M/s. Abdul Qayoom Dar, Srinagar V. The Income Tax Officer, Srinagar

ITA 569/ASR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94992 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 02-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Depreciation; Corroborative evidences
• Section: 144

Judgement Text

I.T.A. NO. 569/ASR/2013 ASSESSMENT YEAR: 2 005 - 06 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR [CORAM: PRAMOD KUMAR AM AND A.D. JAIN JM] I.T.A. NO. 569 /ASR/201 3 ASSESSMENT YEAR: 2005 - 06 ABDUL QAYOOM DHAR . .APPELLANT CHAN A PORA, OPP . CHINAR GAS AGENCY NEAR SHAH MOTORS, SRINAG AR J& K PAAN : AAALFA 9593 K VS. INCOME TAX OFFICER WARD 3(1), SRIN A GAR , J&K RESPONDENT APPEARANCES BY: PADAM BAHL FOR THE APPELLANT TARSEM LAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: JUNE 11 , 2015 DATE OF PRONOUNCING THE ORDER : AUGUST 31 , 2015 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE ASSESSE HAS CALLED INTO QUESTION CORRECTNESS OF THE ORDER DATED 10 TH JULY, 2013 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 14 4 OF THE INCO ME TAX ACT, 1961 ( THE ACT HEREINAFTER) , FOR THE ASSESSMENT YEAR 2005 - 06 , ON THE FOLLOWING GROUNDS: 1. THE HON BLE COMMISSIONER OF INCOME TAX (APPEALS) I S NOT JUSTIFIED IN UPHOLDING THE APPLICA T ION OF HIGHER RATE OF 10% BY THE LEARNED ASSESSING OFFICER. 2. THE HON BLE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED WHILE NOT ALLOWING THE SALARY AND INTEREST TO TH E PARTNERS FROM THE ASSESSED INCOME. 3. THE RATE OF 10% ON THE GROSS RECEIPTS WHICH IS TOO EXCESSIVE, ARBITRARY AND LIABLE TO BE DELETED . I.T.A. NO. 569/ASR/2013 ASSESSMENT YEAR: 2 005 - 06 PAGE 2 OF 3 4. IT HAS BEEN HELD BY THE HON BLE I T AT AMRITSAR B ENCH, VIDE ITS ORDER ITA NO.252 (ASR) / 2010 IN C A SE OF M/S CONSTRUCTION ENGINEERS SRINAGAR VS. ADDL. CIT RANGE - 3, SRINAGAR H A S HELD A RATE OF 6.50% GENUINE IN C A SE OF CONTRACTORS. 5. IT HAS BEEN HELD IN CASE OF THE CIT III, LUDHI ANA VS . M/S SHIVAM CONSTRUCTION CO. B Y THE HON BLE HIGH COURT OF PUNJAB AND HARYANA VIDE IT NO.183 OF 2007 THAT THE ASSESSEE WAS ENTITLED TO DEDUCTIONS ON ACCOUNT OF SALARY AND INTEREST TO THE PARTNERS AFTER APPLICATION OF 10% ON GROSS RECEIPTS. 6. THE LD. CIT( A ) IS NOT JUSTIFIED WHILE NOT CONSIDERING THE AUDIT REPORT OF CHARTERED ACCOUNTANT UNDER SECTION 44AB OF THE INCOME TAX ACT, 1961. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD TO ALTER, AMEND, MODIFY, SUBSTITUTE , DELETE AND/O R RESCUE D ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE FINAL HEARING, IF NECESSITY SO ARISES. 8. THEREFORE, IT IS PRAYED THAT THE ADDITIONS CONFIRMED BY THE HON BLE COMMISSIONER OF APPEALS S CLAIMED BY THE APPELLANT MAY PLEASE BE DELETED. 2. BR IEFLY STATED, THE RELEVANT MATERIAL FACTS OF THE CASE ARE LIKE THIS. THIS IS A CASE OF A CONSTRUCTION CONTRACTOR AND THE ASSESSMENT WAS COMPLETED, FOR WANT OF PRODUCTION OF BOOKS OF ACCOUNTS AND SUPPORTING EVIDENCES, AS BEST JUDGMENT ASSESSMENT ON ESTIMATE PROFIT @ 10% OF TURNOVER. IN DOING SO, HE PLACED RELIANCE ON A DECISION OF THIS TRIBUNAL IN THE CASE OF AO VS. POOJA CONSTRUCTION CO [(1999) 64 TTJ 733 (ASR)]. THE DEDUCTION IN RESPECT OF DEPRECIATION AND INTEREST AND SALARIES PAID TO THE PARTNERS WERE AL SO DECLINED ON THE BASIS THAT ITS TAXATION ON ESTIMATE BASIS AND THE ESTIMATED PROFIT TAKES INTO ACCOUNT ALL THESE FACTORS. ON A TURNOVER OF R 1,69,24,642, THE ESTIMATED PROFIT WAS TAKEN AS 16,92,464. AGGRIEVED, ASSESSE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). WHILE LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING IN PRINCIPLE, HE REDUCED THE AMOUNT OF TURNOVER BY MAKING ADJUSTMENT OF RS 25,20,938, BEING THE COST OF MATERIAL SUPPLIED BY THE CLIENT OF THE ASSESSE. THE ASSESSE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 4. IN THE CASE BEFORE US, THERE IS NO DISPUTE THAT THE INCOME IS TO BE ESTIMATED ON THE BASIS OF OTHER COMPARABLE CASES. THE AUTHORITIES BELOW HAVE ADOPTED 10% PROFIT ON THE BASIS OF POOJA CONSTRUCTION (SUPRA), WHILE LEARNED COUNSEL FOR THE ASSESSE SEEKS I.T.A. NO. 569/ASR/2013 ASSESSMENT YEAR: 2 005 - 06 PAGE 3 OF 3 RELIANCE ON A RATHER DECISION OF THIS TRIBUNAL IN THE CASE OF CONSTR UCTION ENGINEERS VS ACIT AND VICE VERSA ( ITA NOS. 252 AND 266/ASR/10) WHICH APPROVES 6.5% PROFIT ESTIMATE IN THE CASE OF CONSTRUCTION CONTRACTORS SUBJECT TO DEDUCTION FOR SALARIES AND INTEREST PAID TO THE PARTNERS BUT WITHOUT ANY FURTHER DEDUCTION FOR DEP RECIATION. AS THIS DECISION STATES, IT IS ON THE BASIS OF STAND OF CHANDIGRAH BENCHES ON SIMILAR FACTS, WHICH NOW STANDS APPROVED BY HON BLE PUNJAB & HARYANA HIGH COURT. WE HAVE NOTICED THAT THE DECISION RELIED UPON BY THE AUTHORITIES BELOW IS A RELATIVELY OLD DECISION PERTAINING TO THE ASSESSMENT YEAR 1990 - 91 AND SO FAR AS BUSINESS SITUATIONS ARE CONCERNED, MUCH HAS CHANGED IN THE MEANTIME. IN THIS VIEW OF THE MATTER, WE WOULD RATHER RELY UPON RELATIVELY RECENT DECISION IN THE CASE OF CONSTRUCTION ENGINEER S (SUPRA), AND, RESPECTFULLY FOLLOWING THE SAME, DIRECT THE ASSESSING OFFICER TO ESTIMATE THE PROFIT ON THE BASIS OF 6.5% ESTIMATE RATE SUBJECT TO DEDUCTION TO ADMISSIBLE SALARIES AND INTEREST TO THE PARTNERS. THE ASSESSE GETS THE RELIEF ACCORDINGLY. 5 . IN THE RESULT, APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 31 ST DAY OF AUGUST, 2015. SD/XX SD/XX A D JAIN PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED THE 31 ST DAY OF AUGUST, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSIS TANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR