9911796707
TMI Blog2017 (6) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable on record, the matter is set-aside to the file of the AO to apply net profit rate of 7% in respect of contract activity only after examining the segmental profit/loss account. - ITA No. 38-39/JP/15 - - - Dated:- 27-2-2017 - Shri Kul Bharat, JM And Shri Vikram Singh Yadav, AM Assessee by : Shri Manish Agarwal (CA) Revenue by : Shri Prithvirj Meena ( Addl. CIT ) ORDER Per Shri Vikram Singh Yadav, A. M. These are two appeals filed by the assessee against the order of Ld. CIT (A)-II, Jaipur dated 15.12.2014 for assessment years 2010-11 2011-12. 2. The first ground in both the appeals relates to rejection of books of accounts and invoking of provisions of section 145(3) of the Act. During the course of hearing, the ld. AR submitted that he did not wish to press this ground in respect of both the years under appeal. In the result, the ground No.1 in respect of both these years under appeal are dismissed as not pressed. 3. Similarly, in respect of ground No. 3 in both the appeals, the appellant has challenged the treatment of vehicle hiring income as an independent stream of revenue separate from the business stream of revenues. During the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earwise break-up of the total receipts for A.Y. 2008-09 to A.Y. 2011-12 is tabulated as under: Asst. Year Contract receipts (Rs) Job charges receipts (Rs) Sales (Rs) 2008-09 2,52,09,524/- 2,09,12,275/- - 2009-10 2,93,16,191/- 5,16,41,6887/- - 2010-11 2,89,95,747/- - 8,48,07,388 2011-12 44,38,952/- - 8,93,49,479 From the perusal of the above table, your honours would appreciate the fact that in the year under appeal, assessee has no job charges and the contract receipts also reduced substantially as against the same sales have taken place. Since in the earlier years which had made basis for the application of the net profit of 7% by Ld. CIT(A), there were no sales thus the same could not be applied on the sales component for which as is evident from the assessment order n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of rural households in villages and blocks for Jaipur Vidyut Vitran Nigam Ltd. The appellant has three revenue streams in this year viz. Sales, contracts receipts and vehicle hiring charges. (Vehicle hiring charges will be considered in ground No.3). The revenue stream pertaining to sales and supply of material is a new stream, starting from this year. It has been stated by the appellant that all the defects which have been pointed out by the AO in the books of accounts pertaining to job work expenses and labour charges which relate to contract receipts and the A.O. has not pointed out any defects in sales or the expenditure/purchases relating to these sales. This contentions of the appellant is not acceptable because the expenses relating to the business of supply of material (relating to sales) and contract receipts cannot be bifurcated. The expenses relating to job work expenses and labour charges would pertain to both the revenue streams. (3.4) The AO has based the estimate of net profit @11.5% before depreciation and interest, on the basis of the order of ITAT, Jaipur in the case of Choudhury Brothers and the decision o f the Rajasthan High Court in the case of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Therefore, any estimation of profit should have a reasonable and rationale nexus with the defects noticed by the AO while rejecting the books of accounts. In the instant case, the basis of rejection relates to the contract activity carried out by the appellant, therefore, the estimation of profit should relate to the contract activity and not in respect of other activities which have not been doubted. To this extent, we agree with the contentions of the ld. AR. Now if we look at the profit which has been estimated by the AO and confirmed by the ld. CIT(A), it is noted that the AO has estimated the net profit rate of 11.5% as against net profit of 3.94% offered by the assessee in its profit and loss account. The ld. CIT(A) thereafter has reduced the net profit to 7% following the past history of the assessee. It is here that the genesis of the dispute between the assessee and the revenue lies. Given that both the parties are not disputing the net profit rate of 7% and the only dispute relates to the nature and quantum of receipts on which such net profit rate would be applied. The assessee s contention is that the net profit rate of 7% should be restricted to contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
