2018 (11) TMI 1432 - AT - Income Tax

Addition being difference in contract receipts actual receipts v/s contract receipts as shown in the Form-16A (TDS certificate) - Held that - We find that the total receipts are not taxable as only profit element is required to be taxed. Therefore considering the various decisions of Coordinate Benches we consider 10% net profit of the amount ofRs.10,58,063/- as profit earned by the assessee in respect of these gross receipts as per contract. The AO directed to work out the net profit accordingly and the balance addition is therefore deleted. This ground of appeal is partly allowed. Addition of contract receipts - There is a difference on account of opening balance in respect of ledger accents with the assessee and ledger accounts of Vaman Prestressing Co. Pvt. Ltd., hence the amount of ₹ 5,29,764/- has been rightly added by the AO and confirmed by the CIT(A). The contention of the AR that only net profit is to be taxed is without any basis as this difference is on account of actual receipts, hence, the said income remained to be taxed, accordingly this ground of appeal of the assessee is dismissed. Addition towards kitchen expenses - no pointing out any specific defects in the vouchers made by the AO - Held that - No merit in confirmation of such addition, accordingly same is directed to be deleted, this ground of appeal of assessee is therefore allowed. Addition made towards labour expense - Held that - AO has made disallowance of 75,000/- pertaining to labour expenses out of total expenses of ₹ 57,05,271/-. However, we find that disallowance made without any specific defect pointing out by the AO, therefore such disallowance of ₹ 75,000/- are directed to be deleted. Addition made towards travelling expenses - Held that - Disallowance of 20% considering the same as personal in nature, hence, the element of personal use of travelling does not denied. No infirmity in the order of CIT(A), accordingly the same is confirmed. Therefore, this ground of appeal is dismissed. Addition made towards vehicle expenses - Held that - AO has made disallowance @10% considering the personal element in respect of use of vehicles therefore we do not find any infirmity in the order of CIT(A), accordingly the same is upheld. Therefore, this ground of appeal is dismissed.

Summary

Issues:
1. Addition of difference in contract receipts
2. Addition of difference in opening balance of ledger account
3. Addition of kitchen expenses
4. Addition of labor expenses
5. Addition of traveling expenses
6. Addition of vehicle expenses

Issue 1 - Addition of difference in contract receipts:
The appeal was against the order of the CIT (A) regarding the addition of a difference in contract receipts amounting to ?10,58,063. The AO found a variance in the contract receipts shown by the assessee compared to the TDS certificate. The CIT (A) confirmed the addition, stating that the receipts were not advances and should be accounted for. The Tribunal allowed the appeal partly, considering only the net profit element to be taxed, directing the AO to calculate the net profit accordingly.

Issue 2 - Addition of difference in opening balance of ledger account:
The appeal contested the addition of ?5,29,746 as unexplained income due to a variance in the opening balance of ledger accounts. The CIT (A) upheld the addition, emphasizing the need for the appellant to explain the discrepancy. The Tribunal dismissed the appeal, stating that the difference in opening balance was on account of actual receipts and therefore taxable.

Issue 3 - Addition of kitchen expenses:
The AO disallowed ?60,000 of kitchen expenses without specific defects in the vouchers. The Tribunal directed the deletion of this addition, as no merit was found in confirming it.

Issue 4 - Addition of labor expenses:
The AO disallowed ?75,000 of labor expenses without specific defects pointed out. The Tribunal directed the deletion of this disallowance as no specific defects were identified.

Issue 5 - Addition of traveling expenses:
The AO disallowed ?20,000 of traveling expenses, considering it as personal in nature. The Tribunal confirmed this addition, stating that the personal element in traveling expenses was not denied.

Issue 6 - Addition of vehicle expenses:
The AO disallowed ?10,000 of vehicle expenses at a rate of 10% due to the personal element in vehicle use. The Tribunal upheld this addition, finding no infirmity in the CIT (A) order.

In conclusion, the Tribunal partly allowed the appeal, directing the deletion of certain additions while upholding others based on the specific circumstances and merits of each issue raised in the appeal.