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TMI Blog2015 (8) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... able on the date of balance sheet and not on the amounts paid before the end of the previous year does not warrant any deliberation as held in the facts and circumstances of the case, the provisions of section 40(a)(ia) per se are not applicable as the income of the assessee is directed to be determined u/s 44AD on presumptive basis. Accordingly, this ground becomes infactuous. - ITA No.73/Kol/2014 - - - Dated:- 5-8-2015 - Shri Mahavir Singh, JJ. For The Appellant: Shri Anikesh Banerjee, Advocate For The Respondent: Shri Snehotpal Dutta, JCIT ORDER This appeal of assessee arises from the order of ld.CIT(A)-XVI, Kolkata in Appeal No.15/CIT(A)-XVI/Wd-29(1)/10-11 dated 25.10.2013. Assessment was framed by I.T.O., Ward-29(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the act ) for A.Y. 2008-09 vide its order dated 30.09.2010. 2. The issue to be decided are as to whether (i)the ld. CIT(A) is right in rejecting the claim of the assessee that the income is to be determined in accordance with the provision of section 44AD of the Act; (ii)the ld.CIT(A) is right in invoking the provisions of section 40(a)(ia) of the Act when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crossed the monetary limit prescribed u/s 44AB of the Act. This ground was not accepted by the ld. CIT(A) as the ld. AO in his remand report stated that during the earlier year the assesee has reported the turnover of ₹ 84,88,453/- which exceeds the monetary limits prescribed u/s 44AB of the Act and accordingly, the provisions of section 40(a)(ia) of the Act are applicable to the assessee during the previous year 2007-08. (c) that the payment of ₹ 4,71,195/- towards labour charges was made before the end of previous year by the assessee and hence, the provision of section 40(a)(ia) of the Act cannot be invoked. This ground was not accepted by the ld. CIT(A) in view of the decision of the Jurisdictional High Court rendered in the case of CIT vs Crescent Export Syndicate wherein it was held that the provisions of section 40(a)(ia) of the Act are applicable not only to the amount which is shown as payable on the date of balance sheet but also applicable to such expenditure which becomes payable at any time during the relevant previous year and was actually paid within the previous year. (d) that the turnover of the assessee is ₹ 37,06,813 and the net prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding anything to the contrary contained in section 28 to 43C, in the case of an assessee engaged in the business of civil construction or supply of labour for civil construction, a sum equal to eight per cent of the gross receipts paid or payable to the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income, shall be deemed to be the profits and gains of such business chargeable to tax under the head profits and gains of business or profession . Provided that nothing contained in this sub-section shall apply in case the aforesaid gross receipts paid or payable exceed an amount of forty lakh rupees. For the purpose of this section, the expression civil construction includes (a) Construction or repair of any building, bridge, dam or other structure or of any canal or road ; (b) The execution of any works contract. The provision of section 44AD of the Act contemplates that the income determined under the presumptive scheme is optional and provides system of rebuttal. A person can claim that his income of the above mentioned business is lower than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022 at page 1026. (ii)R.M.Adaikalavan, vs State of Tamil Nadu reported in 238 ITR 263 at 674 (Madras Full Bench decision). It is well settled that while dealing with the non obstante clause in which the legislature wants to give overriding effect to section. it must try to find out to the extent legislature had intended to give one provision over riding effect over another provision. Such intention of the legislature in this behalf is to be gathered from the enacting part of the section. Reliance is placed in this regard on the decision of the Hon ble Apex Court in the case of A.G.Varadarajulu vs State of Tamil Nadu (1998) 146 CPR (SC) 117 at page 123. A clause beginning with an expression Notwithstanding anything contained in this Act or in some particular act or in any law for the time being in force or in any contract is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict, over riding effect over the provision of the Act or the contract mentioned in the non obstante clause. It is equivalent to say that in spite of the provision of the case or any other act in the non obstante clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o under section 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in section 40 is also taken into account. This decision supports the view that when the assessee cannot claim any expenses after applying the net profit rate, then the AO too cannot make addition after applying the net profit rate. Even if the assessee commits any default under Chapter XVIIB of the Act with regard to the TDS provision, it is only for the TDS officer to take suitable action on the assessee, the doors of the AO are absolutely shut when the income is determined on presumptive basis u/s 44AD of the Act. In view of the aforesaid facts and circumstances, the legal provision of section 44AD of the Act shows an overriding effect over other provisions contained in section 28 to 43C of the Act, I hold that the provisions of section 40(a)(ia) of the Act cannot be invoked in the instant case as the income is directed to be determined on presumptive basis u/s 44AD of the Act. Accordingly, ground Nos.3,5,6 and 7 are allowed in favour of the assessee. The next issue to be decided in this appeal is as to whether section 40(a)(ia) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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