2010 (8) TMI 958 - AT - Income Tax

2012 (5) TMI 394 - HC

Issues Involved:

1. Deletion of trading addition of Rs. 42,88,000/-
2. Deletion of addition of Rs. 16,62,480/- related to property sale
3. Deletion of addition of Rs. 5,89,000/- u/s 68
4. Allowance of depreciation on trucks @ 50%

Summary:

Issue 1: Deletion of trading addition of Rs. 42,88,000/-

The revenue contended that the Ld. CIT(A) erred in deleting the trading addition of Rs. 42,88,000/-. The AO had rejected the assessee's books of accounts, citing the low net profit rate of 1.28% compared to the 8% prescribed u/s 44AD for civil contractors not maintaining books of accounts. The AO also noted the absence of project-wise details and unconfirmed balances. The Ld. CIT(A) found that the AO's observations were general and not specific, and that the assessee's accounts were audited and consistent with past practices. The Tribunal upheld the Ld. CIT(A)'s decision, noting that the AO did not provide strong reasons to reject the books of accounts and that similar additions in the previous year were deleted and upheld by the ITAT.

Issue 2: Deletion of addition of Rs. 16,62,480/- related to property sale

The revenue argued that the Ld. CIT(A) erred in deleting the addition of Rs. 16,62,480/-. The AO had applied section 40A(2b) and estimated the property value based on circle rates, concluding that the assessee understated the sale proceeds. The Ld. CIT(A) found that the AO erroneously applied section 40A(2)(b) instead of section 50C, which deals with the valuation of property for stamp duty purposes. The Ld. CIT(A) noted that the sale proceeds disclosed by the assessee were higher than the value adopted by the Stamp Valuation Authorities. The Tribunal upheld the Ld. CIT(A)'s decision, finding no reason to interfere.

Issue 3: Deletion of addition of Rs. 5,89,000/- u/s 68

The revenue contended that the Ld. CIT(A) erred in deleting the addition of Rs. 5,89,000/- u/s 68. The AO doubted certain loan entries from the director, Shri Amit Pasricha, and other directors, Shri H.S. Pasricha and Shri Kailash Pasricha. The Ld. CIT(A) found that the directors were regular income tax assessees, confirmed the loans, and provided sufficient evidence of their creditworthiness. The Tribunal upheld the Ld. CIT(A)'s decision, noting that the assessee fulfilled all three ingredients of section 68: identity of the creditor, genuineness of the transaction, and creditworthiness of the creditors.

Issue 4: Allowance of depreciation on trucks @ 50%

The revenue argued that the Ld. CIT(A) erred in directing the AO to allow depreciation on trucks @ 50%. The AO had allowed depreciation at 20%, treating the trucks as motor cars. The Ld. CIT(A) allowed the depreciation at 50%, considering the trucks as commercial vehicles. The Tribunal upheld the Ld. CIT(A)'s decision, noting that the trucks qualified as commercial vehicles and the applicable rate of depreciation was 50%.

Conclusion:

The appeal of the revenue was dismissed, and the Tribunal upheld the Ld. CIT(A)'s decisions on all issues.

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