KUMAWAT CONTRACTORS, Jaipur V. DIT, Jaipur

ITA 981/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5557 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 08-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S NEHARAJCIT
• Keywords: Rejection of books of accounts; Depreciation

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 981/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 KUMAWAT CONTRACTORS, 48, RAM NAGAR, KALWAR ROAD, JHOTWARA, JAIPUR CUKE VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-03, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFK8231C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.L. JAIN (ADVOCATE) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A.S.NEHARA(JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 14/12/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 18 /12/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), JAIPUR DATED 06.09.2016 FOR ASSESSMENT YEAR 2013-14 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APP EAL:- 1. THAT THE LD. APPELLATE AUTHORITY WAS NOT JUSTIF IED IN DISALLOWING THE INTEREST OF RS. 24,47,674 PAID TO T HIRD PARTIES AND ADOPTING THE RATE OF PROFIT HIGHER @ 6% BEFORE ALLO WING PARTNERS SALARY, INTEREST AND DEPRECIATION. ITA NO. 981/JP/2016 KUMAWAT CONTRACTORS, JAIPUR VS. DCIT, JAIPUR 2 2. THAT RS. 279,662/- WRONGLY ADDED IN INCOME INSTE AD OF ALLOWING SET OFF FROM THE INTEREST PAYMENT. 3. THAT RS. 354,118/- WRONGLY CONFIRMATION OF DISAL LOWANCE U/S 40(A)(IA) OF THE I.T. ACT. 2. IN THE GROUND NO. 1 OF APPEAL, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF INTEREST PAID TO 3 RD PARTIES AMOUNTING TO RS. 24,47,674/- AND ALSO ADOPTION OF THE NET PROFIT RATE OF 6% AS A GAINST 5.26% DECLARED BY THE ASSESSEE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE APPELLANT IS A CIVIL CONTRACTOR CARRYING OUT CONSTRUCTION WORK FOR RAJAS THAN HOUSING BOARD. DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAS DECLARED A TURNOVER OF RS. 21,93,09,335/- AND NET PROFIT OF RS . 1,15,51,587/- BEFORE ALLOWANCE OF INTEREST, DEPRECIATION AND REMU NERATION TO PARTNERS DETERMINING THE NP RATE OF 5.26% AS COMPARED TO 5.2 0% IN IMMEDIATELY PRECEDING YEAR. 4. THE AO REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) AND APPLIED NP RATE OF 8% SUBJECT TO ALLOWANCE OF DEPRECIATION, IN TEREST TO PARTNERS, AND REMUNERATION TO PARTNERS AND INTEREST TO BANKS AND OTHERS. DURING THE APPELLATE PROCEEDINGS BEFORE LD. CIT(A), IT WAS ADMITTED BY THE APPELLANT THAT IT WAS NOT MAINTAINING STOCK REGISTE R AND HAS THUS HAS NOT CHALLENGED THE REJECTION OF BOOKS OF ACCOUNTS W HICH WAS CONFIRMED BY THE LD. CIT(A) AND IS NOT THEREFORE NOT UNDER CH ALLENGE BEFORE US. 5. FOLLOWING THE EARLIER ORDERS OF THE CO-ORDINATE BENCH FOR AY 2008-09 AND 2009-10, THE LD. CIT(A) ESTIMATED THE N .P RATE OF 6% ITA NO. 981/JP/2016 KUMAWAT CONTRACTORS, JAIPUR VS. DCIT, JAIPUR 3 BEFORE INTEREST, DEPRECIATION AND REMUNERATION AS A GAINST 5.26% DECLARED BY THE APPELLANT. 6. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THERE IS INCREASE IN TURNOVER FROM THE PREVIOUS YEAR AND WHI CH HAS RESULTED IN SLIGHT REDUCTION IN N.P RATE AS COMPARED TO PREVIOU S YEARS BUT AT THE SAME TIME, THE SAME IS BETTER THAN THE N.P RATE DEC LARED IN THE IMMEDIATE PRECEDING YEAR. HENCE, THE N.P RATE DECL ARED BY THE ASSESSEE SHOULD BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PURUSED THE MATERIAL AVAILABLE ON RECORD AND GIVEN A CAREFUL CONSIDERATI ON TO THE FACTUAL MATRIX OF THE CASE. WE FIND THAT IN THE PAST YEARS, THE COORDINATE BENCHES HAVE BEEN TAKEN A CONSISTENT VIEW OF DETERM INING THE N.P RATE OF 6% IN ASSESSEES OWN CASE. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS HIMSELF SUBMITTED BEFORE THE LD CIT(A) THAT THE PREVIOUS YEAR ORDER MAY BE FOLLOWED. FOLLOWING THE PAST HIS TORY OF THE ASSESSEE AND CONSISTENT POSITION TAKEN BY THE CO-ORDINATE BE NCHES, WE UPHELD THE NP RATE OF 6% BEFORE DEPRECIATION, INTEREST AND REMUNERATION. 8. REGARDING FURTHER ALLOWANCE OF RS. 24,47,674/- P AID TO BANKS AND OTHERS BY THE ASSESSEE FROM THE N.P RATE SO DETERMI NED, THE LD. CIT(A) HAS DENIED THE SAID CLAIM FOLLOWING EARLIER ORDERS OF THE CO-ORDINATE BENCH. IN THIS REGARD, THE CONTENTION OF THE LD. AR IS THAT IN THE EARLIER YEARS, THE ASSESSEE HAD NOT CLAIMED ANY INTEREST PA YMENT TO THIRD PARTIES, HENCE, THERE WAS NO OCCASION FOR THE TRIBU NAL TO CONSIDER ANY ALLOWANCE IN RESPECT OF SUCH THIRD PARTY INTEREST. IT WAS ACCORDINGLY SUBMITTED THAT THE LD. CIT(A) WAS NOT CORRECT IN RE JECTING THE CLAIM OF INTEREST PAID TO THIRD PARTIES. WE FIND THAT THE SA ID CONTENTION BY THE LD ITA NO. 981/JP/2016 KUMAWAT CONTRACTORS, JAIPUR VS. DCIT, JAIPUR 4 AR NEED FURTHER EXAMINATION AND IN ABSENCE OF SUFFI CIENT EVIDENCE ON RECORD IN TERMS OF PAST RETURNS OF INCOME AS WELL A S THE ORDERS OF THE CO-ORDINATE BENCHES, WE SET ASIDE THIS MATTER TO TH E FILE OF LD. CIT(A) TO VERIFY THE SAID CONTENTION OF THE LD.AR AND DECIDE THE SAME AFRESH AS PER LAW. 9. REGARDING THE 2 ND GROUND OF APPEAL, THE LD. CIT(A) HAS HELD THAT THE EARNING OF INTEREST INCOME ON INCOME TAX REFUND AND SALES TAX REFUND HAS NOTHING TO DO WITH THE BUSINESS OF THE A PPELLANT. FURTHER, THE APPELLANT HAS NOT PLACED ON RECORD ANY MATERIAL TO SUGGEST THAT INTEREST ON BANK DEPOSIT WAS LINKED TO ITS BUSINESS ACTIVITIES AND THUS IT IS HELD THAT THE AO HAS RIGHTLY TREATED RS. 2,79,66 2/- AS NON OPERATING INCOME AND ADDING THE SAME SEPARATELY TO THE INCOME OF THE APPELLANT. WE DONOT SEE ANY INFIRMITY IN THE SAID FINDINGS OF THE LD CIT(A) AND THE SAME IS HEREBY CONFIRMED. 10. REGARDING THE 3 RD GROUND OF APPEAL, DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD NOT DEDUCTED TDS O N INTEREST OF RS. 3,54,118/- PAID TO RELIGARE FINVEST LTD. WHICH WAS DISALLOWED BY THE AO INVOKING SECTION 40(A)(IA) OF THE ACT. THE LD CIT(A ) UPHELD THE DISALLOWANCE FOLLOWING THE DECISION OF HONBLE PUNJ AB AND HARYANA HIGH COURT IN THE CASE OF P.M.S. DIESELS VS. CIT (2015) 277 CTR 0491 (P&H). THE SAID DECISION HAS SINCE BEEN AFFIRMED BY THE HO NBLE SUPREME COURT IN CASE OF PALAM GAS SERVICES (CIVIL APPEAL N O. 5512 OF 2017) DATED 3.5.2017. HENCE, RESPECTFULLY FOLLOWING THE SAME, THE AO IS HELD JUSTIFIED IN MAKING DISALLOWANCE OF RS. 3,54,118/- U/S 40(A)(IA) OF THE ACT. ITA NO. 981/JP/2016 KUMAWAT CONTRACTORS, JAIPUR VS. DCIT, JAIPUR 5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18/12/2017 SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/12/2017. * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- KUMAWAT CONTRACTORS, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-3, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 981/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR