9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 1494 - AT - Income TaxEstimation of income - contracts for transportation of goods - contract receipt based on TDS certificates - AO estimated @ 6% or CIT(A) reduced it to 2% of receipts - no books were maintained - Held that - The income that admittedly stands brought to tax in assessment is that arising to the assessee-AOP out of the contract receipt from different contractee-companies. The receipt arises to the assessee on the basis of transportation work undertaken by it, and which it does through its members, paying them a sum which, in the absence of any record, led to the estimation of its income in the first place. There is no question of two additions, i.e., on account of surplus (Rs.2.83 lacs) and the other as a percentage of the contract receipt. The AO, who estimated the same at 6% of the contract receipt, accordingly, had rightly not included the admitted surplus, which stands therefore wrongly included by the ld. CIT(A) by inferring its exclusion by the AO to be a mistake. The assessee has reported two other incomes, i.e., interest on tax-refund and sale of scrap. No issue in their respect, as apparent from the orders as well the grounds raised before the first appellate authority, stands raised before the Revenue authorities; the only issue being qua the addition made in assessment. The same, in any case, arising from outside oneself as is contract receipt, the quantum of income from which source is the subject matter of dispute, is income, as indeed it would be for any other person. Reference in this regard may be made to the decision in Banglore Club v. CIT 2013 (1) TMI 343 - SUPREME COURT reiterating the settled position of law in the matter with reference to several judicial precedents. We decide accordingly. Assessee s appeal is partly allowed.
Issues Involved:
1. Determination of taxable income for the assessee-Association of Persons (AOP) from contract receipts. 2. Claim of exemption on surplus contributions from members based on the principle of mutuality. 3. Estimation of income from contract receipts due to lack of maintained books of account. 4. Inclusion of admitted surplus in the total income by the CIT(A). 5. Consideration of other incomes such as interest on tax refund and sale of scrap. Issue-wise Detailed Analysis: 1. Determination of Taxable Income for the Assessee-AOP from Contract Receipts: The primary issue in this appeal is the correct determination of the taxable income of the assessee-AOP for the relevant year, particularly from contract receipts. The assessee, an AOP formed by truck owners, enters into contracts for transportation of goods with various agencies. The Assessing Officer (AO) estimated the income from contract receipts at 6% due to the non-production of books of account by the assessee, leading to a total assessed income of ?23,90,052. The CIT(A), however, applied a net profit rate of 2%, directing the AO to include the income of ?2,83,203 disclosed by the assessee, which had been omitted by the AO. 2. Claim of Exemption on Surplus Contributions from Members Based on the Principle of Mutuality: The assessee argued that any surplus out of contributions received from its members should not qualify as income based on the principle of mutuality. However, the Tribunal observed that there was no finding that the surplus was indeed out of contributions from members, particularly due to the absence of maintained account books. The onus to show that its income is exempt under the Act was on the assessee, which it failed to discharge. 3. Estimation of Income from Contract Receipts Due to Lack of Maintained Books of Account: The Tribunal noted that the assessee did not maintain any books of account, leading to the estimation of income by the Revenue. The assessee's claim that it disbursed the entire contract receipt to its members, including the TDS component, was unevidenced and raised for the first time before the Tribunal. The Tribunal, therefore, upheld the estimation of income, albeit at a reduced rate of 1.5% of the contract receipts, considering the lack of evidence and the need for a reasonable estimation. 4. Inclusion of Admitted Surplus in the Total Income by the CIT(A): The CIT(A) included the admitted surplus of ?2,83,203 in the total income, which the AO had omitted. The Tribunal observed that the AO had rightly not included the admitted surplus, as the income was already estimated at 6% of the contract receipt. Therefore, the inclusion of the admitted surplus by the CIT(A) was deemed incorrect. 5. Consideration of Other Incomes Such as Interest on Tax Refund and Sale of Scrap: The assessee reported other incomes, including interest on tax refund and sale of scrap. The Tribunal noted that no issue was raised regarding these incomes before the Revenue authorities. These incomes, arising from outside sources, were considered as income, similar to the contract receipts. Conclusion: In conclusion, the Tribunal partly allowed the assessee's appeal, reducing the profit rate on contract receipts to 1.5% while upholding the inclusion of other incomes such as interest on tax refund and sale of scrap. The Tribunal emphasized the need for proper maintenance of records and the onus on the assessee to prove its claims for exemptions. The decision was pronounced in the open court on August 28, 2018.
|
