M/s SLC Projects Pvt., Ltd., Visakhapatnam V. THE ACIT., CENTRAL CIRCLE - 2, Visakhapatnam

MA 7/VIZ/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2206 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Depreciation; Rectification of order

Judgement Text

MP NO.7/VIZAG/2014 SLC PROJECTS PVT. LTD., VSKP PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER M.A. NO.7/VIZAG/2014 (ARISING OUT OF ITA NO.160/VIZAG/2013) ASSESSMENT YEAR: 2009-10 SLC PROJECTS PVT. LTD. VISAKHAPATNAM VS. ACIT CENTRAL CIRCLE-2 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AAJCS 8616C ASSESSEE BY : SHRI I. KAMASASTRY, CA REVENUE BY : SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 10.07.2014 DATE OF PRONOUNCEMENT : 21.07.2014 ORDER PER BENCH:- THIS MISCELLANEOUS PETITION HAS BEEN FILED BY THE ASSESSEE SEEKING RECTIFICATION OF MISTAKE CREPT IN TO THE ORDER DATE D 13.12.2013 PASSED BY THE TRIBUNAL IN ITA NO.160/VIZAG/2013. 2. THE CONTENTION OF THE ASSESSEE IN THE MISCELLANE OUS PETITION IS AFTER THE ORDER OF THE CIT(A), THE ASSESSING OFFICER HAS REVISED THE TOTAL INCOME TO RS.1,41,53,883/-, WHEREAS IN THE CONSEQUENTIAL ORDE R PASSED IN PURSUANCE TO THE APPEAL ORDER OF THE TRIBUNAL, THE INCOME HAS BE EN ENHANCED TO RS.1,71,78,463/-. IT IS THEREFORE CONTENDED THAT S INCE THE TRIBUNAL WAS CONSIDERING ASSESSEES APPEAL AND DEPARTMENT HAS NO T CHALLENGED THE ORDER OF THE CIT(A), ASSESSEE CANNOT BE IN A POSITION WOR SE THAN IT WAS AFTER THE ORDER OF THE CIT(A). FURTHER ELABORATING, LD. A.R. HAS SUBMITTED AS UNDER:- MP NO.7/VIZAG/2014 SLC PROJECTS PVT. LTD., VSKP PAGE 2 OF 4 THE DISCLOSURE OF THE AMOUNT OF RS.54.50 WAS CONSID ERED BY THE LD. A.O. DURING THE COURSE OF THE ASSESSMENT PROCEEDING S AND THE EXPLANATIONS OFFERED BY THE ASSESSEE DURING THE SAM E PROCEEDINGS THAT THE RELEVANT INCOME WAS ALREADY DISCLOSED IN THE EA RLIER YEARS ON ACCRUAL BASIS AND ONLY THE TRADE DUES HAVE BEEN REC EIVED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2009- 10 HAVE BEEN FOUND TO BE CORRECT AFTER EXAMINING THE ENTRIES REC ORDED IN THE BOOKS OF ACCOUNT. THE NON-RECORDING OF THE RECEIPT OF 54 .50 LAKHS CONTEMPORANEOUSLY WAS TAKEN THE LD. AO AS A LAPSE J USTIFYING REJECTION OF BOOKS OF ACCOUNT AND FOR ESTIMATION OF THE INCOME. IT WAS NOT CONSIDERED AS FIT FOR MAKING AN ADDITION IN THI S REGARD CONSIDERING THE EVIDENCE PRODUCED BY THE ASSESSEE IN THE FORM O F ENTRIES RECORDED IN THE BOOKS OF ACCOUNT. SIMILARLY THE LD. CIT(A) ALSO HAS DECIDED LIKEWISE. WHILE PASSING THE CONSEQUENTIAL ORDER AS PER THE DI RECTIONS OF THE HONBLE BENCH REPRODUCED ABOVE, THE LD. AO MADE AN ADDITION OF RS.54.50 LAKHS WHICH IS NOT THERE IN THE ORIGINAL A SSESSMENT ORDER OR IN THE ORDER PASSED IN CONSEQUENCE OF THE ORDER OF THE LD. CIT(A). THE LD. AO IS OF THE CONSIDERED OPINION THAT THE HONOUR ABLE BENCH DIRECTED ADDITION OF OTHER INCOME OFFERED BY THE ASSESSEE EV EN DURING THE COURSE OF THE INVESTIGATION PROCEEDINGS IN THE STAT EMENT UNDER SECTION 132(4). THIS IS BECAUSE A PASSING REFERENCE TO THI S AMOUNT OF RS.54.50 LAKHS WAS MADE BY THE HONOURABLE BENCH AT PARA 12 LINE 14 PAGE 7 OF ITS ORDER WHICH IS REPRODUCED HEREUNDER: LD. COUNSEL ALSO FAIRLY ADMITTED THAT IF DEPRECIATI ON CLAIM IS ALLOWED, THE INCOMES BEING DETERMINED WILL BE LESS THAN THE RETURNED INCOME IN AY 2009-10 AND SO THE RETURNED INCOME MAY BE DIRECT ED TO BE ACCEPTED IN THAT YEAR WHICH INCLUDES THE ADDITIONAL INCOME OF RS.54.50 LAKHS OFFERED IN THE COURSE OF SEARCH. IT WAS THEREFORE SUBMITTED THAT NECESSARY ORDER MAY BE PASSED FOR RECTIFYING THE MISTAKE. 3. THE LD. D.R. THOUGH AGREED TO THE FACT THAT AO H AS MISINTERPRETED THE ORDER OF THE TRIBUNAL BUT HE SUBMITTED THAT AS SUCH THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL. 4. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. IT IS SEEN FROM THE ASSESSMENT ORDER THAT AO REJECTING MP NO.7/VIZAG/2014 SLC PROJECTS PVT. LTD., VSKP PAGE 3 OF 4 THE BOOKS OF ACCOUNT HAS ESTIMATED INCOME FROM CONT RACT RECEIPT AT 12%. THE CIT(A) WHILE DISPOSING OF ASSESSEES APPEAL HAS REDUCED IT TO 9.5%. THE SUBJECT MATTER OF DISPUTE AS RAISED BY THE ASSESSEE BEFORE ITAT IS ONLY CONFINED TO ESTIMATION OF PROFIT BY CIT(A) AT 9.5%. THE TRIBUNAL AFTER CONSIDERING SUBMISSIONS OF THE PARTIES HELD AS UNDE R: 16. THE INCOME TAX APPELLATE TRIBUNAL IS ESTIMATING THE INCOME FROM 8% TO 12.5% DEPENDING ON THE NATURE OF CONTRAC T WORK, BUSINESS OF THE ASSESSEE, TURNOVER AND THE MACHINERY EMPLOYE D IN THE BUSINESS. THUS, THERE IS NO FIXED RATE OF UNIFORM ESTIMATION AND THE CASES ARE DECIDED ON THE BASIS OF FACTS IN EACH CASE. HOWEVER , THE SPECIAL BENCH OF THE ITAT INDORE IN THE CASE OF ARIHANT BUILDERS, DEVELOPERS & INVESTORS PVT. LTD., 106 ITD 10 HAVE HELD THE RATE O F 8%, NET OF DEPRECIATION AS REASONABLE AFTER REJECTION OF BOOKS OF ACCOUNT. THERE ARE MANY OTHER CASES, WHEREIN ON SUB-CONTRACT PAYME NTS, INCOME WAS ESTIMATED AT 5% NET. CONSIDERING ABOVE JUDICIAL PRE CEDENTS, WE ARE OF THE OPINION THAT ESTIMATION OF INCOME AT 9.5% BY TH E CIT(A) IS ON HIGHER SIDE. CONSIDERING THE PAST RECORD OF THE ASS ESSEE, WE ARE OF THE OPINION THAT IT IS REASONABLE TO ESTIMATE 5% INCOME NET OF DEPRECIATION ON SUB-CONTRACT PAYMENTS AND 8% NET OF DEPRECIATION ON THE BALANCE OF THE CONTRACT RECEIPTS, OUT OF THE TOTAL TURNOVER SHOWN BY THE ASSESSEE. THIS SHOULD MEET THE END OF JUSTICE ON TH E FACTS OF THE CASE. HOWEVER, OTHER INCOMES OFFERED BY THE ASSESSEE, WIT H REFERENCE TO UNDISCLOSED INCOME BEING ADDED IN AY 2009-10 AND OT HER INCOMES NOT CONNECTED WITH THE CONTRACT RECEIPTS SHOULD BE ACCE PTED AS SUCH. THIS ESTIMATION OF 8% ON ASSESSEES CONTRACT WORKS AND 5 % ON SUB- CONTRACT WORKS IS ONLY LIMITED TO THE CONTRACT RECE IPTS. WITH THESE DIRECTIONS, THE AO IS DIRECTED TO MODIFY THE COMPUT ATION OF INCOME ACCORDINGLY. ASSESSEES GROUNDS ARE CONSIDERED ALLO WED ACCORDINGLY. 4.1 ON A PERUSAL OF THE OPERATIVE PORTION OF THE OR DER PASSED BY THE TRIBUNAL IT IS CLEAR THAT TRIBUNAL DIRECTION IS ONL Y IN RESPECT OF PROFIT RATE TO BE APPLIED TO THE CONTRACT RECEIPTS. SO FAR AS INCOME OTHER THAN CONTRACT RECEIPTS ADDED BY THE AO IN THE ASSESSMENT ORDER AN D CONSIDERED BY THE CIT(A), THE TRIBUNAL DID NOT INTERFERE WITH THE SAM E. HENCE, AS SUCH, THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL. HOWEVER, K EEPING IN VIEW THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE CL ARIFY THAT TRIBUNAL HAS NEVER DIRECTED FOR ADDITION OF RS. 54.50 LAKHS WHIC H WAS NOT SUBJECT MATTER OF ADDITION BY AO NOR AN ISSUE BEFORE CIT(A) OR BEFORE US. THE TRIBUNALS ORDER MP NO.7/VIZAG/2014 SLC PROJECTS PVT. LTD., VSKP PAGE 4 OF 4 BEING CLEAR THERE IS NO SCOPE FOR INTERPRETING IT D IFFERENTLY BY AO. AO IS DIRECTED TO PASS CONSEQUENTIAL ORDER ACCORDINGLY. 5. IN THE RESULT, MISCELLANEOUS APPLICATION IS CONSI DERED TO BE ALLOWED PRO TANTO. PRONOUNCED ACCORDINGLY ON 21 ST JULY, 2014. SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 21 ST JULY, 2014. COPY TO 1 SLC PROJECTS PVT. LTD., 50-104-2, PLOT NO.A-20, T PT COLONY, SEETHAMMADARA, VISAKHAPATNAM. 2 ACIT CENTRAL CIRCLE-2, VISAKHAPATNAM 3 CIT, VISAKHAPATNAM 4 CIT(A), VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM