2022 (8) TMI 957 - AT - Income Tax

Computation of Deduction u/s 80P - calculation of gross contractual value - HELD THAT - In its fact, that the gross receipt should be determined by allowing the reasonable deduction of the items like TDS, VAT, security letter cess and other deduction. Accordingly, the assessee made a correct calculation related to calculation of the contract receipt. Both the Revenue authorities cannot go beyond the jurisdiction of all the orders of Hon ble ITAT. Hon ble ITAT directed denavo assessment it does not mean that the essence of the judgment should be avoided in any means. For, the deduction u/s 80P(2)(a)(vi) of the Act the assessee is eligible. Respectful observation of the order in the case of CIT v. Gurdaspur Hardochhenni Coop. L/C Society 2 007 (2) TMI 214 - PUNJAB AND HARYANA HIGH COURT . Accordingly, the gross receipt of the assessee is restricted amount to Rs.69,02,988/-. There is no change in the profit per centage. Accordingly, the assessee is eligible u/s 80P(2)(a)(vi).

Summary

Issues:
1. Appeal against order of Ld. Commissioner of Income Tax (Appeals) under Income Tax Act, 1961 for Assessment Year 2010-11.
2. Dispute over assessment process and deductions under sections 80P(2)(a)(vi) and 80P(2)(c) of the Act.
3. Determination of gross receipt and profit percentage for assessment.

Issue 1: The appeal was filed against the order of the Ld. Commissioner of Income Tax (Appeals), Bathinda, under the Income Tax Act, 1961, for Assessment Year 2010-11. The impugned order stemmed from the assessment made by the Income Tax Officer, Ward-2(2), Muktsar, under section 143(3) of the Act.

Issue 2: The dispute centered around the assessment process and deductions under sections 80P(2)(a)(vi) and 80P(2)(c) of the Act. The initial assessment was conducted following a direction from the ITAT Amritsar, which highlighted procedural irregularities and lack of adequate opportunity for the assessee to be heard. The ITAT directed a denovo assessment to be carried out by the Assessing Officer after affording the assessee proper opportunity. The gross contract receipt and profit percentage were key factors in the assessment, with the Revenue authorities enhancing the gross contract receipt, leading to a discrepancy in the calculation of net profit and subsequent tax liability. The appellate authority upheld the enhancement of turnover and converted the deduction under section 80P(2)(a)(vi) to 80P(2)(c), prompting the assessee to file an appeal.

Issue 3: The determination of gross receipt and profit percentage for assessment was a crucial aspect of the case. The assessee argued that the gross receipt should be calculated after allowing reasonable deductions such as TDS, VAT, security, cess, and other deductions. The counsel contended that the Revenue authorities should not exceed the jurisdiction set by the ITAT's order, which had already determined the turnover and provided specific directions regarding the deduction under section 80P(2)(a)(vi). The ITAT, in its analysis, emphasized the correct calculation of the contract receipt and reiterated that the assessee was eligible for the deduction under section 80P(2)(a)(vi) based on the purpose of the society and relevant legal precedents.

In conclusion, the ITAT allowed the appeal of the assessee, emphasizing the proper calculation of gross receipt, adherence to the ITAT's directions, and eligibility for the deduction under section 80P(2)(a)(vi) of the Income Tax Act, 1961. The judgment highlighted the importance of following procedural fairness and legal principles in conducting assessments and determining tax liabilities.