Dy. Commissioner of Income Tax , Circle-2(1), Hyderabad V. Jayadarshini Housing Private Limited, Hyderabad

ITA 735/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7207 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 735/HYD/2019 ASSESSMENT YEAR: 2011-12 DCIT, CIRCLE-2(1), HYDERABAD VS M/S.JAYADARSHINI HOUSING PRIVATE LIMITED, HYDERABAD [PAN: AAACJ5050E] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI ROHIT MUJUMDAR, DR FOR ASSESSEE : SHRI RAVI BHARADWAJ, AR DATE OF HEARING : 07-01-2021 DATE OF PRONOUNCEMENT : 22-01-2021 O R D E R PER BENCH : THIS REVENUES APPEAL FOR AY.2011-12 ARISES FROM THE CIT(A)-2, HYDERABADS ORDER DATED 26-02-2019 PASSED IN CASE NO.10034/GNT/CIT(A)-2/2016-17 IN PROCEEDINGS U/S.14 3(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES SOLE SUBSTANTIVE GRIEVANCE RAISED IN THE INSTANT APPEAL PLEADS THAT THE CIT(A) HAS ERRED IN LAW A ND ON FACTS IN ESTIMATING THE ASSESSEES PROFITS FROM CONTRACTU AL RECEIPTS AND SALE OF PLOTS @8% AND @5%; RESPECTIVELY, THAN THAT @15% OF WHOLESALE BASIS ADOPTED IN THE ASSESSING ITA NO. 735/HYD/2019 :- 2 -: OFFICERS ORDER DT.11-08-2016 PASSED IN CONSEQUENCE TO THE TRIBUNALS FIRST ROUND ORDER. BOTH THE LEARNED REPRESEN TATIVE TOOK US TO THE CIT(A)S DETAILED DISCUSSION ON THIS ISSU E AS UNDER: 4.3 GROUND NO.3 IS ESTIMATION OF NET PROFIT @15% O N GROSS RECEIPTS INSTEAD OF 8%. I HAVE GONE THROUGH THE SUBMISSIONS FILED BY THE AP PELLANT, ASSESSMENT ORDER AND DECISIONS OF ITAT VISAKHAPATNA M IN THE CASE OF ACIT, CIRCLE-2(1) VS. AGRIGOLD CONSTRUCTIONS PVT LTD. THE PRESENT CASE, APPELLANT HAS SHOWN GROSS RECEIPTS OF RS.18,0 9,62,569/-. THE NET PROFIT AFTER DEPRECIATION IS SHOWN @ 1.33% FOR THE YEAR UNDER CONSIDERATION. THE A.O HAS ESTIMATED THE SAME @ 15% ON GROSS RECEIPTS. THE HON'BLE JURISDICTIONAL ITAT, HYDERABA D IN THE FOLLOWING CASES HELD THAT 'THE PROFIT RATE OF 8% WOULD BE FAI R AND REASONABLE CONSIDERING THE NATURE OF BUSINESS CARRIED ON BY TH E ASSESSEE. WE THEREFORE DIRECT THE A.O TO ESTIMATE THE PROFIT BY APPLYING THE RATE OF 8% NET OF ALL THE DEDUCTIONS ON TURNOVER DECLARED B Y THE ASSESSEE.' 1. P.PAVANI & OTHERS, ITA NA. 615/H/12, ITAT, HYDERABA D [2014]. 2. SRI PV. SITARAMASWAMY NAIDU, HYDERABAD VERSUS ADDL. COMMISSIONER OF INCOME-TAX, HYDERABAD-2014(1) TMI 1 266- ITAT HYDEILABAD. 3. TEJA CONSTRUCTIONS IN ITA NO.1191/HYD/2011 ORDER DA TED 17.2.2012. 4. C. ESWAR REDDY, (I.T.A. NOS. 668, 670, 685 & 686/HY D/2009) DT. 31.1.2011. 5. K.C.REDDY ASSOCIATES (ITA NOS.804 & 805/HYD/93 DATE D 24.4.96). 6. SRI SRINIVASA CONSTRUCTIONS (ITA NO. 1843/HYD/89 DA TED 29.8.1999). 7. M. BHASKAR REDDY (ITA NO.168/HYD/2006 DATED 1.9.200 7). IN THE CASE OF ACIT VS AGRIGOLD CONSTRUCTION PVT LT D ITA NO.505/VIZAG/2014 ADJUDICATED ON 10.1.2018, THE HON 'BLE ITAT ON AN APPEAL PREFERRED BY THE DEPARTMENT HAS UPHELD TH E SCALING DOWN OF THE ESTIMATED PROFIT TO 8% ON CONTRACT RECEIPTS AND 5% ON SALE OF PLOTS, BY THE HON'BLE CIT. THE HON'BLE ITAT WHILE UPHOLDING THE ESTIMATION OF 8% ON CONTRACT RECEIPTS AND 5% ON SALE OF PLOTS HAS OBSERVED AS FO LLOWS :- ITA NO. 735/HYD/2019 :- 3 -: 'FROM THE PERUSAL OF THE ASSESSMENT ORDER IT IS OBS ERVED THAT THE AO DID NOT REJECT THE BOOKS OF ACCOUNTS BEFORE RESORTING FOR ESTIMATI ON OF INCOME. IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD TO HOLD THAT THE EXP ENDITURE CLAIMED BY THE ASSESSEE IS UNREASONABLY HIGH AND QUANTIFICATION OF UNVERIFIABLE NATURE OF EXPENDITURE AND FRESH FACTS TO RESORT TO HIGHER EST IMATION OF INCOME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CI T(A) AND WE HOLD THAT THE LD.CIT(A) HAS RIGHTLY APPLIED THE ESTIMATION OF INC OME AT 8% ON CONTRACT RECEIPTS AND 5% ON SALE OF PLOTS. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL PROCEEDINGS AGAINST AND IN SUPPORT OF THE CIT(A)S ORD ER ESTIMATING THE ASSESSEES PROFITS IN THE TWIN RECEIPTS. SUFFICE TO SAY, WE ARE OF THE OPINION THAT THE CIT(A)S ESTIMATION FOR ASSESSEES CONTRACTUAL RECEIPTS HARDLY CALLS FOR ANY INTERFERENCE SINCE HE HAS BEEN GUIDED BY VARIOUS JUDICIAL PRECED ENTS (SUPRA) AS WELL AS THE NATURE OF THE TAXPAYERS CONTRACTU AL WORKS PERFORMED. THERE CAN BE HARDLY ANY DISPUTE THA T A CONTRACTUAL ASSIGNMENT DOES NOT CARRY BUSINESS RISK AT HIGHER RATE SINCE INVOLVING ASSERTED RETURNS AND ALL EXPENSES RELEVANT THERETO. WE THUS FIND NO MERIT IN THE FORMER GRIEVANCE . 3.1. COMING TO THE LATTER ASPECT OF ESTIMATION OF ASSESS EES PROFITS FROM SALE OF PLOTS @5%, IT IS NOT IN DISPUTE THAT IT HAD NOT PLACED ON RECORD ALL OF THE CORRESPONDING DETAILS OF PLOTS SOLD IN BOTH ROUNDS OF THE INSTANT LIS. 4. LEARNED AUTHORISED REPRESENTATIVE PRESSED VERY HA RD IN SUPPORT OF THE CIT(A)S CONCLUSION THAT 5% PROFIT RATE ON SALE OF PLOTS IS INDEED JUST AND PROPER. WE FIND NO REASON TO ACCEPT LEARNED COUNSELS ARGUMENTS IN ENTIRETY. THE FACT REM AINS THAT CONTRARY TO THE ASSESSEES CONTRACTUAL RECEIPTS, IS THIS SEGMENT OF SALE OF VACANT PLOTS HAS OF COURSE NOT UNDERGONE THE OTHER INPUTS OF LABOUR AND CONSTRUCTION EXPENDITURE HEADS. TH ESE ITA NO. 735/HYD/2019 :- 4 -: PLOTS HAVE BEEN SOLD ON AS AND WHERE BASIS IN OTHER W ORDS. IT CAN THEREFORE BE SUFFICIENTLY PRESUMED THAT IN ABSENCE OF ANY VALUE ADDITION OR IMPROVEMENT OR IMPROVEMENT, THE SA LE OF THESE VACANT PLOTS MUST HAVE RESULTED IN HIGHER MARGIN THAN MERE PROFIT RATE 5%. WE THEREFORE EXERCISE OUR INHEREN T JURISDICTION U/S.254 OF THE ACT TO RE-ESTIMATE THE PROFIT R ATE ON THIS LATTER SEGMENT AS 8% ONLY. IT IS MADE CLEAR THAT THE SAME WOULD NOT BE TREATED AS PRECEDENT IN ANY OTHER ASSESSMEN T YEAR OR IN ANY OTHER CASE; WHATSOEVER. NECESSARY CO MPUTATION AS PER LAW TO FOLLOW. 5. THIS REVENUES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.GO DARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 22-01-2021 TNMM ITA NO. 735/HYD/2019 :- 5 -: COPY TO : 1.THE DCIT, CIRCLE-2(1), HYDERABAD. 2.M/S.JAYADARSHINI HOUSING PRIVATE LIMITED, #8-2-58 0 & 574/C, FLAT NO.202, NAJAF APARTMENTS, ROAD NO.7&8, BANJARA HILLS, HYDERABAD. 3.CIT(APPEALS)-2, GUNTUR. 4.PR.CIT-2, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.