M/s. Laxminath Infrastructure Pvt. Ltd., JODHPUR v. ITO, CHURU

ITA 582/JODH/2013 | 2010-2011
Pronouncement Date: 03-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 58223314 RSA 2013
Assessee PAN AABCL3531B
Bench Jodhpur
Appeal Number ITA 582/JODH/2013
Duration Of Justice 3 month(s) 7 day(s)
Appellant M/s. Laxminath Infrastructure Pvt. Ltd., JODHPUR
Respondent ITO, CHURU
Appeal Type Income Tax Appeal
Pronouncement Date 03-04-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 03-04-2014
Assessment Year 2010-2011
Appeal Filed On 26-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K. SAINI ACCOUNTANT MEMBER. ITA NO. 582/JODH/2013 (A.Y. 2010-11) M/S LAXMINATH INFRASTRUCTURE (P). LTD. VS. THE INCO ME-TAX OFFICER C 91 AGRASEN NAGAR WARD - 1 CHURU CHURU PAN NO. AABCL 3531 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C.JAIN AND SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI N.A. JOSHI DR. DATE OF HEARING : 01/04/2014. DATE OF PRONOUNCEMENT : 03/04/2014. O R D E R PER HARI OM MARATHA J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2010-11 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-III JAIPUR RAJASTHAN DAT ED 08.11.2013. 2 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS A PPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND LOOKING TO THE PAST HISTORY OF CASE AND JU DICIAL DECISIONS CITED THE LD. CIT(A) GROSSLY ERRED IN SUS TAINING AN ADDITION OF RS. 44 89 631/- IN THE INCOME DECLARED FROM CONTRACT BUSINESS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS GROSSLY ERRED IN HOLDING T HE INCOME FROM INTEREST AMOUNTING TO RS. 12 84 137/- LIABLE T O BE ASSESSED SEPARATELY EVEN AFTER HOLDING THE SAME AS INCOME FROM BUSINESS WHICH IS NOT A SEPARATE SOURCE OF INC OME LIABLE TO BE TAXED SEPARATELY AND IS TO BE CONSIDER ED AS PART OF INCOME FROM CONTRACT BUSINESS. 3. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO R AISE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE T HE TIME OF HEARING. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. 4. FACTS APROPOS GROUND NO. 1 ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTORSHIP AFTER OBTAI NING CONTRACT FROM GOVERNMENT/SEMI GOVERNMENT DEPARTMENTS. FOR A.Y. 2 010-11 THE 3 ASSESSEE-FIRM FILED HIS RETURN OF INCOME (ROI) ON 1 3.10.2010 DECLARING TOTAL INCOME OF RS. 4 11 575/- AS AGAINST WHICH AS SESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE INCOME-TAX ACT 1961 [' THE ACT' FOR SHORT] AT A TOTAL INCOME OF RS. 60 16 570/-. THE ASSESSEE HAS MAINTAINED ITS BOOKS OF ACCOUNT REGULARLY DURING ITS BUSINESS WHI CH HAS BEEN REJECTED BY THE A.O. U/S 145(3) OF THE ACT. THE ASSESSEE DI SCLOSED TOTAL RECEIPTS FROM CONTRACT RECEIPTS AT RS. 69 071 257/- AND HAS ARRIVED AT NET PROFIT OF RS. 12 75 779/- GIVING NET PROFIT RAT E OF 1.85% AND GROSS PROFIT RATE OF 5.35%. AFTER REJECTION OF BOOKS TH E A.O. HAS APPLIED NET PROFIT RATE OF 8.5% AND HAS MADE IMPUGNED ADDITION OF RS. 58 71 057/-. AGGRIEVED THE ASSESSEE FILED APPEAL AND THE LD. CI T(A) AFTER UPHOLDING THE REJECTION OF BOOKS OF ACCOUNT HAS INSTEAD IN VOKED NET PROFIT RATE OF 6.5% INSTEAD OF 8.5% APPLIED BY THE A.O. AND HA S THUS RESTRICTED THE ADDITION TO RS. 44 89 631/-. THE ASSESSEE IS FURTH ER AGGRIEVED. 4.1 THE APPELLANT-FIRM HAS NOT ASSAILED THE REJECTI ON OF BOOKS OF ACCOUNT BUT ON MERITS THE IMPUGNED ADDITION HAS B EEN CHALLENGED ON THE GROUND THAT EVEN AFTER REJECTION OF BOOKS AS PE R SETTLED LEGAL POSITION THE PAST HISTORY OF THE ASSESSEE HAS TO B E ADOPTED. IT WAS ARGUED BY THE LD. A.R. THAT DURING YEAR UNDER CONSI DERATION THAT IS 2010-11 THE ASSESSEE HAS DISCLOSED GROSS PROFIT RA TE OF 5.35% AND NET 4 PROFIT RATE OF 1.85% AS THE RECEIPTS HAD DECLINED B UT IN THE IMMEDIATELY PRECEDING YEAR THE GROSS PROFIT RATE O F 2.88% AND NET PROFIT RATE OF 0.06% WERE DISCLOSED. THEREFORE AC CORDING TO HIM WHEN THE RESULTS DECLARED IN THIS YEAR ARE BETTER T HAN THE PAST YEAR THERE IS NO OCCASION TO MAKE ANY ADDITION IN THE TR ADING RESULTS AS HAS BEEN DONE BY THE AUTHORITIES BELOW. 5. PER CONTRA THE LD. D.R. HAS SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW AND MORE SPECIFICALLY THE ORDER O F THE LD. CIT(A) AND HAS PRAYED THAT NO FURTHER RELIEF CAN BE GRANTED BE CAUSE THE LD. CIT(A) HAS RELIED ON THE RESULTS OF CERTAIN COMPARABLE CAS ES IN THIS LINE. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE HAVE FOUND IT FOR A FACT THAT THE ASSESSEE FIRM IS A FIRM OF CONTRACTOR S WHO OBTAINS WORK CONTRACT FROM GOVERNMENT/SEMI GOVERNMENT DEPARTMENT S AND DURING THE YEAR UNDER CONSIDERATION IT HAS DISCLOSED BETT ER NET PROFIT RATE AND BETTER GROSS PROFIT RATE. IT IS TRITE THAT AFT ER REJECTION OF BOOKS OF ACCOUNT THE PAST HISTORY OF THE ASSESSEE ITSELF IS THE BEST GUIDE AND IN CASE THE RESULTS IN A GIVEN CASE ARE FOUND TO BE BE TTER THAN THE PAST YEAR THEN NO TRADING ADDITION CAN BE MADE. THE CO MPARATIVE CHART OF 5 GROSS RECEIPTS AND PROFIT DECLARED FOR A.Y. 2008-09 TO 2010-11 IS AS UNDER: A .Y. GROSS RECEIPTS GROSS PROFIT GROSS PROFIT RATE NET PROFIT NET PROFIT RATE 2008 - 09 52421931 1243874 2.37% ( - )1069439 0.0% 2009 - 10 131038421 3781629 2.88% 88872 0.06% 2010 - 11 69071257 3696900 5.35% 1275779 1.85% 6.1 A BARE PERUSAL OF ABOVE CHART REVEALS THE FIGUR ES GIVEN THEREIN WHICH IS NOT DISPUTED BY PARTIES ONE CAN EASILY MA KE OUT THE GROSS PROFIT RATE AS WELL AS THE NET PROFIT RATE DECLARED DURING THE YEAR 2010- 11 ARE BETTER THAN THE RESULTS DECLARED IN 2009-10. THE LAW ON THIS ISSUE IS ALMOST SETTLED AND CERTAIN BY THE FOLLOWIN G DECISIONS: I) SRI RAM & CO VS. ACIT 316 ITR 139 [RAJ] II) GHASI RAM TODARMAL VS. ITO 196 ITR 329 III) RAJENDRA PRASAD SUBHASH CHAND VS. UOI 237 CTR 382 THE RATIO DECIDENDI OF THE ABOVE JUDGMENTS IS THAT IN CASE THE ASSESSEE SHOWS BETTER RESULTS DURING THE YEAR UNDER CONSIDER ATION AS COMPARED TO PAST YEAR THEN THERE IS NO NEED FOR MAKING ANY FURTHER TRADING 6 ADDITION. IN VIEW OF THE ABOVE DICTUM OF HON'BLE J URISDICTIONAL HIGH COURT WHICH HAS BINDING EFFECT WE HAVE TO HOLD THA T NO FURTHER ADDITION CAN BE MADE IN THE DECLARED RESULTS. THE LD. CIT(A) HAS PLACED RELIANCE ON CERTAIN CASES BELONG TO CONTRACT ORS BUT AS WE HAVE ALREADY STATED THE FACTUAL MATRIX OF COMPARABLE CA SES DEFINITELY DIFFER AND HAVE LITTLE NUANCE REGARDING THE NATURE OF BUSINESS THAT IS IF THEY ARE OBTAINING CONTRACT FROM GOVERNMENT/SEMI GOVERNMENT DEPARTMENTS OR FROM PRIVATE PARTIES AND RESPECTIVE TURNOVER DISCLOSED BY THEM. BUT THE CONTRACT WORK DONE ALSO DEPENDS ON THE PLACE(S) WHERE THE PARTIES ARE EXECUTING THEIR CONTRACT WORK . IN CASE THE PAST HISTORY OF THE ASSESSEE IS NOT AVAILABLE THEN IN T HAT EVENTUALITY THE HISTORY OF COMPARABLES HAS BEEN TREATED AS A GOOD G UIDANCE BY THE COURTS. HOWEVER IN THE GIVEN CASE WHEN THE HISTO RY OF THE ASSESSEE ITSELF EXISTS THERE IS NO NEED TO JUMP THE GUN AND IGNORE ITS PAST HISTORY. ACCORDINGLY WE HOLD THAT THE RESULTS SHO WN DURING THE YEAR UNDER CONSIDERATION BEING BETTER THAN THE RESULTS S HOWN IN THE IMMEDIATELY PRECEDING A.Y. THERE IS NO REASON TO M AKE ANY FURTHER ADDITION ON THIS COUNT. ACCORDINGLY WE ORDER TO D ELETE THE ENTIRE ADDITION MADE IN THE TRADING RESULTS DISCLOSED BY T HE ASSESSEE AND MORE PARTICULARLY TO DELETE THE IMPUGNED ADDITION OF RS. 44 89 631/- 7 SUSTAINED BY THE LD. CIT(A). RESULTANTLY WE ALLO W GROUND NO. 1 OF THIS APPEAL. 7. FACTS APROPOS GROUND NO. 2 OF THIS APPEAL ARE TH AT THE ASSESSEE AS PER THE TERMS AND CONDITIONS BY THE GOVERNMENT D EPARTMENT THAT SOME FIXED AMOUNT HAS TO BE DEPOSITED IN THE BANK F OR OBTAINING WORK CONTRACT AND THIS ASSESSEE HAD TO DEPOSIT A PARTICU LAR SUM IN FDRS ON WHICH INTEREST INCOME WAS EARNED. SUCH INTEREST IN COME OF RS. 12 84 137/- HAS BEEN SHOWN BY THE ASSESSEE AS ITS B USINESS INCOME BUT THE A.O. HAS TREATED IT AS INCOME FROM OTHER SOURCE S. THE LD. CIT(A) HAS ALSO TAKEN THE SAME VIEW AND HAS CONFIRMED THE IMPUGNED ADDITION OF RS. 12 84 137/- BY TREATING IT AS INCOME FROM OT HER SOURCES. 8. BEFORE US BOTH THE PARTIES HAVE REITERATED THEI R ARGUMENTS TAKEN BEFORE THE LD. CIT(A). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE HAVE FOUND THAT ADDITION HAS BEEN MADE BECAUSE THE ASSESSEE HAS SHO WN INTEREST INCOME ON FDRS IN ITS PROFIT AND LOSS ACCOUNT AND O N THAT BASIS ALONE THE A.O. PERSUADED HIMSELF TO TREAT THIS INTEREST I NCOME AS INCOME FROM OTHER SOURCES. HOWEVER THE A.O. HAS IGNORED THE CONTENTION OF 8 THE ASSESSEE THAT FDRS WERE PURCHASED FOR TAKING CO NTRACT WORK AND THEREFORE THE INTEREST ACCRUING ON THESE FDRS WOUL D BECOME ITS BUSINESS INCOME. THE ASSESSEE FILED COPIES OF FDRS WHICH WERE PLEDGED WITH VARIOUS GOVERNMENT DEPARTMENT. THE A. O. OR THE LD. CIT(A) HAVE NOT DISPUTED THE ABOVE MENTIONED FACTS. IN OUR CONSIDERED OPINION HIS INTEREST INCOME WOULD PARTAKE THE CHAR ACTER OF BUSINESS INCOME ONLY. IN SUCH LIKE CASES WE HAVE TAKEN NUM EROUS DECISIONS IN THE SAME LINES. ACCORDINGLY AFTER CONSIDERING THIS INTEREST INCOME AS PART OF BUSINESS INCOME AS HAS BEEN CLAIMED BY THE ASSESSEE WE ALLOW GROUND NO. 2 OF THIS APPEAL AS IT HAS BEEN PRAYED F OR. 10. GROUND NOS. 3 AND 4 ARE FORMAL AND DO NOT REQUI RE ANY ADJUDICATION. 11. IN THE RESULT THIS APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD APRIL 2014. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER VL/ DATED : 3 RD APRIL 2014. 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. DR ITAT JODHPUR BY ORDER 6. GUARD FILE AR ITAT JODHPUR