Prahallad Charan Baug, Balasore V. JCIT, Balasore

ITA 77/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3728 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 77 / CTK /20 1 5 ( / ASSESSMENT YEAR : 20 10 - 20 1 1 ) PRAHALLAD CHARAN BAUG, AT - AZIMABAD, BALASORE - 756001 VS. ACIT, BALASORE, RANGE, BALASORE. ./ ./ PAN/GIR NO. : A CZPB 2012 G ( / APPELLANT ) .. ( / RESPONDENT ) AS SESSEE - SHRI PRAHALLAD CHARAN BAUG, PRESENT IN PERSON /REVENU E BY : SHRI D.K.PRADHAN, DR / DATE OF HEARING : 27 / 0 6 /201 7 / DATE OF PRONOUNCEMENT 28 / 06 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A) , CUTT ACK , DATED 28.11.2014 , PASSED IN I.T. APPEAL NO. 0354 / 1 3 - 1 4 , CHALLENGING THE ACTION OF THE CIT(A) IN NOT ALLOWING THE CLAIM OF REIMBURSEMENT OF ROYALTY AND INSURANCE CLAIM AND SINCE THE BOOKS OF ACCOUNTS ARE REJECTED, ESTIMATING THE INCOME AT 8% IS NOT IN AC CORDANCE WITH LAW. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A A - CLASS CIVIL CONTRACTOR, EXECUTING WORKS OF GOVERNMENT DEPARTMENTS LIKE R.W. DIVISION, R&B DIVISION, DRAINAGE DIVISION ETC, FILED ITS RETURN OF INCOME ON 14.10.2010 DECLARING TOTAL INCOME AT RS. 1,37,71,410/ - FO R THE ASSESSMENT YEAR 20 10 - 201 1 . SUBSEQUENTLY, THE ASSESSEE S CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) WAS ISSUED TO THE ASSESSEE. IN COMPLIANCE TO THE NOTICE, LD. AR OF THE ASSESSEE APPEARED FROM TIME TO ITA NO. 77/20 15 2 TIME WITH THE WRITTEN SUBMISSIONS AND REPLIES TO THE QUESTIONNAIRE AND THE CASE WAS DISCUSSED. THE AO FOUND THAT THE ASSESSEE IS A A - CLASS CONTRACTOR EXECUTING THE WORKS OF GOVERNMENT DEPARTMENT AND DURING THE FINANCIAL YEAR 2009 - 2010 THE ASSESSEE HAD A GROSS CONTRACT RECEIPTS OF RS.18.85 CRORES AND TOTAL GROSS INCOME IS BEING RS.19.27 CRORES AND THE ASSESSEE HAD OFFERED INCOME OF RS.1,38,71,413/ - AS NET PROFIT RATE OF 7.20%. THERE WAS A SURVEY OPERATION U/S.133A ON 9.3.2010 AND STATEMENTS WERE RECORDED AND AS PER THE SUBMISSION, THE ASSESSEE HAD NOT MAINTAINED PROPER BOOKS OF ACCOUNTS AND ACCEPTED TO OFFER INCOME ON ESTIMATED BASIS. ACCORDINGLY, LD. AO ESTIMATED 8% OF THE GROSS RECEIPTS ALONG WITH OTHER INCOME AND ASSESSED TOTAL INCOME AT 1,77,62,690/ - , PASSED THE ORDER U/S.143(3) OF THE ACT, DATED 07.03.2013. 3 . AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , WHEREAS THE LD. CIT(A) HAVING CONSIDERED THE ARGUMENTS, FINDINGS OF AO AND THE SUBMISSIONS, FOUND THAT THE ASSESS EE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE OBSERVING AT PAGE 3 AS UNDER : - I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE CONTENTION OF THE APPELLANT. THE APPELLANT HAD APPARENTLY DISCLOSED 8% OF THE NET PROFIT OF GROSS TURNOVER DURING SURVEY U/S.L33A OF THE ACT AND ADMITTED THAT HE HAD NOT MAINTAINED IMPORTANT BOOKS OF ACCOUNT INCLUDING THE CASH BOOK. HOWEVER THE APPELLANT HAD NOT REFUTED HIS CONTENTION AS PROVIDED DURING SURVEY U/S. 1 33A OF THE ACT WHILE HEARING THE APPEAL. GOING TO THE P & L A/C. OF THE APPELLANT IT IS EVIDENT THAT THE APPELLANT CHARGED TO ITS P & L A/C. ROYALTY AND TIME EXTENSION FEES AMOUNTING TO RS.49,12,953/ - AND ROYALTY AGAINST LEASE OF QUARRY AMOUNTING TO RS.26,41,500/ - WHEREAS HE HAD RECEIVED REIMBURSEMENT OF ROYALTY AT RS.8,56,371/ - . SINCE ROYALTY PAYMENT AND REIMBURSED AMOUNT ARE ACCOUNTED FOR THROUGH A LEDGER BY THE APPELLANT AND ROYALTY PAYMENT IN THIS YEAR IS MUCH MORE THAN THE ROYALTY REIMBURSEMENT, I DO NOT SEE ANY REASON WH Y THE ROYALTY REIMBURSEMENT SHOULD NOT BE SHOWN ITA NO. 77/20 15 3 BY THE APPELLANT AS INCOME. IT IS BECAUSE THE SAME HAS ALREADY BEEN CLAIMED BY THE APPELLANT AS EXPENDITURE. THE APPELLANT HAD HIMSELF ACCOUNTED FOR THE SAME IN THE P & L A/C. THEREFORE THE ROYALTY REIMBURSED SHOULD BE ADDED TO THE GROSS BILLS RECEIVED IN ESTIMATING THE NET PROFIT @8%. THE SAME HOLDS GOOD FOR WORK PACKAGE INSURANCE CLAIM. THE APPELLANT HAD CLAIMED THE INSURANCE PREMI UM IN THE P & L A/C. AND HAD ALSO CLAIMED THE LOSSES INCURRED IN THE FLOOD ETC . IN THE P & L A/C. THOUGH THE WORK PACKAGE INSURANCE CLAIM SHOULD HAVE BEEN ACCOUNTED FOR SEPARATELY, THE APPELLANT HAD ALREADY CLAIMED FOR THE EXPENSES IN THE P & L A/C. THEREFORE THE WORK PACKAGE INSURANCE CLAIM SHOULD ALSO BE ADDED TO THE GROSS RECEIPT S AND NET PROFIT @8% SHOULD BE CALCULATED FROM THIS NEW GROSS RECEIPTS. THE DEPRECIATION HOWEVER IS TO BE DEDUCTED FROM THE NEW GROSS RECEIPTS AND THEREAFTER NET PROFIT @8% SHOULD BE COMPUTED FROM SUCH GROSS RECEIPTS. 4 . AGGRIEVED BY THE ORDER OF THE CI T(A) THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5 . AT THE TIME OF HEARING, THE ASSESSEE, BEING PRESENT IN PERSON, SUBMITTED THAT THE CIT(A) HAS NOT CONSIDERED THE CLAIM OF REIMBURSEMENT OF INSURANCE CLAIM AND ALSO ESTIMATION OF INCOME AT 8% OF GROSS RECEIPT IS ON HIGHER SIDE AS THE REVENUE HAS ACCEPTED 7% IN ASSESSMENT YEAR 2011 - 2012 AND ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. 6. CONTRA, LD. DR, RELYING ON THE ORDERS OF AUTHORITIES BELOW, OPPOSED TO THE GROUNDS O F APPEAL RAISED BY THE ASSESSEE. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE JUDICIAL DECISION . THE CONTENTION OF THE ASSESSEE THAT THE INCOME HAS BEEN ESTIMATED AT 8% IRRESPECTIVE OF THE FACT THAT THE REVE NUE HAS ACCEPTED HE INCOME AT 7% FOR THE SUBSEQUENT ASSESSMENT YEAR I.E. A.Y.2011 - 2012, WHICH IS NOT DISPUTED. FURTHER, WE FOUND IN ASSESSEES OWN CASE THE TRIBUNAL IN ITA NO.614/CTK/2012, DATED ITA NO. 77/20 15 4 13.2.2013 FOR THE ASSESSMENT YEAR 2009 - 2010, HAS CONSIDERED 7 % OF THE GROSS RECEIPTS AS INCOME. WE ALSO FOUND THAT 7% OF THE GROSS RECEIPTS HAS BEEN ACCEPTED BY THE REVENUE FOR THE ASSESSMENT YEAR 20 09 - 20 10 AND THE REVENUE HAS NOT DISPUTED. ACCORDINGLY, WE, FOLLOWING THE JUDICIAL PRONOUNCEMENT RENDERED BY THE COORDI NATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE (SUPRA), DIRECT THE AO TO ESTIMATE THE INCOME AT 7% OF THE GROSS RECEIPTS . THIS GROUND OF THE ASSESSEE IS ALLOWED. IN REGARD TO REIMBURSEMENT OF ROYALTY AND INSURANCE CLAIM, WE UPHOLD THE ORDER OF THE CIT( A) IN THIS REGARD. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 28/06 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 28 / 06 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - PRAHALLAD CHA RAN BAUG, BALASORE 2. / THE RESPONDENT - JCIT, BALASORE, RANGE - BALASORE. 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//