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TMI Blog2012 (7) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case the ld. CIT(A) grossly erred in upholding charging of interest u/s 234B & 234D. 4) That the petitioner may kindly be permitted to raise any additional or alternative ground at or before the time of hearing. 5) The petitioner prays for justice & relief." 3. The Revenue has raised the following grounds of appeal :_ "On the facts and in the circumstances of the case the ld. CIT(A) has erred in deleting the addition of ₹ 31,27,950/- made by the AO on account of non-deduction of tax as required by provision of section 40(a)(ia) of the Income Tax Act, 1961. That the appellant reserves its rights to add, amend or alter the ground on or before date appeal is finally heard. ITA No.532/Jodh/2010 by the assessee 4. The brief facts of the case are that the assessee is engaged in contractor business for construction of roads and buildings. During the assessment proceedings, the Assessing Officer (A.O.) noticed that the assessee has shown contract receipts of ₹ 21,49,39,150/- on which Net Profit (N.P.) is shown at ₹ 1,18,51,627/- giving N.P. rate of 5.51% in comparison to last year's net profit rate of 4.83%. The A.O. furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal. However, on merit, the ld. Authorised Reprehensive drew our attention to page no.89 of assessee's Paper Book where statement showing comparative position of contract receipts, profit rate disclosed and net profit rate finally assessed. The said statement is reproduced as below :- A.Y. Contract Receipts Profit before deduction Rate of profit before deduction Net Profit after deduction Profit rate applied by AO before deduction Addition made by ld AO Addition sustained by CIT(A) As per ITAT Decision N.P. Rate finally assessed Sustained Relief 2003-04 43762856 5370078 12.21% 1.03% 12.50% 100279 100279 No appeal 1.26% 2004-05 45007549 5498488 12.22% 0.89% 12.50% 127456 127456 No appeal 1.17% 2005-06 54846737 6526761 11.90% 0.84% 12.50% 329081 329081 No appeal 1.44% 2006-07 140179045. 17115840 12.21% 5.00% 12.50% 406547 406547 203000 203547 5.15% 2007-08 214939150 24062437 11.19% 5.51% 12.50% 3585548 3585548 Under appeal 7.18% 8. The ld. Authorised Representative submitted that if the N.P. rate is compared with previous year, it is better than N.P. rate disclosed in all the preceding years and, as such, no addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found in the method or maintenance of accounts, the taxing authority is bound to compute the profits and gains of business or profession or vocation in accordance with the method employed by the assessee. Therefore, in case where the Income-tax Officer or the taxing authority finds that in maintaining accounts, the assessee has regularly employed a particular method and does not make any investigation to find or does not find any defect in the accounts and accept the accounts as they are, he is bound to compute the income in accordance with the accounts maintained by the assessee. 11. In the light of the above discussions, if we consider the facts of the case under consideration, we find that there is no dispute about the rejection of books of account. After rejecting books of account, the A.O. is to make the best judgment in accordance with section 144 of the Act. The best judgement is a factually decided matter with the wisdom truly and legally. Judgement does not depend upon the arbitrary caprice of judge but on selected invariable principle of justice. Though there is an element of guess work in the best judgement assessment, it should not be a willed one who shall have rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses and balance addition of ₹ 32,74,285/- is deleted. 12. The brief facts of 2nd ground are that during the assessment proceedings, the A.O. noticed that the assessee received an mount of ₹ 80,468/- from F.D.R. in bank. The A.O. was of the view that this is a separate income and it is to be considered in addition to the estimation made for the purpose of income from business. The A.O., therefore, taken the income from other sources ₹ 80,468/- and added as income from other sources in addition to income estimated from business. The CIT(A) confirmed the order of the A.O. 13. Ld. Authorised Representative submitted that on identical set of facts the I.T.A.T. in assessee's own case in ITA No.537/JU/2009 for A.Y. 2006-07 while deciding appeal dated 09.12.2011 held that interest will be treated as income from business. The relevant finding from the said order pointed out by the Ld. Authorised Representative is reproduced as below from page no.31 of assessee's Paper Book:- "We have heard both the parties on this issue. The assessee has declared interest paid to third parties amounting to ₹ 35,83,211/-. Interest received to the extent of ₹ 3,00,681/- was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision and such amount if liable to be disallowed as provisions of sec 40(a)(ia). There are no exceptions as is the case with disallowance u/s 40A(3) of I.T. Act 1961. Further, the assessee can claim these expenses in the year when he chooses to deduct TDS. In view of this an amount of ₹ 31,27,950/- (Rs.4,50,000 + ₹ 26,77,950) is being made to the income of the assessee." 17. The CIT(A) deleted the addition of ₹ 26,77,950/- under section 40(a)(ia) of the Act where the A.O. held that section 194C of the Act is applicable. The CIT(A) has given detailed finding in his order at paragraph no.7.4 which reads as under :- "I have gone through the facts of the case and it is observed that outstanding payment of labour charges shown in the balance sheet in the name of various Supervisor/Jamadar are not liable for deduction of TDS under provisions of sec. 194C. There is no contract between payer and payee either orally or in writing. For sake of convenience, name of Supervisor through whom the wages were to be distributed is mentioned in the voucher in respect of labour charges payable to the workers. There is no dispute that the payments were not payable to a single pers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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