Baldev Singh Negi, Kinnaur V. Addl. CIT, Shimla

ITA 623/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6519 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B M MONGA
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.623/CHD/2017 (ASSESSMENT YEAR : 2011-12) BALDEV SINGH NEGI, VS. THE ADDL.CIT, VILLAGE & PO SHORANG, SHIMLA RANGE, PO CHOTA KHAMBA, SHIMLA. TEHSIL NICHAR, DISTT. KINNAUR. PAN: AUJPS8378J (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI B.M. MONGA & ROHIT KAURA RESPONDENT BY : SMT.CHANDER KANTA, DR DATE OF HEARING : 26.12.2017 DATE OF PRONOUNCEMENT : 26.12.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S) FARIDABAD (HEREINAFTER REFERRED TO AS CIT(APPEALS) ) DATED 16.1.2017 RELATING TO ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE, THROUGH THE GROUND NO.1 OF APPEAL HAS AGITATED THE ESTIMATION OF PROFIT FROM HIS CONTRACT ORSHIP ACTIVITY, AT THE RATE OF 8% ON THE GROSS AMOUNT OF RECEIPT. IT HAS BEEN FURTHER CONTENDED THAT WHILE ESTIMATING THE PROFIT, THE COST OF MATERIAL RECEIVED FROM THE DEPA RTMENT SHOULD HAVE BEEN EXCLUDED. THE LD. COUNSEL FOR ASSE SSEE, IN THIS RESPECT, HAS RELIED UPON THE DECISION OF THE H ON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PRABHAT KUMAR (2010) 323 ITR 675 (P&H). VIDE GROUND NO.2, THE ASSESSEE HAS AGITATED THE ACTION OF THE L OWER 2 AUTHORITIES IN TREATING THE INTEREST INCOME AS INC OME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME DECLAR ED BY THE ASSESSEE. APART FROM THAT, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND OF APPEAL PLEADING THAT THE ASSES SEE SHOULD HAVE ALSO BEEN ALLOWED THE BENEFIT OF REDUCT ION ON ACCOUNT OF DEPRECIATION WHILE DETERMINING THE NET P ROFIT RATE FROM ITS CONTRACTUAL RECEIPT. 3. WE HAVE HEARD THE RIVAL CONTENTIONS. SO FAR AS GROUND NO.1 RELATING TO DETERMINATION OF NET PROFITS FROM CONTRACTUAL RECEIPT IS CONCERNED, THE LD. DR HAS SU BMITTED THAT THE ASSESSING OFFICER HAD APPLIED THE RATE AT 10% WHILE ASSESSING THE PROFITS FROM THE CONTRACTUAL BUSINESS . HOWEVER, IN APPEAL, THE LD.CIT(APPEALS) REDUCED THE SAME TO 8%. SHE, THEREFORE, HAS STATED THAT NO FURTHER REDUCTION IN THE NET PROFIT IS REQUIRED. SO FAR AS THE ISSUE RELATING TO ALLOWABILITY OF DEPRECIATION WHILE DETERMINING THE NET PROFIT IS CONCERNED, SHE HAS STRONGLY OBJECTED TO TAKING O F THIS ADDITIONAL GROUND AT THIS STAGE. SHE HAS FURTHER P LEADED THAT WHEN THE NET PROFIT HAS BEEN ASSESSED ON ESTIM ATION BASIS THAT TAKES INTO CONSIDERATION ALL TYPE OF DED UCTIONS AVAILABLE TO THE ASSESSEE AND THAT NO FURTHER DEDUC TION IS ALLOWABLE ON ANY OTHER GROUND. 4. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE THAT THE COST OF MA TERIAL SUPPLIED BY THE GOVERNMENT BODIES SHOULD HAVE BEEN EXCLUDED WHILE DETERMINING THE PROFIT AND FURTHER T HAT THE ASSESSEE IS OTHERWISE, ELIGIBLE TO CLAIM THE DEPREC IATION AS 3 ADMISSIBLE TO IT UNDER THE PROVISIONS OF THE ACT. HE HAS FURTHER SUBMITTED THAT THE MATTER MAY BE REMITTED T O THE ASSESSING OFFICER FOR CONSIDERATION OF ALL ASPECTS OF THE CASE AND FOR DETERMINATION OF THE INCOME OF THE ASSESSEE ACCORDINGLY. HOWEVER, NO ARGUMENTS HAVE BEEN ADVANC ED BY THE LD. COUNSEL FOR ASSESSEE SO FAR AS THE ISSUE RE LATING TO THE HEAD OF INTEREST INCOME IS CONCERNED. 5. CONSIDERING THE ABOVE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES, WE ARE OF THE VIEW THAT BOTH ISSUES RELATING TO THE DETERMINATION OF NET PROFIT AND REDUCTION, THEREFROM ON ACCOUNT OF DEPRECIATION REQ UIRE RECONSIDERATION AT THE END OF THE ASSESSING OFFICER . WE, THEREFORE, RESTORE THE MATTER TO THE FILE OF THE AS SESSING OFFICER WITH DIRECTION TO CONSIDER THE ABOVE BOTH P LEAS OF THE ASSESSEE AND DECIDE THE SAME AFRESH IN ACCORDAN CE WITH LAW. HOWEVER, THE FINDINGS ON THE CIT(APPEALS) TRE ATING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES IS UPH ELD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE PARTIES ON 26.12.2017. SD/- SD/- (B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 26 TH DECEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4