United Electric Co., , Chirala V. Asst. Commissioner of Income Tax, Circle-1(1), Guntur

MA 65/Hyd/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7116 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 18-10-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARVIND DAKSHIN
• Assessee Lawyers: A C GANGAIAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER M.A. NO. 65/HYD/2019 (ARISING OUT OF ITA NO. 2139/HYD/2018) ASSESSMENT YEAR: 2009-10 M/S.UNITED ELECTRIC CO., CHIRALA [PAN: AABFU2361D] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, ONGOLE (APPLICANT) (RESPONDENT) FOR ASSESSEE : SHRI A.C.GANGAIAH, AR FOR REVENUE : SHRI ARVIND DAKSHIN, DR DATE OF HEARING : 18-10-2019 DATE OF PRONOUNCEMENT : 18-10-2019 O R D E R PER D.S. SUNDER SINGH, A.M. : IN THIS CASE, THE ITAT HAS PASSED THE ORDER ON 15-03- 2019 AGAINST WHICH, ASSESSEE FILED MISCELLANEOUS APPLICATI ON STATING THAT MISTAKES WERE CREPT IN THE ORDER OF THE ITAT IN PARA NO.8.1 AND 8.2 AND REQUESTED FOR RECTIFICATION OF THE ORDER R ECTIFYING THE MISTAKES. THE ASSESSEE REPRODUCED THE RELEVANT PARAGR APHS OF THE ORDER IN THE MA AS UNDER: 8.1.THE ASSESSEE HAS NOT CHALLENGED ESTIMATION OF INCOME @8% BEFORE THE CIT(A) AND NO MATERIAL IS PLACE D BEFORE US TO ESTABLISH THAT THE INCOME OF THE ASSESSEE I S BELOW 8%.....; 2 M.A. NO. 65/HYD/2019 8.2DURING THE APPEAL HEARING THE LD.AR DID NOT EXPLAIN AS TO WHY THE SAID RECEIPTS SHOULD NOT BE ASSESSED SEPARATELY AND NO MATERIAL IS PLACED BEFORE US TO SHOW THAT THE BROKERAGE COMMISSION AND THE HONORARIUM ARE PART OF THE TURNOVER; 2. WITH REGARD TO ESTIMATION OF INCOME, THE ASSESSEE CO NTENDED THAT THE ITAT HAD PASSED THE ORDER HOLDING THAT THE ASSE SSEE HAS NOT CHALLENGED THE ESTIMATION OF INCOME @8% BEFORE THE C IT(A) OR NO MATERIAL WAS PLACED BEFORE THE TRIBUNAL DURING THE APPEAL HEARING TO ESTABLISH THAT THE INCOME OF THE ASSESSEE WAS BELOW 8%. 2.1. WITH REGARD TO BROKERAGE AND HONORARIUM, THE CONTE NTION OF THE ASSESSEE IS THAT THE LD.AR DID NOT EXPLAIN AS TO WHY THE SAID RECEIPTS SHOULD NOT BE ASSESSED SEPARATELY AND NO MATER IAL WAS PLACED BEFORE TRIBUNAL TO SHOW THAT THE BROKERAGE COMMI SSION AND HONORARIUM CONSTITUTE THE PART OF THE TURNOVER. 2.2. THE ASSESSEE SUBMITTED IN ITS MISCELLANEOUS APPLI CATION THAT IT HAS FURNISHED THE ENTIRE INFORMATION AND ARGUMENTS I N THE WRITTEN SUBMISSIONS AND THE PAPER BOOK FILED BEFORE THE ITAT, THEREFORE, CONTENDED THAT THE ITAT HAS COMMITTED AN ERROR IN NOT CONSIDERING THE WRITTEN SUBMISSIONS AND THE CONTENTS O F THE PAPER BOOK. 2.3. THE ASSESSEE FURTHER SUBMITTED IN ITS WRITTEN SUB MISSIONS (AT PG.2) OF THE MISCELLANEOUS APPLICATION, STATING THAT IT HAS FILED 3 M.A. NO. 65/HYD/2019 APPEAL THE BEFORE THE CIT(A) SPECIFYING THAT THE ESTI MATION OF INCOME @8% OF THE TURNOVER OF RS.45,17,082/- (12.5%) AND ON TURNOVER RS.97,01,980/- MAY BE ON HIGHER SIDE AND THE AO MAY BE DIRECTED TO ESTIMATE THE INCOME @4%. THE ASSESSEE FU RTHER STATED THAT THE PROFIT EARNED BY THE M/S.UNITED ELECTRIC CO. , IN THE PRECEDING THREE YEARS, WAS AS FOLLOWS: S. NO. ASS T. YEAR PREVIOUS YEAR TURNOVER PROFIT % OF PROFIT TO TURNOVER AMOUNT IN RUPEES 1 2006 - 07 2005 - 06 1,37,29,809.77 1,08,601.86 0.8% 2 2007 - 08 2006 - 07 2,99,73,923.21 5,82,695.14 1.94% 3 2008-09 2007-08 2,97,54,437.35 (2,97,39,978.35 + 14,459) 5,45,743.90 1.83% 4 2009-10 2008-09 7,31,16,861.95 (7,29,84,056.95 + 21,673 + 1,11,132) 22,84,699.11 3.124% 2.4. FURTHER REFERRING TO PG.3 OF THE WRITTEN SUBMISSION S, ASSESSEE STATED AS UNDER: 2) THE APPELLANT IN PAGE NO. 3 OF WRITTEN SUBMISSI ONS SPECIFIED THE APPELLANT SPECIFIED ENCLOSING THE ACCOUNT COPY OF M/S BOOTHARATHANAM CONSTRUCTIONS. UNITED ELECTRIC CO HA VE RENDERED CONSULTANCY WORK TO THE CREDITOR SPECIFIED IN CONNE CTION WITH IRRIGATION TENDERS / CONTRACT WORK. THE EXCESS AMOU NT GIVEN TO US OVER THE EXPENDITURE RS. 1,11,132/- IS CREDITED TO HONORARIUM ACCOUNT. IT IS IN CONNECTION WITH BUSINESS ONLY. TH E INCOME IS ESTIMATED ON THE TURNOVER OF THE FIRM. THERE IS NO NECESSITY TO ADD THE RECEIPT OF HONORARIUM TO THE ESTIMATED INCOME A ND TO TAX UNDER INCOME FROM OTHER SOURCES WHICH IS AGAINST COMPUTAT ION PROVISIONS. ITAT VACATED THE DIRECTIONS AGAINST COM PUTATION PROVISIONS. WE SPECIFY THAT THE INCOME IS IN RELATION TO BUSINE SS AND HENCE THE SAME IS NOT TO BE TAXED UNDER HEAD INCOME FROM OTHER SOURCES. TH E INCOME IS ESTIMATED ON 4 M.A. NO. 65/HYD/2019 THE TURNOVER OF THE ASSESSEE. HENCE THERE IS NO NEE D TO ADD THE SAME ONCE AGAIN. CIT (A) IS PRAYED TO DIRECT AO TO DELETE THE ADDITI ON. THE APPELLANT HAD SPECIFIED THAT THE CONTRACT AMOUN T RS.21,673 IN EXCESS OF SUB-CONTRACT IN RESPECT OF KANAPARTHY LIS APSIDC ONGOLE IS CREDITED AS COMMISSION. BUT IT IS EXCESS OF CONT RACT AMOUNT OVER THE PAYMENTS SUBCONTRACTORS. THE INCOME IS ESTIMATE D ON THE TURNOVER OF THE FIRM. THERE IS NO NECESSITY TO ADD THE RECEIPT OF HONORARIUM TO THE ESTIMATED INCOME AND TO TAX UNDER INCOME FROM OTHER SOURCES WHICH IS AGAIN COMPUTATION PROVISIONS . ITAT VACATED THE DIRECTIONS AGAINST COMPUTATION PROVISIONS 2.5. THEREFORE, THE ASSESSEE SUBMITTED THAT THERE WAS A MISTAKE IN THE ORDER OF THE HON'BLE ITAT, HENCE REQUESTED TO CO NSIDER THE SUBMISSIONS AND PASS APPROPRIATE ORDERS. 3. DURING THE HEARING, LD.AR REITERATED THE WRITTEN SUBMISSIONS MADE IN THE MISCELLANEOUS APPLICATION. 4. ON THE OTHER THAN, LD.DR ARGUED THAT THERE IS NO MISTA KE IN THE ORDER OF THE ITAT, WHICH REQUIRES RECTIFICATION, HENCE REQUESTED TO DISMISS THE MISCELLANEOUS APPLICATION OF THE ASSESSEE. 5. WE HAVE GONE THROUGH THE MISCELLANEOUS APPLICATION AND ALSO SUBMISSIONS MADE BY THE LD.AR. IN THE MISCELLAN EOUS APPLICATION, ASSESSEE HAS REFERRED THE WRITTEN SUBMISS IONS AND THE PAPER BOOK, IN PGS.2 & 3 OF THE MISCELLANEOUS APP LICATION. HOWEVER, THE CASE WAS HEARD AT LENGTH ON 11-03-2009 AN D THE LD.AR DID NOT MAKE ANY REFERENCE TO THE WRITTEN SUBMISSI ONS OR THE PAPER BOOK IN HIS ARGUMENTS. THE ONLY ISSUE ARGUE D BY THE LD.AR WAS THAT THE AO HAS NOT GIVEN EFFECT TO THE ORDER OF LD.CIT CORRECTLY. THE ISSUE INVOLVED IN THE APPEAL WAS WHETH ER THE AO 5 M.A. NO. 65/HYD/2019 FOLLOWED THE DIRECTIONS OF LD.CIT/ITAT OR NOT? THE L D.CIT, GUNTUR IN HIS ORDER DATED 04/03/2013 HAS GIVEN SPECIFIC DIR ECTION TO THE AO IN PARA NO.4 TO ESTIMATE THE INCOME @8% ON SALES AND CONTRACT RECEIPTS AFTER EXCLUDING THE BROKERAGE AND H ONORARIUM. IN A DETAILED DISCUSSION MADE BY THIS TRIBUNAL IN THE ORDER, IT WAS HELD THAT AO HAS GIVEN EFFECT TO THE DIRECTIONS OF THE LD .CIT CORRECTLY AND ESTIMATED THE INCOME @8% AFTER EXCLUSION OF BROKERAGE AND HONORARIUM. SINCE THE TRIBUNAL HAS GI VEN THE FINDING THAT THE AO HAS FOLLOWED THE DIRECTIONS OF LD. CIT CORRECTLY AND ESTIMATED THE INCOME @8% AND THE LD.AR DID NOT MAK E ANY REFERENCE TO THE WRITTEN SUBMISSIONS OR THE PAPER BOOK DURING THE APPEAL HEARING, THERE IS NO MISTAKE WHICH CALLS FOR I NTERFERENCE IN THIS ORDER, HENCE, THE ASSESSEES REQUEST FOR RECTIFICA TION OF MISTAKE WITH REGARD TO THE FIRST ISSUE OF ESTIMATION OF I NCOME, FINDS NO MERIT, HENCE THE SAME IS DISMISSED. 5.1. THE SECOND ISSUE IS WITH REGARD TO BROKERAGE CO MMISSION AND HONORARIUM. THOUGH THE ASSESSEE IN THE MISCELLANE OUS APPLICATION REFERRED THE WRITTEN SUBMISSIONS AND PGS. 28 AND 29 OF THE PAPER BOOK, NO REFERENCE WAS MADE DURING THE APPEAL HEARING WITH REGARD TO THE WRITTEN SUBMISSIONS AND THE PA PER BOOK. EVEN OTHERWISE, THE ASSESSEE HAS NOT ESTABLISHED WITH A PROPER EVIDENCE EITHER BEFORE THE AO OR BEFORE THE CI T(A) THAT THE COMMISSION AND BROKERAGE INCOME CONSTITUTE THE PART OF THE TURNOVER AS DISCUSSED IN THE APPEAL ORDER. SINCE THE ASSESSEE DID NOT MAKE REFERENCE TO THE WRITTEN SUBMISSIONS OR THE PAP ER BOOK, IN HIS ARGUMENTS, THE SUBMISSIONS MADE BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION DOES NOT CONSTITUTE ANY MIS TAKE, WHICH 6 M.A. NO. 65/HYD/2019 REQUIRE INTERFERENCE IN THE ORDER. ACCORDINGLY, WE F IND NO MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE O N THIS ISSUE ALSO. HENCE, THE SAME IS DISMISSED. 5.2. THE TRIBUNAL WHILE DECIDING THE APPEAL OF THE AS SESSEE HAS CONSIDERED ALL THE FACTS AND THE ARGUMENTS OF THE LD.AR AS WELL AS THE DRT AT THE TIME OF HEARING AND PASSED THE DETAILED OR DER AND NO RECTIFICATION IS CALLED-FOR. ACCORDINGLY, THE MISC ELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2019 SD/- SD/- (V. DURGA RAO) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTAN T MEMBER HYDERABAD, DATED: 18-10-2019 TNMM 7 M.A. NO. 65/HYD/2019 COPY TO : 1. M/S.UNITED ELECTRIC CO., ANDHRA RATNA ROAD, CHIR ALA, PRAKASAM DIST., AP. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, ONGOLE. 3. THE CIT(APPEALS)-1, GUNTUR. 4. THE PR.CIT-GUNTUR. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.