ACIT, Jaipur V. CREATIVE POJECTS AND CONTRACTS P LTD., Jaipur

ITA 988/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54217 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 29-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N S VYAS
• Assessee Lawyers: D K MEENA
• Keywords: Business income; Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 988/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: AABCC 6585 C A.C.I.T. CIRCLE 5, JAIPUR V. M/S CREATIVE PROJECTS AND CONTRACTS PVT LTD., J.L.N. MARG GANESH COLONY, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI D.K. MEENA DEPARTMENT BY: SHRI N.S. VYAS DATE OF HEARING: 17-10-2011 DATE OF PRONOUNCEMENT: 21 -10-2011 ORDER PER N.L. KALRA, AM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)- II, JAIPUR DATED 20.5.2010. 2. THE GROUND OF APPEAL RAISED BY THE REVENUE ARE A S UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN:- (I) DELETING TRADING ADDITION THOUGH REJECTION OF B OOKS OF ACCOUNTS HAS BEEN UPHELD. (II) STATING THAT GROSS CONTRACT RECEIPTS WERE RS. 8,65,33,075/-. AS A MATTER OF FACT THE AO HAS TAKEN GROSS CONTRACT RECE IPTS AT RS. 10,02,14,029/- AS PER CONTRACT ACC WHICH INCLUDE OP ENING W.I.P IN THE 2 DEBIT SIDE AND CLOSING SIDE. IN THE PROFIT AND LOS S ACCOUNT THE ASSESSEE HAS WRONGLY SHOWN GROSS CONTRACT RECEIPTS AFTER RED UCING OPENING W.I.P OF RS. 1,26,35,064/- AS SUCH THE CORRECT CONT RACT RECEIPT IS RS. 9,91,68,139/-. (III) HOLDING THAT AFTER ESTIMATING THE NET PROFIT FURTHER REDUCTION HAS TO BE ALLOWED ON ACCOUNT OF DEPRECIATION, DESPITE THE FACT THAT THE AO SPECIFICALLY APPLIED NET PROFIT RATE OF 8% CONSIDER ING ALLOWABILITY OF ALL EXPENSES. (IV) NOT SUSTAINING ADDITION MADE BY AO ASSESSEE INTERES T ON FDR AND WCT REFUND UNDER THE HEAD INCOME FROM OTHER SOU RCES THOUGH CONFIRMED ACTION OF THE AO IN PRINCIPLE. 3 THE ASSESSEE IS ENGAGED IN THE EXECUTION OF CIVIL CONTRACT. THE AO AT PAGE 2 OF THE ASSESSMENT ORDER HAS MENTIONED THAT T HE ASSESSEE HAS SHOWN NET PROFIT OF RS. 73,75,242/- OUT OF TOTAL TURNOVER OF RS. 10,02,14,029/-. THE AO APPLIED NET PROFIT RATE OF 8% ON TOTAL SALES OF RS. 10,02,14,029/-. THE ASSESSEE WHILE FILING THE APPEAL RAISED THE FOLLOWI NG GROUND OF APPEAL: THAT THE AO HAS ERRED IN REJECTING THE BOOKS OF AC COUNTS U/S 145(3) OF THE ACT AND THEREBY APPLIED NET PROFIT RATE OF 8% O N GROSS CONTRACT RECEIPTS OF RS. 10,02,14,029/- WHICH HAS RESULTED I N TRADING ADDITION OF RS. 12,88,313/-. THE LD. CIT(A) IN HIS ORDER HAS MENTIONED THAT IT I S NOT CLEAR AS TO HOW THE AO HAS ADOPTED THE GROSS CONTRACT RECEIPTS OF RS. 1 0, 02,14,029/-. ACCORDING TO THE LD. CIT(A), THE GROSS RECEIPT RECE IVED AS PER PROFIT AND LOSS ACCOUNT ARE RS. 8,65,33,075/-. IN THE GROUND OF APP EAL BEFORE US, THE REVENUE HAS REFERRED TO OPENING WORK IN PROCESS OF RS. 1,26 ,35,064/-. THERE MAY BE CLOSING WORKING PROGRESS ALSO. NO DETAILS HAVE BEE N FILED BEFORE US. HENCE WE ARE NOT IN A POSITION TO RECONCILE THE CONTRACT RECEIPTS ADOPTED BY THE LD. CIT(A) AT RS. 8,65,33,075/- AND ADOPTED BY THE AO AND RS. 10,02,14,023/-. 3 THE LD. CIT(A) WILL PROVIDE OPPORTUNITY TO THE AO T O EXPLAIN AS TO HOW THE RECEIPTS WERE TAKEN AT RS. 10,02,14,023/-. AFTER G IVING OPPORTUNITY TO THE AO THE LD. CIT(A) WILL RECORD HIS FINDING IN RESPEC T OF CONTRACT RECEIPTS TO BE CONSIDERED IN THE ORDER UNDER REFERENCE FOR ASCE RTAINING THE INCOME AS PER ACCOUNTING ADOPTED BY ASSESSEE. 4. THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR ASS ESSMENT YEAR 2002-03 AND 2004-05 UPHELD THE FINDING OF THE LD. CIT(A) IN DIRECTING THE AO TO ALLOW DEPRECIATION AND INTEREST AFTER APPLYING NET PROFIT RATE. WE, THEREFORE, FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO DISALLOW THE DEPRECIATION AND INTEREST AFTER APPLYING NET PROFIT RATE. THE TRIBUNAL IN THE CASE FOR ASSESSMENT YEAR 2002-03 AND 2004-05 VIDE O RDER DATED 25.7.2008 HAS DIRECTED THAT THE INTEREST FROM FDR AND ON WCT REFUND SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AND WILL NOT BE CONSIDERED AS PART OF THE BUSINESS INCOME. FOLLOWING THAT WE HOL D THAT INTEREST ON FDR IS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCE S. 5 IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTL Y ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21-10-2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPU DATED: 21 /10/2011 SURESH COPY FORWARDED TO :- 1 A.C.I.T. CIRCLE 5, JAIPUR 2 M/S CREASTIVE PROJECTS AND CONTRACTS (P) LTD. 3 THE LD. CIT 4 THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.39/JP /11) A.R, ITAT, JAIPUR 4 5 6 7 8 9