9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (6) TMI 7 - AT - Income TaxRejection of books of accounts and estimation of income - HELD THAT - There is no denial of the fact that in assessee s own case right from the year 1999-2000, income of the assessee has been determined by resorting to estimation and dealing with other additions made. This fact is evident from the orders of the Tribunal for earlier assessment years and more particularly 2014 (4) TMI 389 - ITAT HYDERABAD and 2023 (11) TMI 980 - ITAT HYDERABAD No change of circumstances warranting a different view is brough to our notice. Since the learned CIT(A) followed the binding precedents in resorting to estimation of the income of the assessee, we do not find anything illegality or irregularity in the findings of the learned CIT(A) on this aspect. Hence, Ground No. 2 of Revenue s appeal is dismissed. Estimation of profit - Estimation of profit at 11.5% as against 12.5% directed by the learned CIT(A) for this year will be fair and reasonable estimation. We, therefore, modify the order of the learned CIT(A) accordingly and direct the AO to estimate the profit at 11.5% before depreciation on contract work executed by the assessee itself. With this, assessee s appeal is accordingly allowed in part. Disallowance of deduction u/s 80-IA(4) - HELD THAT - Admittedly there is no change in the facts and circumstances of the case obtaining from the earlier assessment years. In these circumstances, we find it difficult to take a different view for this assessment year. We, therefore, do not find any illegality or irregularity in the order of CIT(A) following the binding precedent in the well-considered view of a Co- ordinate Bench of the Tribunal taken for the earlier assessment years by orders dated 16/03/2012 and 25/08/2023. Accordingly, we uphold the findings of the learned CIT(A) for this assessment year also and dismiss the Ground No. 3 of Revenue s appeal. Disallowance of interest u/s 14A r.w.r 8D of the Rules and also the disallowance of interest expense under section 36(1)(iii) - HELD THAT - We find that there is nothing to contradict the findings of the learned CIT(A) on this aspect. CIT(A) on a comprehensive enquiry, found that the assessee had to associate with other concerns to form into a joint venture for obtaining and executing works of NHAI and after being successful bidder, when the works were allotted to the SPV in accordance with the rules framed by the NHAI, the assessee being a constituent of joint venture, had to invest amounts through the constituents to further the process of business activity. In the absence of any material to prove contrary, we find it difficult to reach a different conclusion than the one reached by the learned CIT(A). Certainly, the constitution of the SPV in terms of the rules of NHAI, obtaining contracts there from and to pump the funds to the constituents for execution of such work allotted to the constituents, all is part of the business exigency. We, therefore, do not find anything illegality or irregularity in the learned CIT(A) following the decision in the case of S.A. Builders 2006 (12) TMI 82 - SUPREME COURT and to delete the disallowance. Taxing of the interest earned on FDs - AO found that an amount was shown towards interest on unsecured loans as other income category, but the same was not offered to tax - HELD THAT - Reduction of such amount from the finance charges as is evidenced from the details shown in schedule-16 to the final accounts as observed by the learned CIT(A) is not contradicted with reference to any material. The department could have refuted the findings of the learned CIT(A) with reference to financials of the assessee as noted by the learned CIT(A). Since this amount was already reduced from the finance charges, when debiting the same cannot be added separately. On this score, we uphold the findings of the learned CIT(A) and confirm the deletion. Ground is accordingly dismissed. Cash payments in violation of section 40A(3) - AR submitted that when once the income is estimated, disallowance under section 40A(3) of the Act cannot be made - HELD THAT - As decided in Smt. Santosh Jain 2006 (8) TMI 167 - PUNJAB AND HARYANA HIGH COURT that when once income of assessee was computed by applying gross profit rate or by estimation, provisions of section 40A(3) could not be invoked. Apart from this, the order of the learned Assessing Officer does not spell out as to the distance of the sites from the urban areas of Allahabad, Kurnool etc., but going by the name of the site, AO concluded that the payments in cash at such places is not justified. We have to keep it in mind that the name of the site is only for identification purpose, but it does not indicate anything about the distance between such site and the urban areas with which those are identified. CIT(A) recorded that on verification of the details he found that there were no banking facilities at the sites at which the cash payments were made since those are far away from the urban areas and such expenses were made for providing housing accommodation and other facilities to the workers at the site and, therefore, such payments are justified. This finding of fact is not controverted with reference to any facts and figures and, therefore, it does not appear to us to disbelieve the same. We, therefore, do not find anything perverse in the findings of the learned CIT(A) and accordingly confirm the same. Disallowance of business promotion expenses - CIT(A) held that the said expenditure is not of suspicious nature and AO did not deal with the explanation offered by the assessee to the effect that such expenditure was incurred by the directors and Head Officer staff, accompanying them to the sites - HELD THAT - CIT(A) recorded that the assessee submitted before him that this expenditure was incurred in the process of visiting various sites by the Directors, Officers and staff members and since it is connected to the business promotion of the assessee, the same is allowable, and, therefore, the learned CIT(A) allowed the same. Further, CIT(A) recorded that when once the income is determined by resorting to the estimation by rejecting the books of accounts, no further addition need be made. Though the learned CIT(A) does not say that he himself verified the details of the expenditure said to have been incurred in the process of visiting various sites by the Directors, Officers and staff members to reach a conclusion that it is connected to the business promotion of the assessee to be allowed, the fact remains that the income of the assessee is determined by resorting to the estimation by rejecting the books of accounts, and therefore, no further addition need be made. On this score, we uphold the findings of the learned CIT(A) on this aspect and dismiss the Ground of appeal of Revenue.
Issues Involved:
1. Rejection of books of accounts and estimation of income. 2. Deduction u/s 80-IA(4) of the Income Tax Act. 3. Disallowance of interest u/s 14A and u/s 36(1)(iii) of the Income Tax Act. 4. Taxation of interest income from FDs. 5. Disallowance of cash payments u/s 40A(3) of the Income Tax Act. 6. Disallowance of business promotion expenses. Summary: 1. Rejection of Books of Accounts and Estimation of Income: The learned CIT(A) rejected the assessee's books of accounts and estimated the income at 12.5% before depreciation. The Revenue argued that the CIT(A) was not justified in making such estimation without calling for a remand report from the Assessing Officer, violating Rule 46A of the Income Tax Rules, 1962. The Tribunal found that the CIT(A) based his estimation on consistent past practices in the assessee's own case and not on fresh evidence. Thus, there was no violation of Rule 46A, and the Tribunal upheld the CIT(A)'s findings, dismissing Revenue's ground. 2. Deduction u/s 80-IA(4) of the Income Tax Act: The Assessing Officer disallowed the deduction claimed u/s 80-IA(4), considering the assessee as a works contractor. The learned CIT(A) allowed the deduction, following earlier Tribunal orders and noting no change in circumstances. The Tribunal upheld the CIT(A)'s decision, dismissing Revenue's ground, as the issue was consistently decided in favor of the assessee in previous years. 3. Disallowance of Interest u/s 14A and u/s 36(1)(iii) of the Income Tax Act: The Assessing Officer disallowed interest expenses under sections 14A and 36(1)(iii), arguing that borrowed funds were diverted to sister concerns. The learned CIT(A) found that the investments were made for business exigency and from substantial own funds, thus deleting the disallowance. The Tribunal upheld the CIT(A)'s findings, noting no contrary evidence from the Revenue, and dismissed the related grounds. 4. Taxation of Interest Income from FDs: The Assessing Officer taxed interest earned on FDs as income from other sources. The learned CIT(A) noted that the interest was already reduced from finance charges and directed deletion of the addition. The Tribunal confirmed this, finding no material contradiction from the Revenue, and dismissed the related ground. 5. Disallowance of Cash Payments u/s 40A(3) of the Income Tax Act: The Assessing Officer disallowed cash payments under section 40A(3), considering them unjustified. The learned CIT(A) found that payments were made at remote sites for business purposes and deleted the disallowance. The Tribunal upheld this, noting the absence of banking facilities at the sites and the business necessity of the payments, dismissing the related ground. 6. Disallowance of Business Promotion Expenses: The Assessing Officer disallowed business promotion expenses due to lack of vouchers. The learned CIT(A) allowed the expenses, noting they were incurred by directors and staff visiting sites and were connected to business promotion. The Tribunal upheld this, emphasizing that income was estimated by rejecting books of accounts, thus no further addition was needed, and dismissed the related ground. Conclusion: The appeal of the Revenue was dismissed, and the appeal of the assessee was partly allowed. The Tribunal's order was pronounced on January 11, 2024.
|
