Jaharlal Mukherjee, Kolkata V. ITO, Wd29(1), Kolkata, Kolkata

ITA 73/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99711 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 15-01-2014
• Court: TRIBUNAL
• Department Lawyers: SNEHOTPAL DUTTA
• Assessee Lawyers: ANIKESH BANERJEE
• Keywords: Presumptive income; Business income; Additional evidence
• Section: 44AD; 143(3); 194C; 145; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC , KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM ] IT A NO.73/KOL/2014 ASSESSMENT YEAR : 2008 - 09 ( A PPELLANT ) (RESPONDENT) JAHARLAL MUKHERJEE - VERSUS - I.T.O., WARD - 29(1 ) KOLKATA KOLKATA (PAN: AEYPM 0642J) FOR THE APPELLANT: SHRI ANIKESH BANERJEE, ADVOCATE FOR THE RESPONDENT: SHRI SNEHOTPAL DUTTA, JCIT DATE OF HEARING : 30 .07 .2015. DATE OF PRONOUNCEMENT : 05.08.2015. ORDER THIS APPEAL OF ASSESSEE ARI SES FROM THE ORDER OF LD. CIT(A) - XVI , KOLKATA IN APPEAL NO . 15/CIT(A) - XVI/WD - 29(1)/ 10 - 11 DATED 25.10 .2013 . ASSESSMENT WAS FRAMED BY I.T.O., WARD - 29(1 ), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.Y . 2008 - 09 VIDE ITS ORDER DATED 30.09.2010. 2. THE ISSUE TO BE DECIDED ARE AS TO WHETHER (I)THE LD. CIT(A) IS RIGHT IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE INCOME IS TO BE DETERMINED IN ACCORDANCE WITH THE PROVISION OF SECTION 44AD OF THE ACT; (II)THE LD.CIT(A) IS RIGHT IN INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WHEN THE TAXABLE INCOME IS DETERMINED IN ACCORDANCE WITH THE PRESUMPTIVE SCHEME TAX CONTEMPLATED U/S 44AD OF THE ACT; (III)THE PROVISION OF SECTION 40(A)(IA) IS TO BE MADE APPLIC ABLE IN RESPECT OF AMOUNTS PAID IN THE PREVIOUS YEAR OR IS APPLICABLE ONLY IN RESPECT OF THE AMOUNTS PAYABLE AT THE END OF THE PREVIOUS YEAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. HOLLAND & COMPANY ENGAGED IN T HE BUSINESS OF JOB CONTRACT AND MANUFACTURER OF SPARE PARTS OF ELECTRICAL GOODS. THE ASSESSEE HAD MADE A CLAIM BEFORE THE LD. CIT(A) THAT HE HAD ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 2 DECLARED THE NET PROFIT OF RS.3,91,293.46 WHICH IS MORE THAN 10% OF THE TURNOVER AND HENCE THE PROVISION OF SEC TION 44AD OF THE ACT ARE APPLICABLE TO HIM. THE LD. AO FOUND THAT THE ASSESSEE HAD PAYMENTS/CREDITS TO PARTIES FOR EXECUTION OF WORKS CONTRACT WITHOUT DEDUCTION TAX AT SOURCE TO THE TUNE OF RS.9,74,703/ - AND ACCORDINGLY DISALLOWED THE SAID EXPENDITURE U/S 40(A)(IA) OF THE ACT. AGGRIEVED BY THIS, THE ASSESSEE CHALLENGED THIS ISSUE, AMONG OTHERS, BEFORE THE LD. CIT(A). 4. BEFORE THE LD. CIT(A) THE ASSESSEE SOUGHT TO ASSAIL THIS DISALLOWANCE ON VARIOUS GROUNDS : - (A)THAT CERTAIN PARTIES TO WHOM PAYMENTS WERE MADE INCLUDES PAYMENTS MADE FOR MATERIALS AND LABOUR CHARGES. HENCE TDS PROVISION, IF APPLICABLE, CAN BE APPLICABLE ONLY ON THE COMPONENT OF LABOUR CHARGES. THE ASSESSEE CLAIMED THAT A SUM OF RS.4,92,000/ - REPRESENTED VALUE OF MATERIALS PURCHASED BY THE A SSESSEE FROM VARIOUS PARTIES AND BILLS FOR LABOUR CHARGES WERE RAISED SEPARATELY BY THE PARTIES AND HENCE THE ASSESSEE CANNOT BE HELD AS ASSESSEE IN DEFAULT U/S 201 OF THE ACT IN RESPECT OF MATERIAL PORTION AND SEPARATE BILL WAS RAISED FOR THE LABOUR POR TION. THE ASSESSEE FILED ADDITIONAL EVIDENCES BEFORE THE LD. CIT(A) TO SUPPORT HIS CONTENTION IN THIS REGARD. KIND ATTENTION IS INVITED TO PAGE 5 OF RELEVANT PART OF THE LD. CIT(A) IN THIS REGARD. THIS GROUND WAS NOT ACCEPTED BY THE LD. CIT(A) AND ACCORDI NG TO LD. CIT(A), ONLY COMPOSITE BILL WAS RAISED BY THE ASSESSEE AND THE VALUE OF THE MATERIALS WERE NOT SEPARATELY MENTIONED IN THE BILL. MOREOVER, THE ASSESSEE HAD CLAIMED THE ENTIRE AMOUNT OF THE BILLS AS AN EXPENDITURE UNDER THE HEAD LABOUR CHARGES . (B) THAT THE PROVISION OF SECTION 40(A)(IA) OF THE ACT IS NOT APPLICABLE TO THE ASSESSEE AS THE TURNOVER OF THE BUSINESS DURING THE PREVIOUS 2006 - 07 HAD NOT CROSSED THE MONETARY LIMIT PRESCRIBED U/S 44AB OF THE ACT. THIS GROUND WAS NOT ACCEPTED BY THE LD. CIT(A) AS THE LD. AO IN HIS REMAND REPORT STATED THAT DURING THE EARLIER YEAR THE ASSESEE HAS REPORTED THE TURNOVER OF ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 3 RS.84,88,453/ - WHICH EXCEEDS THE MONETARY LIMITS PRESCRIBED U/S 44AB OF THE ACT AND ACCORDINGLY, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE TO THE ASSESSEE DURING THE PREVIOUS YEAR 2007 - 08. (C) THAT THE PAYMENT OF RS.4,71,195/ - TOWARDS LABOUR CHARGES WAS MADE BEFORE THE END OF PREVIOUS YEAR BY THE ASSESSEE AND HENCE, THE PROVISION OF SECTION 40(A)(IA) OF THE ACT CANNO T BE INVOKED. THIS GROUND WAS NOT ACCEPTED BY THE LD. CIT(A) IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT VS CRESCENT EXPORT SYNDICATE WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPL ICABLE NOT ONLY TO THE AMOUNT WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE SHEET BUT ALSO APPLICABLE TO SUCH EXPENDITURE WHICH BECOMES PAYABLE AT ANY TIME DURING THE RELEVANT PREVIOUS YEAR AND WAS ACTUALLY PAID WITHIN THE PREVIOUS YEAR. (D) THAT THE T URNOVER OF THE ASSESSEE IS RS.37,06,813 AND THE NET PROFIT WAS RS.3,91,293/ - WHICH IS MORE THAN 10% OF THE TURNOVER. HENCE, THE PROVISIONS OF SECTION 44AD IS APPLICABLE TO THE ASSESSEE WHERE THE INCOME IS DETERMINED U/S 44AD OF THE ACT, THE PROVISION OF SE CTION 40(A)(IA) OF THE ACT CANNOT BE MADE APPLICABLE. THIS GROUND WAS NOT ACCEPTED BY THE LD. CIT(A) BECAUSE THE ASSESSEE HAD NOT FILED ITS RETURN OF INCOME U/S 44AD OF THE ACT AND MOREOVER THE ASSESSEE HAD DULY MAINTAINED BOOKS OF ACCOUNTS. 5. SHRI ANI KESH BANERJEE, ADVOCATE, THE LD. AR APPEARED ON BEHALF OF THE ASSESSEE AND SHRI SNEHOTPAL DUTTA, JCIT APPEARED ON BEHALF OF THE REVENUE. 6. THE LD. AR ARGUED THAT THE CASE OF THE ASSESSEE SQUARELY FALLS UNDER THE AMBIT OF SECTION 44AD OF THE ACT UNDER SU B - SECTION (1) AS THE TURNOVER OF THE ASSESSEE IN A.Y.2008 - 09 IS ONLY RS.37,06,013/ - AND THE NET PROFIT DECLARED BY THE ASSESSEE IS RS.3,91,293/ - WHICH WORKS OUT TO 10.56% OF THE TURNOVER. ACCORDINGLY, HE PLEADED ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 4 THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED WHEN THE INCOME IS DETERMINED U/S 44AD OF THE ACT ON PRESUMPTIVE BASIS. 7. IN RESPONSE TO THIS, THE LD. DR ARGUED THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT OPERATE ON TOTAL DIFFERENT FOOTING IN ORDER TO MAKE THE ASSESS EE S COM PLY WITH TDS PROVISION AND TO INCULCATE TIMELY DEDUCTION AND REMITTANCE OF TAX AT SOURCE TO THE ACCOUNT OF THE CENTRAL GOVERNMENT. HENCE, DISALLOWANCE MADE BY THE LD. AO IS IN ORDER EVEN IF THE INCOME IS DETERMINED U/S 44AD OF THE ACT. 8. I HAVE HEARD THE RIVAL SUBMISSIONS. GROUND NO.1 IS GENERAL IN NATURE AND HENCE THE SAME DOES NOT REQUIRE ANY ADJUDICATION. 9. IN RESPECT OF GROUND NOS. 2 AND 4, ON PERUSAL OF THE RECORDS, IT IS SEEN THAT THE LD. CIT(A) HAD CALLED FOR THE COPIES OF THE BILLS AN D HAD GIVEN A CATEGORICAL FINDING THAT THE MATERIAL PORTION CANNOT BE BIFURCATED FROM THE TOTAL BILL SO AS TO GET OUT OF THE AMBIT OF THE PROVISION OF SECTION 194C OF THE ACT. ADMITTEDLY, THIS FINDING WAS NOT REFUTED BY THE LD. DR DURING THE COURSE OF HEAR ING BEFORE ME. HENCE GROUND NOS. 2 AND 4 RAISED BY THE ASSESSEE ARE DISMISSED. 10. GROUND NOS. 3, 5, 6 AND 7 ARE IDENTICAL IN NATURE AND TAKEN UP TOGETHER HEREIN. THE LD. DR DID NOT REFUTE THE CLAIM OF THE ASSESEE IN RESPECT OF APPLICABILITY OF SECTION 4 4AD FOR A.Y.2008 - 09. FOR THE SAKE OF CONVENIENCE THE PROVISION OF SECTION 44AD IS REPRODUCED HEREUNDER : - 44AD (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 28 TO 43C, IN THE CASE OF AN ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL CONSTRU CTION OR SUPPLY OF LABOUR FOR CIVIL CONSTRUCTION, A SUM EQUAL TO EIGHT PER CENT OF THE GROSS RECEIPTS PAID OR PAYABLE TO THE ASSESSEE IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM AS DECLARED B Y THE ASSESSEE IN HIS RETURN OF INCOME, SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION . PROVIDED THAT NOTHING CONTAINED IN THIS SUB - SECTION SHALL APPLY IN CASE TH E AFORESAID GROSS RECEIPTS PAID OR PAYABLE EXCEED AN AMOUNT OF FORTY LAKH RUPEES. FOR THE PURPOSE OF THIS SECTION, THE EXPRESSION CIVIL CONSTRUCTION INCLUDES ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 5 ( A ) CONSTRUCTION OR REPAIR OF ANY BUILDING, BRIDGE, DAM OR OTHER STRUCTURE OR OF ANY CANAL OR ROAD ; ( B ) THE EXECUTION OF ANY WORKS CONTRACT. THE PROVISION OF SECTION 44AD OF THE ACT CONTEMPLATES THAT THE INCOME DETERMINED UNDER THE PRESUMPTIVE SCHEME IS OPTIONAL AND PROVIDES SYSTEM OF REBUTTAL. A PERSON CAN CLAIM THAT HIS INCOME OF THE ABOVE MENTIONED BUS INESS IS LOWER THAN THE SPECIFIED ESTIMATE OF INCOME. IN SUCH A CASE, HE MUST PRODUCE NECESSARY EVIDENCES TO PROVE HIS CASE DULY SUPPORTED BY A REPORT FROM AN ACCOUNTANT IN ACCORDANCE WITH SECTION 44AB OF THE ACT. THE ASSESSEE IS ENTITLED TO CLAIM THE BENE FIT OF PRESUMPTIVE TAX U/S 44AD OF THE ACT IF HE HAD REPORTED THE NET PROFIT OF MORE THAN 8% OF THE TURNOVER. IN THE INSTANT CASE, THE ASSESSEE HAD REPORTED THE NET PROFIT AT 1 0.56% OF ITS TURNOVER DURING A.Y.2008 - 09. HENCE, I HOLD THAT THE CLAIM MADE BY THE ASSESSEE IN HIS INCOME BE DETERMINED IN ACCORDANCE WITH THE PROVISION OF SECTION 44AD OF THE ACT IS IN ORDER. ACCORDINGLY THE LD. AO IS DIRECTED TO ACCEPT THE TAXABLE INCOME REPORTED BY THE ASSESSEE AS INCOME REPORTED U/S 44AD OF THE ACT ON PRESUMPTIVE BASIS. 11. THE NEXT ISSUE IS TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE PROVISION OF SECTION 40(A)(IA) OF THE ACT CAN BE MADE APPLICABLE FOR THE ASSESSEE WHEN HIS INCOME IS DETERMINED IN ACCORDANCE WITH THE PRESUMPTIVE SCHEME U/S 44AD OF THE ACT. FROM THE BARE READING OF SECTION 44AD OF THE ACT, IT CAN BE SEEN THAT IT STARTS WITH AN NON OBSTANTE CLAUSE . NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 28 TO 43C . THIS GOES TO PROVE THAT THE PROVISIONS OF SECTION 44AD OF THE ACT OV ERRIDES ALL OTHER PROVISIONS CONTAINED IN SECTION 28 TO 43C. ADMITTEDLY, THE PROVISIONS OF SECTION 40(A)(IA)OF THE ACT FALLS WITHIN THIS RANGE OF SECTIONS 28 TO 43C OF CHAPTER - XVII B OF THE I.T.ACT. WHEN AN INCOME IS PRESUMPTIVELY TAXED U/S 44AD OF THE A CT ANY FURTHER BUSINESS INCOME BY APPLYING THE PROVISIONS OF SECTIONS 28 TO 43C (INCLUDING SECTION 40(A)(IA) OF THE ACT) WOULD GET TELESCOPED WITH THE PRESUMPTIVE INCOME DETERMINED. FOR THIS REASON, THE LEGISLATURE HAD PROVIDED SECTION 44AD OF THE ACT WIT H A NON OBSTANTE ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 6 CLAUSE HAVING AN OVER RIDING EFFECT OVER OTHER PROVISIONS OF SECTIONS 28 TO 43C OF THE ACT. IT IS PERTINENT TO DWELL UPON THE IMPACT OF NON OBSTANTE CLAUSE AT THIS STAGE. IT IS WELL KNOWN THAT THE NON OBSTANTE CLAUSE IS A LEGISLATIVE DE VICE WHICH IS USUALLY EMPLOYED TO GIVE OVER RIDING EFFECT TO CERTAIN PROVISIONS OVER SUM CONTRARY PROVISION THAT MAY BE EITHER IN THE SAME ENACTMENT OR SOME OTHER ENACTMENT TO SAY TO AVOID THE OPERATION AND EFFECT OF ALL CONTRARY PROVISIONS . RELIANCE IS PLACED IN THIS REGARD ON THE FOLLOWING DECISIONS : (I)UNION OF INDIA VS G.M.KOKIAL REPORTED IN AIR 1984 (SC) 1022 AT PAGE 1026. (II)R.M.ADAIKALAVAN, VS STATE OF TAMIL NADU REPORTED IN 238 ITR 263 AT 674 (MADRAS FULL BENCH DECISION). IT IS WELL SETTLED THA T WHILE DEALING WITH THE NON OBSTANTE CLAUSE IN WHICH THE LEGISLATURE WANTS TO GIVE OVERRIDING EFFECT TO SECTION. IT MUST TRY TO FIND OUT TO THE EXTENT LEGISLATURE HAD INTENDED TO GIVE ONE PROVISION OVER RIDING EFFECT OVER ANOTHER PROVISION. SUCH INTENT ION OF THE LEGISLATURE IN THIS BEHALF IS TO BE GATHERED FROM THE ENACTING PART OF THE SECTION. RELIANCE IS PLACED IN THIS REGARD ON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF A.G.VARADARAJULU VS STATE OF TAMIL NADU (1998) 146 CPR (SC) 117 AT PA GE 123. A CLAUSE BEGINNING WITH AN EXPRESSION NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT OR IN SOME PARTICULAR ACT OR IN ANY LAW FOR THE TIME BEING IN FORCE OR IN ANY CONTRACT IS MORE OFTEN THAN NOT APPENDED TO A SECTION IN THE BEGINNING WITH A VIE W TO GIVE THE ENACTING PART OF THE SECTION IN CASE OF CONFLICT, OVER RIDING EFFECT OVER THE PROVISION OF THE ACT OR THE CONTRACT MENTIONED IN THE NON OBSTANTE CLAUSE. IT IS EQUIVALENT TO SAY THAT IN SPITE OF THE PROVISION OF THE CASE OR ANY OTHER ACT IN THE NON OBSTANTE CLAUSE OR ANY CONTRACT OR DOCUMENTS MENTIONED, THE ENACTMENT FOLLOWING IT WILL HAVE ITS OPERATION OR THAT THE PROVISION EMBRACED IN THE NON OBSTANTE CLAUSE WOULD NOT BE IMPEDIMENT FOR AN OPERATION OF AN ENACTMENT. ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 7 RELIANCE IS PLACED I N THIS REGARD ON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF CHANDAVARKAR SITA RATNA RAO VS ASHALATA S.GURAM REPORTED IN AIR (1987) (SC) 117 AT PAGE 134. THE WORDS SHALL DEEMED OR THE KEY WORDS AND THEY ARE INDICATIVE OF THE LEGISLATIVE INTENT THAT THE TAX SHALL BE CHARGEABLE ON PRESUMPTIVE INCOME, COMPUTED AS PER SUB - SECTION (1) OF SECTION 44AD OF THE ACT. THE VERY PURPOSE OF THE VERY ENACTMENT OF SECTION 44AD OF THE ACT IS TO PROVIDE HASSLE FREE PROCEEDINGS. SUCH PROCEEDINGS ARE MADE TO COMPL ETE THE ASSESSMENT PROVIDED THE CONDITIONS LAID DOWN IN SUCH ENACTMENT ARE FULFILLED. THE ASSESSMENT OF INCOME UNDER PRESUMPTIVE BASIS U/S 44AD IS SIMILAR TO THE INCOME DETERMINED ON AN ESTIMATED BASIS BY THE AO AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. ONCE THE BOOKS ARE REJECTED THE DOORS OF THE AO ARE CLOSED FOR LOOKING AFTER OTHER PROVISIONS OF THE ACT WHICH ARE RELEVANT FOR DETERMINING THE BUSINESS INCOME OF THE ASSESSEE, UNLESS OR OTHERWISE SPECIFICALLY PROVIDED IN THE PROVISIONS OF SECTI ON 44AD OF THE ACT ITSELF SUCH AS ALLOWANCE OF INTEREST AND REMUNERATION TO PARTNERS IN THE CASE OF A PARTNERSHIP FIRM. RELIANCE IS PLACED IN THIS REGARD ON THE DECISION OF HON BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS CIT REPOR TED IN 232 ITR 776 (AP), WHEREIN LORDSHIPS HAD HELD AS UNDER : - THE PATTERN OF ASSESSMENT UNDER THE INCOME - TAX ACT, 1961, IS GIVEN BY SECTION 29 WHICH STATES THAT THE INCOME FROM PROFITS AND GAINS OF BUSINESS SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVI SIONS CONTAINED IN SECTIONS 30 TO 43D OF THE ACT. SECTION 40 PROVIDES FOR CERTAIN DISALLOWANCES IN CERTAIN CASES NOTWITHSTANDING THAT THOSE AMOUNTS ARE ALLOWED GENERALLY UNDER OTHER SECTIONS. THE COMPUTATION UNDER SECTION 29 IS TO BE MADE UNDER SECTION 145 ON THE BASIS OF THE BOOKS REGULARLY MAINTAINED BY THE ASSESSEE. IF THOSE BOOKS ARE NOT CORRECT OR COMPLETE, THE INCOME - TAX OFFICER MAY REJECT THOSE BOOKS AND ESTIMATE THE INCOME TO THE BEST OF HIS JUDGMENT. WHEN SUCH AN ESTIMATE IS MADE, IT IS IN SUBSTITU TION OF THE INCOME THAT IS TO BE COMPUTED UNDER SECTION 29. IN OTHER WORDS ALL THE DEDUCTIONS WHICH ARE REFERRED TO UNDER SECTION 29 ARE DEEMED TO HAVE BEEN TAKEN INTO ACCOUNT WHILE MAKING SUCH AN ESTIMATE. THIS WILL ALSO MEAN THAT THE EMBARGO PLACED IN SE CTION 40 IS ALSO TAKEN INTO ACCOUNT. THIS DECISION SUPPORTS THE VIEW THAT WHEN THE ASSESSEE CANNOT CLAIM ANY EXPENSES AFTER APPLYING THE NET PROFIT RATE, THEN THE AO TOO CANNOT MAKE ADDITION AFTER APPLYING THE NET PROFIT RATE. EVEN IF THE ASSESSEE COMMIT S ANY DEFAULT UNDER CHAPTER XVIIB OF ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 8 THE ACT WITH REGARD TO THE TDS PROVISION, IT IS ONLY FOR THE TDS OFFICER TO TAKE SUITABLE ACTION ON THE ASSESSEE, THE DOORS OF THE AO ARE ABSOLUTELY SHUT WHEN THE INCOME IS DETERMINED ON PRESUMPTIVE BASIS U/S 44AD OF TH E ACT. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES, THE LEGAL PROVISION OF SECTION 44AD OF THE ACT SHOWS AN OVERRIDING EFFECT OVER OTHER PROVISIONS CONTAINED I N SECTION 28 TO 43C OF THE ACT, I HOLD THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED IN THE INSTANT CASE AS THE INCO ME IS DIRECTED TO BE DETERMINED ON PRESUMPTIVE BASIS U/S 44AD OF THE ACT. ACCORDINGLY, GROUND NOS.3,5,6 AND 7 ARE ALLOWED IN FAVOUR OF THE ASSESSEE. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETH ER SECTION 40(A)(IA) OF THE ACT, IN FACT AND CIRCUMSTANCES OF THE INSTANT CASE, ARE APPLICABLE IN RESPECT OF AMOUNTS PAYABLE ON THE DATE OF BALANCE SHEET AND NOT ON THE AMOUNTS PAID BEFORE THE END OF THE PREVIOUS YEAR. THIS ISSUE DOES NOT WARRANT ANY DELIB ERATION AS I HAVE HELD IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISIONS OF SECTION 40(A)(IA) PER SE ARE NOT APPLICABLE AS THE INCOME OF THE ASSESSEE IS DIRECTED TO BE DETERMINED U/S 44AD ON PRESUMPTIVE BASIS. ACCORDINGLY, THIS GROUND BECOMES INFA CTUOUS. GROUND NOS.9 TO 12 WERE WITHDRAWN BY THE LD. AR DURING THE COURSE OF HEARING AND HAS RECORDED THE STATEMENT FROM THE BAR. GROUND NOS. 9 TO 12 ARE DISMISSED AS NOT PRESSED. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRO NOUNC ED IN TH E COURT . SD/ - [MAHAVIR SINGH] JUDICIAL MEMBER DATE: 05.08.2015. R.G.(.P.S.) ITA NO. 73/KOL/2014 JAHARLAL MUKHERJEE A.YR. 2008 - 09 9 COPY OF THE ORDER FORWARDED TO : 1 . JAHARLAL MU KHERJEE, 162/B/200, LAKE GARDENS, KOLKATA - 700045. 2 THE I.T.O., WARD - 29(1 ), KOLKATA . 3 . THE CIT, 4. THE CIT(A) - XVI , KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES