9911796707
TMI Blog2014 (8) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... Valuation of contract – Held that:- Assessee stated that it was following project completion method, the entire income emanating from such contract was duly offered for taxation in the immediately succeeding year - CIT(A) observed that only the profit element from the contract should have been charged to tax - proportionate net profit worked out on the basis of the contract receipts during the year vis-a-vis the total value of the contract and restricted the addition - the action of the AO in taxing the gross sum has no legs to stand on, because tax is levied on the ‘income’ and not on the ‘receipt’ - the substantial part of the contract was completed by the assessee during the year, in view of which it also received a sum – thus, the Perc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not challenged by the assessee before the appellate authorities. 3. We have heard the rival submissions and perused the relevant material on record. It is observed that the basis for the instant addition u/s 69C was the AIR information indicating that the assessee deposited a sum of ₹ 49.79 lacs in its bank account, which in the opinion of the AO, the source of which was not disclosed. The details of such AIR information are contained on pages 6-9 of the paper book. Page 10 of the paper book indicates that the AO inquired about these transactions and requested the assessee to produce cash book for verification. In reply, the assessee filed a letter dated 14.12.09 stating that all the entries of cash deposits in the bank were du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it implies that the source of such expenditure emanates from the books of account, for which there can be no question of making any addition u/s 69C. Here is a case in which the assessee stated that the amounts referred to in AIR totaling to ₹ 49.79 lacs were duly recorded in the books of account by means of cash deposits. When the books of account were produced before the AO, it was incumbent upon him to verify the veracity of the assessee s contention as put forth before him through its letter dated 14.12.09. The ld. CIT(A) sustained the addition by basing his opinion on similar addition made for the preceding year, without verifying the assessee s contention, more so, when the AO himself admitted that the basis of addition for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kakinada Sea Port Ltd. was in progress during the year which completed in the subsequent year. The assessee stated that since it was following project completion method, resultantly, the entire income emanating from such contract was duly offered for taxation in the immediately succeeding year. Not convinced with the assessee s submissions, the AO held that the amount of ₹ 1.67 crore was liable to be taxed in the previous year relevant to the assessment year under consideration. The assessee contended before the ld. CIT(A) that it incurred expenses amounting to ₹ 1,00,01,925/- in the year under consideration in respect of the above contract of ₹ 1.67 crore and a further sum of ₹ 66,29,222/- was incurred in subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax in the subsequent year. The fact recorded by the ld. CIT(A) that the assessee incurred a sum of ₹ 1.00 crore in this year and ₹ 66.29 lac in the subsequent year towards this contract, has not been controverted by the ld. DR. This shows that the action of the AO in taxing the gross sum of ₹ 1.67 crore has no legs to stand on, because tax is levied on the income and not on the receipt . The AO, by including a sum of ₹ 1.67 crore in the total income of the assessee for the current year has, in fact, charged the entire receipt to tax ignoring the fact that the assessee had also incurred expenditure on this contract. The finding of the ld. CIT(A) to this extent is upheld. 8. As the substantial part of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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