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TMI Blog1991 (6) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... it is, generally he is getting Rs.500 per hour for bulldozer. But the expenses are not met except by the assessee which works out to Rs. 300 and the assessee is left with only Rs.200 profit per working hour. The working is given below. 1. Cost of diesel per hour 20 @ liters @ Rs. 4 Rs. 80 2. Cost of oil per hour 1-1/2 liters @ Rs. 20 Rs. 30 3. Cost of Hydrolic oil 1 litre @ Rs. 35 Rs. 35 4. Cost of greae 1 Kg. per hour @ Rs. 25 Rs. 25 5. Operators charge per hour @ Rs. 50 Rs. 50 . (including salary and idling charges) . . . 6. Supervisor's payment per hour Rs. 10 Rs. 10 7. Commission charges for arranging the . . . . dozer to commission agents @ Rs. 20 Rs. 20 8. Maintenance charges and cost of spare . . . Parts per hour Rs. 50 Rs. 50 . Total . Rs. 300 . . . . Balance Profit per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing note of such surplus in the early year. Thus, he arrived at the unexplained investment or expenditure in a sum of Rs. 5,07,290. He noticed the additions made to the assessee's income in the previous year relevant to the ass. yr. 1987-88 and such additions cam to Rs.2,51,245. He also gave credit for the difference in the opening balance in a sum of Rs. 9,765. Thus in all he found that the assessee had sources to explain to the extent of Rs. 2,61,010. The balance in a sum of Rs. 2,46,280 was sustained as unexplained investment. The computation is as follows: "Deficit as per the appellant's statement of Rs. payments 3,53,475 Add: . On account of credit in the account with CP Jose . Co., after considering the surplus available form . the earlier year as discussed above 13,947 . Expenditure by way of filling up of land 35,000 . Educational expenses of children 12,000 . Household expenses 36,000 . investment in residential building 2,06,868 . Less : admitted 1,50,000 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imated addition of Rs. 5,00,000 made by the ITO. The Department is not on appeal on the relief granted to the assessee in respect of the investment in residential property. It is only the assessee that is on appeal. The CIT(A) has given valid reasons for arriving at the estimate of Rs.2,06,868 and we are not persuaded by the arguments of the assessee's counsel for a further. reduction in the quantum. This ground is decided against the assessee. 8. Another ground in the assessee's appeal is against the addition of Rs.13,947. 9. We have heard rival submissions. We decline to interfere for the reasons stated by the first appellate authority. 10. In the Revenue's appeal, the grievance is about the reduction of the estimated receipts from Rs. 14,25,000 to Rs.6,08,000 for one bulldozer. The crux of the grievance is that the CIT(A) Should have estimated the hire charges at least for 200 days instead of 160 days in an year. The fact of the case may be briefly stated follows : From the papers seized in the course of the search, the ITO found the bulldozer is hired out at Rs. 450 to Rs. 500 per hour for a minimum working hours of 8 hours per day. From the letters he found that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee being a contractor with substantial receipts had required the use of the bulldozer for his own purposes during which time it will not be available for being let on hire. These factors also have weighed with the CIT(A) when he granted the relief. Thus, his order is based on materials and practical considerations. We decline to interfere. 12. Another grievance of revenue is against the relief granted by the CIT(A) in the estimate of income from 5 road rollers. The grievance is that the CIT(A) should not have equated the number of working days of the four road rollers to the use of one road roller for 365 days. The facts of the case are as follows: The ITO noticed that the road rollers is hired out at Rs. 500 per day. He estimated the number of working days at 250 per road roller and arrived at a gross receipt of Rs. 5,00,000 (Rs. 500 x 250 x 4). For one road roller which was sold during the year, he estimated the gross receipt at Rs. 25,000. The CIT(A) found from the seizer papers that the road roller NO.3 was given on hire only for a period of 165 days. On that basis, be estimated the number of days for the other three road rollers at 200 days on the basis of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the bulldozer cannot be considered as a transport vehicle. He relied on a number of decisions as follows: (i) Aravind Construction Co. (P) Ltd. vs. IAC (1990) 33 ITD 581 (Del) (ii) Progressive Engineering Co. vs. ITO (1987) 23 ITD 419 (hyd); (iii) ITO vs. N.K.Patel Co., (1982) 20 ITD 220 (Ahd); and (iv) CIT vs. super Drills (1988) 73 CTR (AP) 97 : (1990) 174 ITR 640 (AP) He further held that merely because the bulldozer was let out on hire the investment allowance cannot be denied. In this view of the matter, he relied on the following decisions : (i) Jaikishandas vs. CIT (1951) 20 ITR 540 (Lah); (ii) New Savan Sugar and Gur Refining Co. Ltd vs. CIT (1969) 74 ITR 7 (SC); and (iii) CIT vs. Vikram Cotton Mills Ltd. (1988) 67 CTR (SC) 169 : (1988) 169 ITR 597(SC) On facts he held that the assessee had used the bulldozer in his own contract business in addition to giving it on hire when not required by him for his own use. However, he denied the relief on the ground that the assessee did not maintain regular books of account and his income was always estimated as a percentage of the contract receipts and proceedings were initiated against him for non-mainten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied the investment allowance to the assessee on the ground that the assessee did not maintain regular books of account and action was taken against him for non-maintenance of accounts as required under s. 44AA of the IT Act, 1961. The assessee is aggrieved against such decision. 20. The learned Chartered Accountant for the assessee furnished before us copies of the profit and loss account for the year ended 31st March, 1987 and the balance sheet as at 31st March 1987 which are already on the record of the ITO. He also produced before us a ledger in a small note book containing 90 pages in which accounts are found upto 55 pages. Sri Srinivasan, C.A. admits that he did not have a day book or a cash book. Nor did he have the accounts on double entry system of accounting. But he has a ledger containing the necessary accounts from which the profit and loss account and the balance sheet were prepared and filed before the ITO. We have scrutinised the ledger and the profit and loss account and the balance sheet. The figures in the profit and loss account and the balance sheet are from the ledger produced before us. In the profit and loss account, the assessee has created a reserve o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing for the purpose of the business of the undertaking. The mere fact that day books etc. are not available cannot make the profit and loss account filed by him not reliable for the purpose of application of s. 10(2)(vid). The profit and loss account produced by the assessee. the genuineness of which has not been disputed by the Department, has to be taken as entitling the assessee to the benefit of that provision. "The Hon'ble High Court in coming to that conclusion relied on its own decision in P. Appavu Pillai vs. CIT (1965) 58 ITR 622 (Mad) wherein their Lordships had to deal with obsolescence allowance which has to be written off in the books of account under s. 10(2)(Vii) of the IT Act, 1922. In that context their Lordships had to consider the meaning of the expression "books of the assessee" and observed as follows : "The expression 'books of the assessee' in the context in which is appears in s. 10(2)(vii) does not give any indication of the particular type of accounts which the assessee should maintain. That the accounts maintained by the assessee are defective in the sense that they do not lead to a correct assessment of the income. profits and gains of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of any article or thing. The assessee is engaged in the business of executing contract works. In the course of contract, he produces new articles or things as, for e.g., a road is laid out or a building or dam is constructed. Even immovable properties would fall under the definition of 'article' or 'thing'. Therefore, it cannot be said that the assessee is not engaged in production activity. Investment allowance is available if the assessee uses the machinery in construction works also. As a contractor it cannot be said that he is not engaged in construction activity. For all these reasons, we reject the Revenue's ground of appeal. 24. The last point at issue in the assessee's appeal is whether he is entitled to depreciation on the second bulldozer which was purchased a day before the last day of the previous year. The assessee has furnished the relevant particulars, but failed to claim depreciation on the same before the ITO. He has raised the issue before the learned CIT(A) for the first time. The first appellate authority did not specifically deal with the plea of the assessee for depreciation on the second bulldozer. Sri R. Srinivasan, the learned C.A., contends that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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