9911796707
TMI Blog2014 (1) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit of 8% incorporated in Section 44AD reflects a legislative approved rate of net profit, which can be considered as fair and reasonable to estimate income from contract business in cases like that of the present assessee where the books of account are not found reliable by the Assessing Officer - the determination of income from contracting business is also proximate to the rate of net profit of 8% contained in Section 44AD of the Act - the income from contracting business of the assessee be estimated at 8% of the gross receipts and the addition be worked out – Decided partly in favour of Assessee. Section 44AD of the Act did not apply to the assessee before it, however, considering that the presumptive net profit rate of 8% in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. In brief, the facts are that assessee individual is a civil contractor engaged in the business of executing civil construction works for Government organizations and also Private Sector. For the assessment year under consideration, he filed a return of income declaring total income of Rs. 17,16,909/-. The assessee had declared gross receipts of Rs. 3,30,15,099/-and net profit of Rs. 18,62,056/-, which was 5.64% of the gross receipts. In the course of assessment proceedings, the Assessing Officer called for the books of account and other supporting vouchers. The Assessing Officer after noticing certain discrepancies in the books of account, which have been detailed in para 9 of the assessment order, rejected the book results invoking S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art relief allowed by the CIT(A) whereby the net profit from contracting business has been estimated at 12% as against 15% estimated by the Assessing Officer. Since, the cross grounds relate to the same issue, we proceed to adjudicate the same together. 5. Before us, learned counsel for the assessee submitted that though assessee was aggrieved by the action of the income-tax authorities in rejecting the book results by invoking Section 145(3) of the Act, however, if the net profit of the assessee is determined by applying a reasonable percentage of gross receipts, the assessee would satisfied. According to the learned counsel, the net profit estimated by the lower authorities was on a higher side and excessive. In this connection, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have carefully considered the rival submissions. In so far as the action of the income-tax authorities in rejecting the book results by invoking Section 145(3) of the Act is concerned, the same is not adjudicated on account of the submission of the assessee. The learned counsel for the assessee has canvassed for adoption of the net profit ratio of 8% on contract receipts in the present case in order to estimate the income from the business of contracting. Ostensibly, there is no hard and fast rule for estimating income from the business of civil constructing. So, however, Section 44AD of the Act prescribes estimation from contract business in cases specified there at the rate of 8% of gross receipts. Section 44AD covers cases of civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow Rs. 40 lacs and therefore, the Tribunal applied the presumptive rate of net profit of 8% incorporated under Section 44AD of the Act. In our considered opinion, the aforesaid point made out by the CIT(A) is quite misplaced inasmuch as the Delhi Bench of the Tribunal was considering the case of an assessee whose books of account were found unreliable and the contract receipts exceeded Rs. 40 lacs. Therefore, the Tribunal observed that strictly speaking, Section 44AD of the Act did not apply to the assessee before it, however, considering that the presumptive net profit rate of 8% incorporated under Section 44AD of the Act which represented a just, fair and equitable rate of net profit, the Tribunal found it fit to apply the same rate to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
