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Issues:
1. Continuation of registration u/s 184(7) of the IT Act. 2. Computation of net profit for estimating total income. Analysis: 1. The first issue in this appeal pertains to the continuation of registration u/s 184(7) of the IT Act. The dispute arose as the assessee filed a belated declaration in Form No. 12 due to a dispute among partners, leading to the Income Tax Officer (ITO) rejecting the continuation of registration. The Appellate Assistant Commissioner (AAC) upheld this decision. However, the assessee argued citing circulars issued by the Central Board of Direct Taxes (CBDT) emphasizing that a declaration filed along with a belated return constitutes sufficient compliance. The Tribunal referred to various precedents and held that since the delay was not mala fide and no penalty was levied, the assessee was entitled to continuation of registration under section 184(7) of the IT Act. 2. The second issue involves the computation of net profit for estimating total income. The ITO applied a percentage of 12.5 on gross receipts without excluding the value of materials supplied by contracting authorities. The assessee contended that as per a Supreme Court decision, the cost of materials supplied should be excluded from net profit calculation. The AAC rejected this argument, stating it was not raised before the ITO. However, the Tribunal allowed this ground of appeal, citing the Supreme Court's decision that when materials supplied by the Government remain its property, no profit element is involved in the turnover. Therefore, the income should be determined based on cash payments received from the Government, exclusive of material costs. The Tribunal accepted this argument and allowed the appeal. In conclusion, the Tribunal allowed the appeal, granting continuation of registration to the assessee under section 184(7) and directing the computation of net profit for estimating total income in accordance with the Supreme Court's decision regarding material costs supplied by the Government.
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