K Krishna Reddy Contractors, R R Dist, Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 654/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2295 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation
• Section: 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A SMC : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA.NO. 654/HYD/2016 ASSESSMENT YEAR 2011 - 2012 K. KRISHNA REDDY CONTRACTORS, PLOT NO.86, AMBIENCE FORT, ATTAPUR RAJENDRA NAGAR, RANGA REDDY DISTRICT. PAN: AACFK9045M VS. INCOME TAX OFFICER, WARD - 8(2), SIGNATURE TOWERS, OPP: BOTANICAL GARDENS, KONDAPUR, HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI S. RAMA RAO FOR REVENUE : SMT SUMAN MALIK, DR DATE OF HEARING : 25.07 .2017 DATE OF PRONOUNCEMENT : 25.07 .2017 ORDER PER D. MANMOHAN, VP. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSESSEE FIRM AND IT PERTAINS TO THE ASSESSMENT YEAR 2011 - 2012. THE FIRM IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS. FOR THE YEA R UNDER CONSIDERATION, IT ADMITTED A TOTAL INCOME OF RS. 12,54,860/ - . THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS. 1,07,36,972/ - , WHEREIN THE A.O. ESTIMATED INCOME ON CONTRACT RECEIPTS AT 12.5% BUT DID NOT ALLOW DEDUCTIONS SUCH AS BANK INTEREST, DEPRECIATION ETC. 2. ASSESSEE HAD NO OBJECTION WITH REGARD TO PERCENTAGE OF PROFIT ESTIMATED BY THE ASSESSING OFFICER. HOWEVER, IT OBJECTED TO THE DISALLOWANCE OF THE CLAIM FOR DEDUCTION TOWARDS DEPRECIATION AND OTHER SUCH STATUTORY DEDUCTIONS. LD. CIT( A) WAS OF THE OPINION THAT IN THE LIGHT OF THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (232 ITR 776), NO DEDUCTIONS ARE PERMISSIBLE ONCE THE INCOME IS ESTIMATED. HE ACCORDINGLY DISMISSED THE ISSUE URGED BY TH E ASSESSEE. 3. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. T HERE IS A MISTAKE IN GROUND NO.2, WHEREIN IT WAS MENTIONED THAT DEDUCTIONS WERE CLAIMED U/S 2 40(6) OF THE ACT WHEREAS, IT WAS U/S 40(B) OF THE ACT ; THE AS SESSEE CONTENDS THAT NORMA LLY IN THIS LINE OF BUSINESS PROFIT RATE IS ADOPTED @ 8% WHEREAS THE ASSESSING OFFICER ADOPTED 12.5% IN WHICH EVENT, THE FINANCIAL CHARGES AND DEDUCTIONS ALLOWABLE U/S 40(B) OUGHT TO HAVE BEEN CONSIDERED FOR DEDUCTION. LD COUNSEL FOR THE ASSESSEE PL ACED BEFORE THE TRIBUNAL A COPY OF THE ORDER OF THE ITAT, HYDERABAD (ITA NO.164/HYD/2013, DATED 31.03.2015), WHEREIN I AM A PARTY, TO CONTEND THAT THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT (SUPRA) IS DISTINGUISHABLE ON FACTS AND STATUTORY DEDUC TIONS ARE NECESSARILY TO BE CONSIDERED SEPARATELY AND ALLOWED AS DEDUCTIONS. IN THE AFORESAID DECISION, THE TRIBUNAL PASSED A DETAILED ORDER BEFORE COMING TO THE CONCLUSION THAT EVEN AFTER ESTIMATING THE INCOME, STATUTORY DEDUCTIONS ARE TO BE SEPARATELY C ONSIDERED. LD. CIT(A) DR HAS NOT RAISED ANY OBJECTION IN THIS REGARD. 4 . UNDER THESE CIRCUMSTANCES, I DIRECT THE ASSESSING OFFICER TO FOLLOW THE DECISION OF THE ITAT AND RE - COMPUTE THE INCOME ACCORDINGLY. 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ACCORDING LY IN THE OPEN COURT ON THIS 25 TH DAY OF JULY, 2017. S D / - (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 25 TH JULY , 2017 OKK, SR.PS COPY TO 1. K. KRISHNA REDDY CONTRACTORS,PLOT NO.86, AMBIENCE FORT, ATTAPUR RAJENDRA NAGAR, RANGA REDDY DISTRICT. 2. INCOME TAX OFFICER, WARD - 8(2), HYDERBAD. 3. CIT(A) - 2 , HYDERABAD. 4. PR. CIT - 2 , HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE