DCIT, Cir-16(1), Hyderabad V. M/s.Nakoda Chemicals Ltd., Hyderabad

MA 32/HYD/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6619 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-04-2011
• Assessment Year: misc
• Appeal Filed On: 11-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER M.A. NO.32/HYD/11 : ASST. YEARS: 2004-05. (IN ITA NO.1009/H/11) : DCIT, CIR-16(1), HYDERABAD. V/S- M/S. NAKODA CHEMICALS LTD., HYDERABAD. (PAN: AAACN 6893 M) (APPLICANT) (RESPONDEN T) APPLICANT BY : SHRI B.V. PRASAD REDDY RESPONDENT BY : SRI S. RAMA RAO O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: BY THIS MISC. APPLICATION, THE REVENUE IS SEEKING THE TRIBUNAL TO AMEND ITS ORDER TO RECTIFY SOME MISTAKES AP PARENT FROM THE RECORD PASSED IN ITA NO.1009/HYD/2008 FOR THE ASSESSMENT YE AR 2004- 05. 2. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE DISCLOSED PROFIT BEFORE DEPRECIATION AT 11.5% ON SALES AND THE ASSESSING OFFICER ESTIMATED INCOME AT THE RATE OF 13% OF TOTAL SALES AND M.A.NO.32/HYD/11 NAKODA CHEMICALS LTD., SECBAD. ====================== 2 THE DIFFERENCE OF RS,9,77,165/- WAS ADDED TO THE TOTAL INCOME. THE ESTIMATION OF PROFIT IS BEFORE DEPRECIATION. IT IS FU RTHER SUBMITTED THAT THE CIT (A) HAD PASSED ORDER FOR ASSESSMENT YEAR UNDER CON SIDERATION ON 13-3-2008 WHEREIN WITH REGARD TO ONE OF THE ISSUES NAMELY ESTIMATING NET PROFIT AT 13% OF TOTAL SALES HAD HELD T HAT THE ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING SUCH PROFIT ON SALES @ 13% AND THEREBY ADDING THE DIFFERENTIAL AMOUNT OF RS.9,77,16 5/- TO THE INCOME OF THE ASSESSEE. IT IS SUBMITTED THAT WHILE ADJUDICATING THE GROUND WITH REGARD TO NET PROFIT AT 13% OF THE SALES, THE TRIBUNA L IN ITS ORDER DATED 30-4-2010 DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT AT 11% ON THE SALES AS AGAINST 13% ESTIMATED BY THE ASSESSING O FFICER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT IS NOT CLEAR FR OM THE DIRECTIONS WHETHER THE PROFITS ARE TO BE ESTIMATED BEFO RE ALLOWING DEPRECIATION OR CLEAR OF DEPRECIATION. IN VIEW OF THE ABOVE, IT IS PRAYED THAT IN PARA-4 OF ITS ORDER, THE TRIBUNAL HAS DIRECTED TO ESTIMATE THE NET PROFIT @ 11% ON SALES AS AGAINST 9.8% DECLARED BY THE ASSESSEE AND 13% SUSTAINED BY THE CIT(A). IT IS SUBMITTED THAT THE ESTIMATION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT (A) WAS W ITH REFERENCE TO PROFIT BEFORE DEPRECIATION. IT IS FURTHER CONTENDE D THAT IF THE INTENTION OF THE TRIBUNAL IS TO ADOPT 11% AS AGAINST 13%, THEN I T WOULD BE LESS THAN THE PROFIT DECLARED BY THE ASSESSEE I.E., BEFORE DE PRECIATION WHICH WORKED OUT TO 11.5% 3. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE WOULD NOT HAVE ANY GRIEVAN CE IF THE DIRECTIONS OF THIS TRIBUNAL IS TO ESTIMATE THE NET PROFI T AT 11% ON SALES (BEFORE DEPRECIATION) OR THE INCOME DECLARED BY THE AS SESSEE WHICHEVER IS HIGHER, FOR WHICH THE LEARNED DEPARTMENTAL REPRESE NTATIVE HAS NOT MADE ANY SERIOUS OBJECTION FOR THIS PROPOSITION. M.A.NO.32/HYD/11 NAKODA CHEMICALS LTD., SECBAD. ====================== 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND FR OM THE ORDER OF THE TRIBUNAL IN THE INSTANT CASE THAT THE BENCH HAS DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT AT 11% ON SALES BEFO RE DEPRECIATION ONLY AND NOT AFTER DEPRECIATION, AS THE ESTIMATION MA DE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT (A) ARE WITH REFERENCE TO THE PROFITS BEFORE DEPRECIATION. TO AVOID ANOMALIES AS POINTED OU T BY THE DEPARTMENT IN ITS MISC. APPLICATION FILED IN THE INSTANT CASE, IT IS CLARIFIED THAT WHILE ESTIMATING THE PROFIT OF THE ASSESSEE AS PER O UR DIRECTION IN OUR ORDER PASSED IN ITA NO.1009/HYD/08 IS LESS THAN THE PROFIT DECLARED BY THE ASSESSEE BEFORE DEPRECIATION, THE PROFIT DECLARED BY THE ASSESSEE BEFORE DEPRECIATION IS TO BE TREATED AS INCOME OF THE A SSESSEE. WE ORDER ACCORDINGLY. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS ALLOWED AS INDICATED ABOVE. ORDER WAS PRONOUNCED IN THE COURT ON 02-06-2011. SD/- SD/- (G.C. GUPTA) (AKBER BASHA) VICE PRESIDENT ACCOUNTANT MEMBER. DATED: 02-06-2011. M.A.NO.32/HYD/11 NAKODA CHEMICALS LTD., SECBAD. ====================== 4 COPY FORWARDED TO: 1. DCIT, CIR-16(1), HYDERABAD. 2. M/S. NAKODA CHEMICALS LIMITED, D-9,SMR NIRANJAN VI LLA, JUPITOR COLONY, SIKH ROAD, SECUNDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-IV, HYDERABAD 4. 5. COMMISSIONER OF INCOME TAX AP-III, HYDERABAD THE DR, ITAT, HYDERABAD. JMR*