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TMI Blog2012 (9) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sources’ - against assessee. Direction to the AO to estimate the profit at 10% on the contract receipts and to allow depreciation - Held that:- As in the earlier years, in similar circumstances, profit rate of 12.5% was applied by the Tribunal, thus the years under consideration no reason for not applying a similar rate - to maintain the principle of consistency the earlier decision of this tribunal is followed and accordingly hold that the profit rate could be at 12.5% of the gross receipts and further claim of depreciation is allowed - Order to modify the order of CIT(Appeals) - partly in favour of assessee. Disallowance at 20% of the total payments made to the sub contract on estimate basis - Held that:- Disallownace was made as that all the vouchers are self-made and in some of the cases there were no vouchers in supporting the claim and in some of the vouchers the name of the recipient is not there. In view of the these facts and circumstances, the inflation of payment cannot be ruled out and, therefore, the entire claim of the assessee cannot be accepted. As revenue has not disputed the execution of the work through sub contract and the profit ratio admitted by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uchers in respect of these two sites were also not furnished. On verification of claim of salary, the AO noticed that amounts shown in the vouchers were not tallying with the statement of salaries furnished during the assessment proceedings. Under contract expenditure the assessee claimed payment towards sub-contract expenses to 12 sub-contractors, who are engaged in separate work, however, there were no sub-contract agreements and in case of some of the sub-contractors, they are not even assessed to tax. Similarly, the AO noted that similar charges shown under other work expenses and the assessee has accepted that the sale tax deduction was wrongly taken as such charges. The assessee could not furnish supporting details in respect of claim made under assignment commission and professional charges. The assessee also could not furnish break-up of inventories shown under current assets. In view of the huge discrepancies in the accounts, the Assessing Officer rejected the books of account and estimated the profit on gross contract receipts at 12.5% clear of depreciation. The assessee challenged the action of the AO before the CIT(appeals), who had confirmed the action of the AO in rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same as business income. The AO assessed these incomes as "income from other sources". On appeal, the CIT(Appeals) has confirmed the action of the AO by treating the said income as 'income from other sources' and such addition. 8. We have heard the learned AR of the assessee as well as the learned Departmental Representative and considered the relevant material on record. The details of the interest receipts and miscellaneous income are given by the CIT(Appeals) in para 8.1 as under: "As seen from the details of the other income, given in Schedule A to the audited Profit & Loss Account, the above amount comprises of the following receipts: Interest on bank deposits Rs. 1,01,530 Interest on IT Refund Rs. 97,460 Interest received on loans Rs. 2,38,584 Miscellaneous income Rs. 7,003 Total Rs. 4,44,577 ========= 9. It is clear from the nature of the receipt that the said income cannot be treated as business income and, therefore, in our opinion the authorities below have rightly treated the same as 'income from other sources'. Hence, we do not find any substance or merit in the ground raised by the assessee on this issue and accordingly the same is dismissed. 10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now settled as decided by the 3rd Member decision of this tribunal in case M/s Krishnamohan Constructions, Hyderabad(supra). Hence, to maintain the principle of consistency, we follow the earlier decision of this tribunal and accordingly hold that the profit rate could be at 12.5% of the gross receipts and further claim of depreciation is allowed. Accordingly, we modify the order of CIT(Appeals) on this issue and estimate the profit rate at 12.5% and further allow the claim of depreciation from the said profit. 13. For the assessment year 2005-06 the assessee has raised the following grounds: "1. The order dated 26/03/2009, passed by the learned CIT(A) is against the appellant company in so far as contrary to the facts of the case. 2. The learned CIT(A) ought not to have disallowed the expenditure, at 20% of the total payments made to subcontractors on estimate basis, while the expenditure is not doubted. 3. The learned CIT(A) erred in making a disallowance, contrary to his own observation as the said expenditure is allowable in principle. 4.The CIT(A) ought to have considered the submissions based on the material evidence, and erred in observing that the same is not incident ..... X X X X Extracts X X X X X X X X Extracts X X X X
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