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TMI Blog1987 (9) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax purposes. Rs. 1,17,197 Less : Losses relating to the assessment years 1978-79 to 1980-81 brought 1,56,870 forward out of the same set off restricted to. Rs. 1,17,197 ------------ Balance Income Rs. Nil" ------------ The assessee sought carry forward of balance of loss of Rs. 39,673. In completing the assessment, the income was computed as under by the ITO : "Business : Income returned Rs. 1,17,197 Deduct : Loss to be carried forward for the asst. year 1978-79 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng supervision charges which were received by the assessee from her husband, Shri Ramaswamy in terms of an agreement entered into with him dated 10-3-1980 and related to building contracts undertaken by him. The CIT was of the view that the contract business which was earlier carried on by the assessee of construction of buildings was not continued in the assessment year 1982-83 and, therefore, under the provisions of sec. 72(1)(i), the business loss of earlier years could not be carried forward and set off against income for this year. This factor, the Commissioner stated, had been overlooked by the ITO in framing the assessment and, therefore, there was an error prejudicial to the revenue which called for being set right. 3. In reply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. A Block 1981 Construction of Tiruchendur Apartments 6 Nos. B Block 1982 Tiruchendur Complex 9 Nos. C Block" According to him, the mere fact that in earlier years the construction was done for outsiders and in this year the construction was done for a project of flats which scheme was started by the assessee's husband, did not make any difference. He also filed copies of the trading account and profit and loss account and submitted that merely because a lump sum was paid as "supervision charge" for what was done by the assessee, it would not cease to be a business of construction contract. He, therefore, submitted that the finding of the ITO was in order. 5. The learned Departmental Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the list of works executed from 1967 onwards. The work of the assessee was construction business. The construction contracts were taken from 1967 right up to 1977 from outside and independent parties, such as Autonomous Bodies, etc. In these contracts, as is usual, the assessee would have to fulfil the same and whatever surplus or deficit resulted would be the assessee's recompense. This would be either profit or loss from business. The agreement of 10th March, 1980 reads as under : "This agreement entered into this 10th day of March, 1980, between Shri AR. Ramaswami of Pallathur, Ramnad District herein after referred to as Party of the First Part and M/s. Parthi Constructions, by Proprietrix Smt. Parvathi Ramaswamy of 13, Leith Castle S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Part. 2. The Party of the First Part agrees to pay 10 per cent of the total cost of construction as supervision charges to the party of the Second Part for attending to the constructions of the Flats. 3. The party of the First Part agrees to advance money for the construction as and when required by the Party of the Second Part. 4. The Party of the Second Part has agreed to the above terms and conditions and undertake to proceed with the construction work immediately. In witness whereof the parties hereto have set their hands on the day above written. For Parthi Constructions Sd/-Proprietrix Party of the First Part. Party of the Second Part" From the coming into force of this agreement, the assessee did not do any contract b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying out the contract work for which of course she did not have to finance expenditure immediately or ultimately from her pocket because, whatever money was expended was reimbursed by the husband. What the assessee got was a fixed amount with reference to the total expenditure incurred. This was paid on completion of the work. Thus, the expenditure on 'A' Block was Rs. 8,95,850 and the amount received by the assessee at 10 per cent was Rs. 89,585. The expenditure incurred on 'B' Block was Rs. 3,13,593 and what the assessee received was Rs. 31,359. The assessee was the contractor. Labour charges were disbursed by the assessee. So, the entire contract work was done by the assessee. Merely because expenditure was reimbursed by the husband afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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