9911796707
|
Home
Issues:
Assessment of profit on materials supplied by the Government under the Income Tax Act, 1961. Detailed Analysis: The case involved a reference under section 256(1) of the Income Tax Act, 1961, regarding the assessment of profit on materials supplied by the Government. The Tribunal referred the question to the High Court whether the profit on such materials could be assessed only if the assessee had factored in such profit while submitting tenders. The dispute arose for the assessment years 1970-71 and 1971-72, where the assessee, a contracting firm, received payments for work done and materials from the Government. The Income Tax Officer estimated a gross profit of five percent on the value of materials, which the assessee contested before the Appellate Tribunal. The Tribunal considered case laws and concluded that the assessment of profit depends on whether the assessee factored in profit on materials while submitting tenders. If the rates in the tender were adjusted based on the assumption that the Government would supply materials, then no profit on materials should be assessed. However, since this aspect was not addressed by the lower authorities, the Tribunal remanded the case to the Income Tax Officer to examine the tenders and determine if profit on materials was calculated. The High Court upheld the Tribunal's decision, emphasizing the need for fuller facts to apply the law correctly. The High Court agreed with the Tribunal's view that without establishing the facts, it was not possible to apply the law accurately. Therefore, the Tribunal's decision to remand the case for further examination was deemed appropriate. Consequently, the High Court answered the referred question in favor of the assessee, indicating that a different view was unwarranted. No costs were awarded in the circumstances.
|
