ITO VI (I), Lucknow V. Shri A. K. Bajpai, Lucknow

ITA 676/LKW/2011

• Counselvise Citation: 67623714 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-07-2014
• Assessment Year: misc
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: P K KAPOOR
• Keywords: Depreciation
• Section: 44AD; 143(3); 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.676/LKW/2011 ASSESSMENT YEAR:2007 - 08 INCOME TAX OFFICER VI(1), LUCKNOW. VS. SHRI A. K. BAJPAI, 36 - B, VIJAY NAGAR COLONY, KRISHNA NAGAR, KANPUR ROAD, LUCKNOW. PAN:AAHFA6190L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K. RAM, SR. D. R. RESPONDENT BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 28/07/2014 DATE OF PRONOUNCEMENT 0 5 /09/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, LUCKNOW DATED 05/09/2011 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN RESTRICTING THE ESTIMATION OF PROFIT TO 5% OF THE GROSS RECEIPTS, HE FAILED TO APPRECIATE THAT ON SIMILAR FACTS ESTIMATION OF NET PROFIT OF 7.5% OF THE GROSS RECEIPTS WAS CONFIRMED IN THE FOLLOWING CASE: (I) RAJESH KUMAR SING H VS. ITO, WARD - 1(3). GORAKHPUR - 5, MTC 289 I.T.A.T., ALLAHABAD. A SIMILAR VIEW WAS TAKEN IN: - (II) DY. COMMISSIONER OF INCOME TAX, CIRCLE BULANDSHAHAR VS. ALLIED CONSTRUCTION 105 ITD 1 (SB) ITAT, DELHI. 2 2. APPELL ANT CRAVE LEAVES TO ADD OR AMEND ANY ONE OR MORE OF THE GROUNDS OF APPEALS, AS STATED ABOVE, AS AND WHEN NEED TO DOING SO ARISES WITH THE PRIOR PERMISSION OF THE COURT. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT SINCE AS PER SUB SECTION (5) OF SECTION 144, IF THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE AS MENTIONED IN SECTION 144, THE FIRM SHALL BE SO ASSESSED THAT NO DEDUCTIO N BY WAY OF PAYMENT OF INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION, BY WHATEVER NAME CALLED, OR ANY PART THEREOF SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD INCOME FROM PROFITS & GAINS. HE SUBMITTED THAT IN VIEW OF THESE PRO VISIONS, NO DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE IN RESPECT OF INTEREST AND DEPRECIATION ETC. HE PLACED RELIANCE ON DECISION OF THE I.T.A.T. IN THE CASE OF RAJESH KUMAR SINGH VS. INCOME TAX OFFICER AS REPORTED IN [2005] (5) MTC 288 (TRIB.). 4. AS A GAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (I) CIT VS. GOTAN LIME KHANJI UDYOG [2002] 256 ITR 243 (RAJ.) (II) CIT VS. M/S J. P. YADAV IN INCOME TAX APPEAL NO. 252 OF 2013 DATED 24/09/2013 (III) CIT VS. JAIN CONSTRUCTION COMPANY & ORS. 245 ITR 527 (RAJ) (IV) CIT VS. BISHAMBHAR DAYAL & CO. [1994] 210 ITR 118 (ALL) 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA NO. 4(5)(II) OF HIS ORDER WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 4(5)(II) THE RATE OF 8% ADOPTED BY THE AO FOR ESTIMATING THE PROFITS IS APPLICABLE TO CIVIL CONTRACTORS HAVING TURNOVER LESS THAN 40LAKHS. IT IS A PRESUMPTIVE RA TE PRESCRIBED IN SECTION 44AD OF THE ACT. THE RECEIPTS OF THE ASSESSEE ARE RS.4,73,85,770/ - . IT IS AN ESTABLISHED FACT THAT AS TURNOVER INCREASES; THE RATE OF PROFIT GOES DOWN TO SOME EXTENT. TAKING ALL FACTORS INTO CONSIDERATION I FIND IT REASONABLE TO CO NFIRM THE ESTIMATION OF PROFITS OF THE APPELLANT @5% OF THE RECEIPTS. HON'BLE I.T.A.T., LUCKNOW IN THE CASE OF SHRI ARVIND KUMAR 3 CHAUDHARY IN ITA NO. 172/LKW/10 FOR ASSESSMENT YEAR 2005 - 2006 CONFIRMED THE RATE OF 5% FOR ESTIMATION OF PROFITS. THE INCOME O F THE APPELLANT FROM THE BUSINESS OF CIVIL CONSTRUCTION @5% OF RECEIPTS OF RS.4,73,85,770/ - WORKS OUT TO RS.23,69,288/ - AS AGAINST RS.37,90,862/ - ESTIMATED BY THE AO. THIS GIVES A RELIEF OF RS.14,21,574/ - TO THE APPELLANT. THE GROUND OF APPEAL IS THEREFORE ALLOWED PARTLY. 5.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT THE CIT(A) HAS FOLLOWED THE TRIBUNAL DECISION RENDERED IN THE CASE OF SHRI ARVIND KUMAR CHAUDHARY (SUPRA). WE ALSO FIND THAT AS PER THE CHART FURNISHED BY THE ASSESSEE, THE PROFIT REPORTED BY THE ASSESSEE IS AROUND 7% OF THE GROSS RECEIPTS BEFORE ALLOWING INTEREST AND REMUNERATION TO PARTNERS. THIS IS BY NOW SETTLED POSITION THAT EVEN IF INCOME IS E STIMATED OF A PARTNERSHIP FIRM THEN ALSO INTEREST ON CAPITAL AND REMUNERATION TO PARTNERS IS TO BE ALLOWED. THE CONTENTION OF THE LEARNED D.R. OF THE REVENUE AND THE TRIBUNAL DECISION CITED BY HIM ARE NOT APPLICABLE BECAUSE IN THE PRESENT CASE , THE ASSESS MENT IS COMPLETED U/S 143(3) AND NOT U/S 144 OF THE ACT. CONSIDERING ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS P RONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 5 /09/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR