M/s Sri Sai Balaji Enterprises, Hyderabad V. ACIT, Circle-2(1), Hyderabad

MA 174/HYD/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0850 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER M.A. NO. 174/HYD/13 (IN ITA NO. 237/HYD/2013 ASSESSMENT YEAR 2009-10) M/S. SAI BALAJI ENTERPRISES, HYDERABAD PAN: ABKFS8882P VS. THE ASST. CIT CIRCLE-9(1) HYDERABAD. APPLICANT RESPONDENT APPELLANT BY: SRI K.C. DEVDAS RESPONDENT BY: SRI R. LAXMAN DATE OF HEARING: 26 .0 7 .2013 DATE OF PRONOUNCEMENT: 08.08.2013 O R D E R PER CHANDRA POOJARI, AM : BY THIS M.A., THE ASSESSEE IS SEEKING RECTIFICATIO N OF THE ORDER OF TRIBUNAL DATED 07/06/2013 PASSED IN ITA NO . 237/HYD/13 FOR THE ASSESSMENT YEAR 2009-10. 2. THE LEARNED AR SUBMITTED THAT THE DEPARTMENT HAS RAISED THE FOLLOWING TWO GROUNDS OF APPEAL IN THE SAID APP EAL: (2) THE HONBLE CIT(A) ERRED IN DELETING THE ADDIT ION MADE TOWARDS ESTIMATING THE INCOME @ 2% ON RS. 11,57,56,058/- AS THE ASSESSEE WOULD NOT HAVE UNDERTAKEN TO EXECUTE WORK ON SUCH A LARGE SCALE WITHOUT ANY PROFIT ELEMENT. (3) THE DECISION OF THE CIT(A) IN ESTIMATING THE IN COME @ 9% OF THE TURNOVER OF RS. 8,48,62,333 IS NOT ACCEPTABLE AS THE MAIN CONTRACTOR HAD MADE TDS ON THE TOTAL TURNOVER OF RS. 20,11,92,902 AND, THEREFO RE, THE INCOME SHOULD HAVE BEEN ESTIMATED @ 9 OF RS. 20,11,92,902/- INSTEAD OF RS. 8,48,62,333/-. M.A. NO. 174/HYD/2013. M/S. SAI BALAJI ENTERPRISES ==================== 2 3. WHILE ADJUDICATING THE SAID GROUNDS OF APPEAL, I N RESPECT OF GROUND NO. 2, THE TRIBUNAL HELD AS FOLLOWS: 8. THE TRIBUNAL IN THE CASE OF C. ESWAR REDDY & CO . IN ITA NO. 668/HYD/2009 & ANR., FOR A.YS. 2003-04 AND 2004-05 VIDE ORDER DATED 31 ST JANUARY, 2011 HELD THAT INCOME HAS TO BE ESTIMATED AT 5% ON SUBCONTRACT REC EIPTS. CONSIDERING THIS, IN OUR OPINION, IF THE ASSESSEE I S NOT ABLE TO PROVE THAT THE PROFIT RATIO IS LESS THAN 5% THEN THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE INCOM E AT 5% ON SUB-CONTRACT RECEIPTS. IN OTHER WORDS, IF THE A SSESSEE PRODUCES NECESSARY DETAILS AND SHOWS THAT THE PROFI T RATIO ON SUBCONTRACT RECEIPTS IS LESS THAN 5%, THE ASSESS ING OFFICER IS DIRECTED TO ADOPT THE SAME. ACCORDINGLY THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION IN THE LIGHT OF OUR ABOVE DIREC TIONS. 4. ACCORDING TO THE LEARNED AR, THE TRIBUNAL COMMIT TED AN ERROR IN DIRECTING THE ASSESSING OFFICER TO ESTIMAT E THE INCOME AT 5% ON SUB-CONTRACT RECEIPTS AGAINST DELETION OF 2% OF INCOME ON SUB-CONTRACT RECEIPTS BY THE CIT(A). THE LEARNED AR CONTENDED THAT WHEN THE REVENUE WAS IN APPEAL BEFORE THE TRIB UNAL WITH REGARD TO DELETION OF 2% OF INCOME ON SUB-CONTRACT RECEIPTS OF RS. 11.57 CRORES, THERE WAS NO GROUND BEFORE THE TR IBUNAL AGAINST THE DIRECTION OF THE CIT(A) ON ESTIMATION O F INCOME. HE, THEREFORE, POINTED OUT THAT THE DIRECTION OF THE TR IBUNAL IS CONTRADICTORY TO THE JUDGMENT OF THE HONBLE SUPREM E COURT IN THE CASE OF BRIJBHUSHANLAL PRADYUMNA KUMAR VS. CIT, 115 ITR 524. BEING SO, HE SOUGHT PROPER DIRECTIONS OF THE T RIBUNAL IN THIS ISSUE. 5. THE LEARNED DR HAS FAIRLY CONCEDED THE SUBMISSI ONS OF THE LEARNED AR AND SUBMITTED THAT THE DECISION OF T HE TRIBUNAL RESULTED IN ENHANCEMENT OF INCOME. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. THE GROUND BEFORE THE TRIBUNAL IS WITH M.A. NO. 174/HYD/2013. M/S. SAI BALAJI ENTERPRISES ==================== 3 REGARD TO DELETION OF ADDITION MADE TOWARDS ESTIMAT ED INCOME AT 2% ON 11,57,56,058/- AS THE ASSESSEE WOULD NOT HAVE UNDERTAKEN TO EXECUTE WORK ON SUCH A LARGE SCALE WI THOUT ANY PROFIT ELEMENT. BEING SO, THE TRIBUNAL MUST HAVE C ONFINED TO THE ADJUDICATION TO THE EXTENT OF DELETION OF 2% ON SUB-CONTRACT RECEIPTS OF RS. 11.57 CRORES, INSTEAD, THE TRIBUNAL GAVE A FINDING THAT TO ESTIMATE THE INCOME AT 5%, THOUGH, THE ASSE SSING OFFICER HIMSELF HAS ESTIMATED THE INCOME AT 2%. IN OUR OPIN ION, IT IS PROPER TO CONFIRM THE ADDITION AT 2% MADE BY THE AS SESSING OFFICER INSTEAD OF ENHANCING THE SAME TO 5%. ACCORD INGLY WE MODIFY THE ORDER OF THE TRIBUNAL AS UNDER: THE ASSESSING OFFICER IS JUSTIFIED IN ESTIMATING TH E INCOME AT 2% ON SUB-CONTRACT RECEIPTS OF RS. 11,57,56,058/ -. THE ORDER OF CIT(A) IS REVERSED ON THIS ISSUE. 7. ACCORDINGLY, PARA 9 OF THE IMPUGNED ORDER MAY BE READ AS UNDER: 9. IN THE RESULT, REVENUE APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT, THE M.A. FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2013. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 8 TH AUGUST, 2013 KV COPY FORWARDED TO: 1. M/S. SAI BALAJI ENTERPRISES, PRAJAY NIVAS, PHASE - 1, MOHAN NAGAR, DILSUKHNAGAR, HYDERABAD. 2. THE ASST. CIT, CIRCLE - 9(1), 1 ST FLOOR, 'B' BLOCK, INCOME - TAX TOWERS, AC GUARDS, HYDERABAD-500 004. 3 . THE CIT(A) - V I, HYDERABAD. 5. THE CIT - V I, HYDERABAD 6. THE DR ' A ' BENCH, ITAT, HYDERABAD