLICITY AND CONSISTENCY. THEREFORE, THE ADDITION CONFIRMED BY THE LD CIT(A) IS REQUIRED TO BE DELETED. 4.1 FOR A.Y. 2011-12, THE LD AR OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE HAS SHOWN NET PROFIT RATE OF 12.62% SUBJEC T TO INTEREST, DEPRECIATION AND REMUNERATION TO THE PARTNER AGAINS T NET PROFIT @ 13.44% SUBJECT TO DEPRECIATION, INTEREST AND REMUNE RATION. THE TURNOVER ALSO HAD INCLUDED RECEIPT ON ACCOUNT OF HI RE CHARGES AND INTEREST AND OTHERS. THE LD ASSESSING OFFICER REJECT ED THE BOOK RESULT U/S 145(3) OF THE ACT AND APPLIED NET PROFIT RATE @ 15% SUBJECT TO INTEREST. THE LD CIT(A) DELETED THE ADDITION BY FOLLOWING THE OR DER OF THE HONBLE ITAT AND LD CIT(A) IN PRECEDING YEAR. HE AGAIN REITE RATED THE SAME ARGUMENT MADE IN A.Y. 2009-10 IN FAIR ESTIMATION OF INCOME, THE ADDITION NEED NOT TO BE MADE EVEN SECTION 145 IS IN VOKED, BETTER RESULTS, BETTER RESULTS EVEN AVERAGE OF EARLIER YEA R TAKEN. THE CASE LAW 12 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT REFERRED BY THE ITO IS NOT COMPARABLE, THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 5. AT THE OUTSET, THE LD DR HEAVILY RELIED ON THE O RDER OF THE ASSESSING OFFICERS AND ARGUED THAT THE LD ASSESSING OFFICERS HAD CONSIDERED ALL THE ASPECTS AND BOOK RESULT AND ASSE SSEE HAS NOT CHALLENGED INVOKING THE PROVISIONS OF SECTION 145(3 ) OF THE ACT IN BOTH THE YEARS, THEREFORE, ORDER OF THE ASSESSING OFFICE R MAY PLEASE BE CONFIRMED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LD CIT(A) HAS CALCULATED NP RATE @ 6.28% ON GIVEN FACTS AND FIGUR ES BY THE ASSESSEE AGAINST 5.16% SHOWN IN THE YEAR UNDER CONSIDERATION . THE LD AR HAD NOT CONTROVERTED THE FINDING GIVEN BY THE LD CIT(A). THE LD AR HAD NOT CHALLENGED THE REJECTION OF BOOKS OF ACCOUNT, THERE FORE, BOOK RESULT CANNOT BE ACCEPTED AS SUCH. THE PAST HISTORY ALSO S HOWED THAT THE ASSESSEE HAD SHOWN MUCH MORE NP RATE EVEN ON HIGHER GROSS RECEIPTS. THE ASSESSEE IS A HABITUAL FOR NON-MAINTAINING PROPE R BOOKS OF ACCOUNT INCLUDING VOUCHERS AND STOCK REGISTER AS PER SITE WI SE AND DETAILS OF LABOUR CHARGES. THEREFORE, WE UPHOLD THE ORDER OF TH E LD CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 13 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT 6.1 IN A.Y. 2011-12, THE ASSESSING OFFICER HAD APPL IED NP RATE OF 15% AND THE ASSESSEE HAD SHOWN NP RATE BEFORE DEPRECIATI ON, INTEREST AND SALARY @ 13.73%. THE NP RATE DURING THE YEAR AFTER DE PRECIATION, INTEREST AND REMUNERATION TO PARTNER IS 3.4% WHEREAS THIS RATE WAS 5.28% IN PRECEDING YEAR, THEREFORE, THERE WAS A SUBS TANTIAL DECLINE IN NP RATE DURING THE YEAR. THE AR HAS NOT EXPLAINED TH IS REASON ALONGWITH EVIDENCE. MOREOVER, IN THE PRESENT CASE AS WELL AS T HERE IS REJECTION OF BOOKS OF ACCOUNT AND THE ASSESSEE HAS FAILED TO MAI NTAIN PROPER BOOKS OF ACCOUNT NAMELY STOCK REGISTER, LABOUR CHARGES RE GISTER, QUALITATIVE DETAILS AND RECORD OF THE INVOICES, THEREFORE, ON A CCOUNT OF RECORD HAS RIGHTLY BEEN REJECTED BY THE AUTHORITIES BELOW, CONS IDERING THE FACTS AND CIRCUMSTANCES, IN THE INTEREST OF JUSTICE, WE CONFIR M LUMP SUM ADDITION OF RS. 12 LACS AND ASSESSEE GET RELIEF OF RS. 7,46, 289/-. 6.2 ACCORDINGLY GROUND NO. 1 OF THE ASSESSEES APP EAL FOR A.Y. 2009- 10 IS DISMISSED AND GROUND NO. 1 OF THE REVENUES A PPEAL IN A.Y. 2011- 12 IS PARTLY ALLOWED. 7. GROUND NO. 3 OF THE ASSESSEES APPEAL FOR A.Y. 2 009-10 IS CONSEQUENTIAL IN NATURE, THEREFORE, NO ADJUDICATION IS REQUIRED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 14 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT 8. THE ASSESSEE HAS RAISED ADDITIONAL GROUND ON ADDI TION CONFIRMED BY THE LD CIT(A). THE ASSESSEE HAS TAKEN ANY GROUND BEFORE THE LD CIT(A) ON THIS ISSUE OF PAYMENT OF PF AND ESI AS CLE ARED FROM FORM NO. 35 FOR A.Y. 2009-10, THEREFORE, AT THIS STAGE, THE ASSESSEE IS NOT ENTITLED TO RAISE ADDITIONAL GROUND WITHOUT RAISING THIS ISSU E BEFORE THE LD CIT(A), WHICH IS ALSO NOT PERMITTED UNDER THE LAW. ACCORDING LY, THIS ADDITION GROUND RAISED BY THE ASSESSEE IS DISMISSED. 9. GROUND NO. 2 OF THE REVENUES APPEAL FOR A.Y. 20 11-12 IS AGAINST DELETING THE ADDITION OF RS. 19,86,289/- U/S 40(A)( IA) OF THE ACT, THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PA ID RS. 11,55,888/- AND RS. 7,90,401/- ON ACCOUNT OF BANK GUARANTEE COM MISSION. THE ASSESSEE HAD NOT DEDUCTED TDS ON SUCH PAYMENT U/S 19 4H AS PER ASSESSING OFFICER. HE GAVE REASONABLE OPPORTUNITY O F BEING HEARD ON THIS ISSUE. AFTER CONSIDERING THE ASSESSEES REPLY, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TDS AT THE TIME OF PAYMENT. SINCE THE ASSESSEE HAD FAILED TO DEDUCT SU CH AMOUNT AT THE TIME OF PAYMENT OF BANK GUARANTEE, BROKERAGE IS DIS ALLOWABLE U/S 40(A)(IA) OF THE ACT. ACCORDINGLY HE MADE ADDITION OF RS. 19,46,289/-. 10. THIS ISSUE IS CHALLENGED BEFORE THE LD CIT(A) IN GROUND NO. 2, WHO HAD ALLOWED BY THE APPEAL BY OBSERVED THAT THIS ISSU E HAS BEEN ARISEN 15 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT IN A.Y. 2009-10 AND 2010-11 IN ASSESSEES CASE BY C ONSIDERING THE DECISION OF MUMBAI ITAT BENCH IN THE CASE OF KOTAK S ECURITIES (2012) 18 TAXMANN.COM 48 (MUM.), WHICH IS SQUARELY APPLICAB LE IN THE CASE OF ASSESSEE ON THE YEAR UNDER CONSIDERATION. THE RELATI ON BETWEEN THE ASSESSEE AND THE BANK IS NOT PRINCIPAL AND AGENT, T HE COMMISSION OF BANK GUARANTEE IS NOT COVERED BY THE EXPLANATION (I ), THEREFORE, NO TDS IS LIABLE TO BE DEDUCTED. 11. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD ASSESSING OFFICER. AT THE OUTSET, THE LD AR OF THE ASSESSEE H AS REITERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND RELIED ON T HE DECISION OF HONBLE MUMBAI ITAT BENCH IN THE CASE OF KOTAK SECUR ITIES (SUPRA) AND ALSO ARGUED THAT IN ASSESSEES OWN CASE, THIS ISSUE HAS BEEN CONSIDERED BY THE LD CIT(A) IN `EARLIER YEAR FOR A.Y. 2010-11, THEREFORE HE PRAYED TO UPHOLD THE ORDER OF THE LD CIT(A). AS THE MATTER IS CONSIDERED BY THE COORDINATE BENCH OF MUMBAI ITAT IN KOTAK SECURITIES (SUPRA) CASE AND IN PRECEDING YEAR ALSO, THIS ISSUE HAS BEEN CONSIDE RED BY THE LD CIT(A) AND DECIDED IN FAVOUR OF THE ASSESSEE. BY FOLLOWING THE PRINCIPLE OF CONSISTENCY ON THE DECISION OF HON'BLE SUPREME COUR T IN THE CASE OF RADHASWAMI SATSANG VS. CIT 193 ITR 32 (SC), THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A). 16 ITA NO. 55&114/JP/2013 & 195/JP/15 M/S LATALA CONSTRUCTION COMPANY VS. ADDL.CIT 12. IN THE RESULT, APPEAL OF THE ASSESSEES AND REV ENUE IN A.Y. 2009- 10 ARE DISMISSED AND APPEAL FILED BY THE REVENUE IN A.Y. 2011-12 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/01/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH JANUARY, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S LATALA CONSTRUCTION COMPANY, JAIP UR. 2. IZR;FKHZ @ THE RESPONDENT- THE ADDL.CIT/DCIT/ACIT, RANGE/CIRCLE- 5, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.55 & 114/JP/2013 & 195/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR