Sri Vijaya Durga Engineering Constructions, Bikkavolu V. The Income Tax Officer, Ward-1, Kakinada

ITA 82/VIZ/2019

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2241 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Keywords: Deemed to accrue or arise in india; Set aside
• Section: 44AD; 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 82 /VIZ/201 9 ( / A SSESSMENT Y EAR : 20 1 0 - 1 1 ) M/S SRI VIJAYA DURGA ENGINEERING CONSTRUCTIONS D.NO.4 - 74, MAIN ROAD R.S.PETA, BIKKAVOLU EAST GODAVARI DIST. [ PAN : AB BFS3663D ] VS. INCOME TAX OFFICER WARD - 1 KAKINADA ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : S HRI B.RAMA KRISHNA , DR / DATE OF HEARING : 13 . 1 1 . 201 9 / DATE OF PRONOUNCEMENT : 20 . 1 1 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) [CIT(A)] - 1, GUNTUR IN APPEAL NO. 0161/2013 - 14 DATED 04 .0 1 .201 9 FOR THE ASSESSMENT YEAR (A.Y.) 20 10 - 11. 2 I.T.A. NO . 82 /VIZ/201 9 , A.Y.20 1 0 - 1 1 M/S SRI VIJAYA DURGA ENGINEERING CONSTRUCTIONS, BIKKAVOLU 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN CIVIL CONTRACTS. FOR THE A.Y.2010 - 11, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.43,84,310/ - . THE CASE WAS TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PRODUCE THE BOOK S OF ACCOUNTS, THEREFORE, THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT ESTIMATING THE INCOME @10% WHICH RESULTED IN ADDITION OF RS.3,61,172/ - . 3. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO. 4. AGAINST THE ORDER OF THE LD.CIT(A), THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE AO ESTIMATED THE INCOME @10% ON THE TOTAL CONTRACT WORKS WHICH IS UNJUSTIFIED. THE LD.AR FURTHER SUBMITTED THAT OUT OF THE GROSS CONT R ACT RECEIPTS OF RS.9,85,67,197/ - SUBSTANTIAL AMOUNT OF SUB CONTRACTS WERE INCLUDED AND THE INCOME FROM SUB - CONTRACTS WAS LESS THAN 5%. AS PER THE PAPER BOOK FURNISHED BY THE ASSESSEE, THE MAIN CONTRACTS RECEI PTS WERE RS.70,48,929/ - , O UT OF THE TOTAL CONTRACTS RECEIPTS OF RS.9.85 CRORES, THE SUB CONTRACTS WERE RS.5.04 CRORES AND THE MATERIAL SUPPLIES WAS RS.4.10 CRORES WHICH THE AO HAS NOT CONSIDERED PROPERLY IN THE ASSESSMENT ORDER . THE 3 I.T.A. NO . 82 /VIZ/201 9 , A.Y.20 1 0 - 1 1 M/S SRI VIJAYA DURGA ENGINEERING CONSTRUCTIONS, BIKKAVOLU LD.AR SUBMITTED THAT THERE IS NO PROFIT ON MATERIAL SUPPLY AND SUB CONTRACT WORKS CARRIES NOT MORE THAN 5% OF PROFIT, THEREFORE, ARGUED THAT THE ESTIMATION OF INCOME @10% ON GROSS CONTRACTS INCLUSIVE OF SUB CONTRACTS IS UNJUSTIFIED AND BEYOND EXPECTATION OF ANYBODY IN THIS LIN E OF BUSINESS. THEREFORE, REQUESTED TO DELETE THE ADDITION AND DIRECT THE AO TO ACCEPT THE INCOME RETURNED. 5. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSEE HAS ADMITTED THE PROFIT @9.63% ON GROSS CONTRACTS RECEIPTS . GROSS CONTRACTS INCLUDE SUB CONTRACTS AND MATERIAL SUPPLY WHICH CONSTITUTE MORE THAN 90% OF THE GROSS CONTRACT WORKS. AS SUBMITTED BY THE LD.AR, THE PROFIT RATE IN THE SUB CONTRACTS RECEIPTS IS NORMALLY LESSER THAN MAIN CONTRACTS. THE DEEMED INCOME IN CIVIL CONSTRUCTION AS PER SECTION 44AD IS 8%. THE AO ALSO DID NOT BRING ANY REASON OR THE COMPARABLE CASE FOR ESTIMATION OF INCOME @10%. THEREFORE, WE HOLD THAT ESTIMATION OF INCOME @ 10% IS UNJUSTIFIED, ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LD.CIT (A) AND DIRECT THE AO TO ACCEPT THE INCOME RETURNED. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 4 I.T.A. NO . 82 /VIZ/201 9 , A.Y.20 1 0 - 1 1 M/S SRI VIJAYA DURGA ENGINEERING CONSTRUCTIONS, BIKKAVOLU 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 20 . 1 1 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S SRI VIJAYA DURGA ENGINEERING CONSTRUCTIONS D.NO.4 - 74, MAIN ROAD, R.S.PETA, BIKKAVOLU, EAST GODAVARI DIST. 2 . / THE REVENUE - INCOME TAX OFFICER, WARD - 1 , KAKINADA 3. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM