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TMI Blog2016 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ate was 5.28% in preceding year, therefore, there was a substantial decline in NP rate during the year. The AR has not explained this reason alongwith evidence. Moreover, in the present case as well as there is rejection of books of account and the assessee has failed to maintain proper books of account namely stock register, labour charges register, qualitative details and record of the invoices, therefore, on account of record has rightly been rejected by the authorities below, considering the facts and circumstances, in the interest of justice, we confirm lump sum addition of ₹ 12 lacs and assessee get relief of ₹ 7,46,289/-.- Decided partly in favour of assessee TDS U/s 194H not paid - payment of bank guarantee, brokerage - Held that:- The relation between the assessee and the bank is not principal and agent, the commission of bank guarantee is not covered by the explanation (i), therefore, no TDS is liable to be deducted. - Decided in favour of assessee - ITA No. 55/JP/2013, ITA No. 114/JP/2013, ITA No. 195/JP/2015 - - - Dated:- 27-1-2016 - SHRI T.R.MEENA, AM AND SHRI LALIET KUMAR, JM For The Assessee : Shri Mahendra Gargieya (Adv) For The Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). (ii) Treating the income from hire charges interest as part of P L account and not treating separately as income from other sources. Ground of revenue s appeal ITA No. 195/JP/2015 (AY 2011-12):- (i) Whether on the facts and in the circumstances of the case and in law the ld CIT(A) has erred in deleting the trading addition of ₹ 19,46,824/- made by the A.O. by applying N.P. rte of 15%. (ii) Whether on the facts and in the circumstances of the case and in law the ld CIT(A) has erred in deleting the addition of ₹ 19,46,289/- U/s 40(a)(ia) for non deduction of TDS U/s 194H on bank Guarantee Commission made by the A.O. 2. The ground No. 1 of assessee s appeal as well as revenue s appeal for A.Y. 2009-10 are revolving around rejection of books U/s 145(3) of the Income Tax Act, 1961 (in short the Act) and applied 8% NP rate in A.Y. 2009-10 and 15% NP rate in A.Y. 2011-12 and the revenue s appeals in both the assessment years are against deletion made by the ld CIT(A) against the income assessed by the Assessing Officer. The assessee is a civil contractor. Return for A.Y. 2009-10 was filed on 30/09/2009 at ₹ 1,43,29,880/- and return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,176/-, which has been considered by the Assessing Officer as income from other sources, which has been included by the assessee in business receipt. The Assessing Officer finally calculated the income on the basis of net profit @ 8%. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who in A.Y. 2009-10 has held that book results rejection U/s 145(3) for both the assessment years are not in dispute. Therefore, the ld CIT(A) approved invoking the provisions of Section 145(3) of the Act. They further held that the appellant has shown net profit rate @ 5.16% only in A.Y. 2009-10 whereas on much lesser contract receipt of ₹ 17,41,01,295/- in A.Y. 2008-09, the assessee had shown net profit rate @ 5.14%, which was 6.28% in A.Y. 2007-08, which was after claiming reduction of depreciation, interest and remuneration to the partner. After considering various case laws and past history of the assessee, she applied N.P. rate of 6.28% instead of 5.16% shown by the appellant in A.Y. 2009-10. As much higher NP had been disclosed in earlier year on lower contract receipts that too after reducing/considering depreciation, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 19,43,753/-. However, the NP before interest, depreciation and remuneration has been worked out @ 10.24%. The ld Assessing Officer rejected the book result U/s 145(3) and applied NP rate @ 8% and also had not been allowed deduction on account of interest, depreciation and remuneration and interest on FDR and rent of machine was treated as income from other sources. He has also disallowed ₹ 54,264/- on account of deposit of employees contribution towards PF U/s 36(v)(a). The ld AR further submitted that when book result is rejected U/s 145(3) then the ld Assessing Officer should have estimated the income fairly, Section 145 of the Act does not confer blind power upon the Assessing Officer to estimate the income on whatever figure but the past history of the case is to be considered and this estimation should not be arbitrary, capricious and wild estimation. He further argued that the Hon ble Rajashtan High Court in the case of CIT Vs. Gotan Lime Khaniz Udyog (supra), if books are rejected U/s 145, it is not necessary that in each and every case addition is required to be made. He further relied on the decision in the case of M/s Rishab Construction (P) Ltd. 38 TW 8 (JP) whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again reiterated the same argument made in A.Y. 2009-10 in fair estimation of income, the addition need not to be made even Section 145 is invoked, better results, better results even average of earlier year taken. The case law referred by the ITO is not comparable, therefore, he prayed to confirm the order of the ld CIT(A). 5. At the outset, the ld DR heavily relied on the order of the Assessing Officers and argued that the ld Assessing Officers had considered all the aspects and book result and assessee has not challenged invoking the provisions of Section 145(3) of the Act in both the years, therefore, order of the Assessing Officer may please be confirmed. 6. We have heard the rival contentions of both the parties and perused the material available on the record. The ld CIT(A) has calculated NP rate @ 6.28% on given facts and figures by the assessee against 5.16% shown in the year under consideration. The ld AR had not controverted the finding given by the ld CIT(A). The ld AR had not challenged the rejection of books of account, therefore, book result cannot be accepted as such. The past history also showed that the assessee had shown much more NP rate even on higher gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of being heard on this issue. After considering the assessee s reply, the Assessing Officer has held that the assessee was required to deduct TDS at the time of payment. Since the assessee had failed to deduct such amount at the time of payment of bank guarantee, brokerage is disallowable U/s 40(a)(ia) of the Act. Accordingly he made addition of ₹ 19,46,289/-. 10. This issue is challenged before the ld CIT(A) in ground No. 2, who had allowed by the appeal by observed that this issue has been arisen in A.Y. 2009-10 and 2010-11 in assessee s case by considering the decision of Mumbai ITAT Bench in the case of Kotak Securities (2012) 18 taxmann.com 48 (Mum.), which is squarely applicable in the case of assessee on the year under consideration. The relation between the assessee and the bank is not principal and agent, the commission of bank guarantee is not covered by the explanation (i), therefore, no TDS is liable to be deducted. 11. The ld DR has vehemently supported the order of the ld Assessing Officer. At the outset, the ld AR of the assessee has reiterated the arguments made before the ld CIT(A) and relied on the decision of Hon ble Mumbai ITAT Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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