ACIT, Cir-10(1), Hyderabad v. M/s. Ashwini Rock Drillers,, Secunderabad

ITA 1216/HYD/2011 | 2008-2009
Pronouncement Date: 04-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 121622514 RSA 2011
Assessee PAN AAIFA3903C
Bench Hyderabad
Appeal Number ITA 1216/HYD/2011
Duration Of Justice 4 month(s) 12 day(s)
Appellant ACIT, Cir-10(1), Hyderabad
Respondent M/s. Ashwini Rock Drillers,, Secunderabad
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 04-11-2011
Assessment Year 2008-2009
Appeal Filed On 22-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.1216/HYD/11 : ASSTT. YEAR 2008-09 ASSTT COMMISSIONER OF INCOME- TAX CIRCLE 10(1) HYDERABAD V/S. M/S. ASHWINI ROCK DRILLERS SECUNDERABAD. ( PAN AAIFA 3903 C ) (APPELLANT) (RESPONDENT) AND C.O. NO.63/HYD/11 ( IN ITA NO.1216/HYD/11) : ASSTT. YEAR 2008-09 M/S. ASHWINI ROCK DRILLERS SECUNDERABAD. ( PAN AAIFA 3903 C ) V/S. ASSTT COMMISSIONER OF INCOME - TAX CIRCLE 10(1) HYDERABAD (CROSS - OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO DEPARTMENT BY : SMT MYTHILI RANI DATE OF HEARING 12.10.2011 DATE OF PRONOUNCEMENT 4.11.2011 O R D E R PER G.C.GUPTA VICE PRESIDENT: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTIO N BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 ARE DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). ITA NO.1216 & CO 63/HYD./2011 M/S. ASHWINI ROCK DRILLERS SECUNDERABAD 2 REVENUES APPEAL: ITA NO.1216/HYD/11 : ASSTT. YEAR 2008-09 2. GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDE R- 1) THE CIT(A) ERRED IN BOTH LAW AND FACTS. 2) THE CIT(APPEALS) ERRED IN DIRECTING THE ASSESSIN G OFFICER TO ESTIMATE THE INCOME AT 6% OF GROSS RECEIPTS AS AGAI NST 9% ESTIMATED BY THE ASSESSING OFFICER AS THERE IS NO B ASE FOR REDUCING THE PERCENTAGE OF ESTIMATION. 3) THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFI CER TO CLUB THE MISCELLANEOUS INCOME ALSO IN THE GROSS RECEIPTS TO EXAMINE THE INCOME AT 6% OF RECEIPTS AS MISCELLANEOUS INCOME IS A SEPARATE HEAD OF INCOME AND IT HAS NOTHING TO DO WITH THE CO NTRACT RECEIPTS. 4) THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFI CER TO ALLOW DEDUCTIONS AS PER SEC.40(B) OF IT ACT OUT OF ESTIMA TED INCOME AS IT IS AGAINST THE DECISION OF THE HONBLE HIGH COURT O F ANDHRA PRADESH IN THE CASE OF M/S. INDWELL CONSTRUCTIONS WHERE IN WAS HELD THAT WHEN NET INCOME IS ESTIMATED ALL OTHER EXPENDITURE AND DEDUCTIONS SUCH AS REMUNERATION TO PARTNERS AND DEPRECIATION ETC. COVERED BY THE PROVISIONS OF SEC.30 TO 43D ARE DEEMED TO HAVE BEEN ALLOWED. (232 ITR 776 AP) 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THERE WAS NO JUSTIFICATION FOR THE CIT(A) TO DIRECT THE ASSES SING OFFICER TO ESTIMATE THE INCOME OF THE ASSESSEE AT 6% OF THE GROSS RECEIPTS AS AGAINST 9% ESTIMATED BY THE ASSESSING OFFICER. SHE RELIED ON THE DECISION O F THE HONBLE JURISDICTIONAL HIGH COURT IN INDWELL CONSTRUCTIONS V/S.CIT (232 ITR 776 ) IN SUPPORT OF HER ARGUMENTS. SHE FURTHER SUBMITTED THAT THE MISCELLA NEOUS INCOME WAS A SEPARATE HEAD OF INCOME AND HAS NOTHING TO DO WITH THE CONTRACT RECEIPTS OF THE ASSESSEE AND THEREFORE THE CIT(A) HAS ERRED IN DI RECTING THE ASSESSING OFFICER TO CLUB THE MISCELLANEOUS INCOME WITH THE OTHER RECEI PTS OF THE ASSESSEE. SHE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED T HE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. HE SUBMITTED T HAT THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS CANCELLED ITA NO.1216 & CO 63/HYD./2011 M/S. ASHWINI ROCK DRILLERS SECUNDERABAD 3 BY THE CIT(A) BY HIS APPELLATE ORDER AND THE REVENU E HAS NOT RAISED ANY GROUND OF APPEAL RELATING TO THIS ISSUE AND ACCORDINGLY NO ESTIMATE OF INCOME SHOULD BE MADE IN THIS CASE. HE SUBMITTED THAT THE RATE OF 6% HAS BEEN APPLIED BY THE CIT(A) BY CONSIDERING THE FACT THAT THE DEPRECIATI ON AND SALARY WERE AMOUNTING TO RS.1.80 CRORES AND RS.67.31 LAKHS AND THEREFORE IF THESE TWO ITEMS OF EXPENDITURE ARE ADDED TO THE NET INCOME ESTIMATED A T THE RATE OF 6% OF THE GROSS RECEIPTS THE NET PROFIT OF THE ASSESSEE COME S TO OVER 12% OF THE GROSS RECEIPTS. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE IN HER REJOINDER SUBMITTED THAT NO VOUCHER ETC. COULD BE PRODUCED BY THE ASSES SEE FOR THE VARIOUS EXPENSES AND THERE WERE NUMBER OF DEFECTS IN THE ACCOUNT BOO KS OF THE ASSESSEE AND HENCE THE RATE OF NET PROFIT APPLIED BY THE ASSESSI NG OFFICER WAS JUSTIFIED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE FIND THAT THE RATE OF NET INCOME APPLIED AT 9% ON THE GROSS CONTR ACT RECEIPTS BY THE ASSESSING OFFICER WAS REDUCED TO 6% OF THE GROSS CONTRACT REC EIPTS BY THE CIT(A) . WE FIND THAT NO COMPARATIVE CASES TO JUSTIFY ESTIMATION A T A HIGHER PERCENTAGE OF NET INCOME COULD BE CITED BY THE ASSESSING OFFICER. WE FIND THAT THE CIT(A) HAS DIRECTED TO APPLY NET INCOME AT THE RATE OF 6% ON T HE GROSS CONTRACT RECEIPTS OF RS.30.28 CRORES TAKING INTO CONSIDERATION THE HIGHE R FIGURE OF DEPRECIATION OF RS.1.80 CRORES. THE CIT(A) HAS DIRECTED ESTIMATION OF NET INCOME AT 6% ON GROSS RECEIPTS CLEAR OF DEPRECIATION AND ACCORDINGLY WAS WHOLLY JUSTIFIED. NO CASE FOR APPLICATION OF HIGHER RATE OF INCOME COULD BE MADE OUT BY THE REVENUE. ACCORDINGLY THE ORDER OF THE CIT(A) IN DIRECTING T HE ASSESSING OFFICER TO ESTIMATE THE ASSESSEES INCOME AT 6% OF THE GROSS CONTRACT R ECEIPTS OF THE ASSESSEE IS UPHELD. 7. WITH REGARD TO GROUND OF APPEAL NO.3 OF THE REV ENUE WITH REGARD TO MISCELLANEOUS INCOME BEING CLUBBED WITH THE GROSS R ECEIPTS OF THE ASSESSEE FOR THE PURPOSE OF ESTIMATION OF INCOME WE FIND THAT T HE AMOUNT OF RS.4 41 047 ITA NO.1216 & CO 63/HYD./2011 M/S. ASHWINI ROCK DRILLERS SECUNDERABAD 4 WAS SHOWN AS MISCELLANEOUS INCOME DERIVED ON THE S ALE OF SCRAP BY THE ASSESSEE SEPARATELY THE ASSESSEE HAS NOT GIVEN ANY BIFURCATION OF THE FIGURE AS TO THE EXPENDITURE INCURRED FOR THE SALE OF SCRAP S EPARATELY. THERE IS NO NEXUS BETWEEN THE MISCELLANEOUS INCOME DECLARED SEPARATEL Y BY THE ASSESSEE AND THE GROSS CONTRACT RECEIPTS OF THE ASSESSEE. ACCORDINGL Y WE HOLD THAT THERE IS NO JUSTIFICATION FOR THE CIT(A) TO DIRECT THE ASSESSIN G OFFICER TO CLUB THE MISCELLANEOUS INCOME OF RS.4 41 047 WITH THE GROSS CONTRACT RECEIPTS OF RS.30.28 CRORES. ACCORDINGLY WE DIRECT THAT THE M ISCELLANEOUS INCOME OF RS.4 41 047 BE ADDED SEPARATELY AS INCOME IN THE H ANDS OF THE ASSESSEE AND THIS AMOUNT OF RS.4 41 0-47 SHOULD BE REDUCED OUT O F THE GROSS CONTRACT RECEIPTS OF RS.30 32 66 146 WHILE APPLYING THE NET INCOME RATE OF 6% ON THE GROSS CONTRACT RECEIPTS OF THE ASSESSEE. ACCORDINGLY GR OUND OF APPEAL NO.2 OF THE REVENUE IS REJECTED AND GROUND OF APPEAL NO.3 IS P ARTLY ALLOWED AS ABOVE WHILE THE GROUNDS OF APPEAL NO.1 AND 4 OF THE REVENUE BE ING GENERAL IN NATURE NEED NO ADJUDICATION. 8. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED IN PART. ASSESSEES C.O. NO.63/HYD/11 ( IN ITA NO.1216/HYD/11) : ASSTT. YEAR 2008-09 9. GROUNDS OF THE ASSESSEE IN ITS CROSS-OBJECTION READ AS UNDER- 1. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUG HT TO HAVE SEEN THAT THE PROFIT BEFORE DEPRECIATION REMUNERATION T O PARTNERS AND INTEREST TO PARTNERS IS RS.3 55 74 630/- WHICH GIVES A RATE OF 11.75% AND THE PROFIT ADMITTED FAIRLY REASONABLE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUG HT TO HAVE SEEN THAT THE BOOKS OF ACCOUNT ARE PROPERTY MAINTAINED A ND THEREFORE REJECTION OF THE BOOKS OF ACCOUNT IS NOT JUSTIFIED PARTICULAR LY IN VIEW OF THE FACT THAT THE PROFIT ADMITTED BEFORE DEPRECIATION REMUNERATI ON AND INTEREST TO PARTNERS IS ABOUT 11.75% OF THE GROSS PROFIT. ITA NO.1216 & CO 63/HYD./2011 M/S. ASHWINI ROCK DRILLERS SECUNDERABAD 5 10. WE HAVE HEARD THE PARTIES THE GROUNDS OF CROS S-OBJECTION OF THE ASSESSEE ARE MERELY SUPPORTIVE IN NATURE AND THE IS SUES RAISED IN THESE GROUNDS IN THE CROSS OBJECTION OF THE ASSESSEE ARE COVERED WITH OUR DECISION HEREINABOVE RENDERED IN THE CONTEXT OF THE GROUNDS OF THE REVEN UE IN ITS APPEAL. ACCORDINGLY CROSS-OBJECTION OF THE ASSESSEE BEING INFRUCTUOUS IS REJECTED. 11. TO SUM UP IN THE RESULT WHILE THE APPEAL OF THE REVENUE IS PARTLY ALLOWED CROSS-OBJECTION OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 4.11.2011 SD/- SD /- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 4 TH NOVEMBER 2011 COPY FORWARDED TO: 1. M/S. ASHWINI ROCK DRILLERS G - 6 RANGA REDDY TOWERS 155/7 STAFF ROAD CANTONMENT WORKSHOP SIKH VILLAGE SECU NDRABAD. 2. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 10(1) HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD 4. COMMISSIONER OF INCOME - TAX - V HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD . B.V.S.