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TMI Blog2020 (9) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... vance of the assessee relates to upholding the ad hoc disallowance of Rs. 10.00 lacs out of contract expenses. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is in the business of contractor. The assessee filed his return of income on 30/10/2015 declaring total income of Rs. 46,86,640/-, which was assessed by the A.O. after making various additions at Rs. 84.21 lacs. During the course of assessment proceedings, the A.O. made ad hoc disallowance of various expenses. By the impugned order, the ld. CIT(A) had upheld the ad hoc disallowance of Rs. 10.00 lacs, against which the assessee is in further appeal before the ITAT. 4. We have considered the rival contentions and carefully gone through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of depreciation was 58,97,727/- while in the year under consideration, it was 85,46,112/-. Further the gross profit rate of assessee of last few years are summarized as under: AY Total Turnover Gross Profit GP Rate 2013-14 15,82,78,563 1,39,60,383 8.82% 2012-13 15,62,50,053 1,36,71,879 8.75% 2011-12 15,50,02,341 1,27,29,257 8.21% Thus, the G.P. rate for the year under consideration was better than the earlier two immediate preceding years. The Hon'ble Rajasthan High Court and the Coordinate Benches of the ITAT, Jaipur held in the various cases that the net profit @ 8% of gross receipts subject to further deduction on account of depreciation and interest are held to be reasonable. Such view has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /C PB pg 11 36,56,252 Less:- Profit from sale of Fixed Assets 6,28,379 Profit from contract and grit business 30,27,873 Add Depreciation 85,46,112 Interest Paid 39,20,689 Received -15,48,252 Net Interest Paid 23,72,437 Total business profit before interest and depreciation 1,39,46,422 Gross Receipts against contract 9,64,53,345 Gross Receipts against grit (As taken by AO) 7,58,25,218 Total receipts 17,22,78,563 % of profit on gross receipts 8.09% It is also pertinent to note that wherever even books of account are rejected by the Assessing Officer then also no trading addition is required to be made as he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave a relief of Rs. 8,02,363/- to the assessee by sustaining an addition of Rs. 34,00,450/-. It is pertinent to mention that the ITAT Coordinate bench in assessee's own case for the Assessment Year 2010-11 vide its order dated 24-09-2015 in ITA No.918/JP/2013 applied the N.P. Rate @ 5.1% on the turnover of Rs. 14,71,70,861/- by observing as under:- ''6. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee has shown total turnover during the year at Rs. 14.71 crores on which net profit has been shown @ 5.02%, which was Rs. 27.98 crores and net profit rate @ 5.77% in immediate preceding year. The assessee claimed that he produced the books of account but the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010-11 while the same was paid by the assessee in A.Y. 2011-12. We have also noted that there was substantial increase in sales tax and royalty during this year in comparison to last year and all these factors resulted into lower net profit in spite of the fact that over all gross profit of the assessee was more than the last year as per following chart. Particulars In AY 2010-11 In AY 2011-12 Difference Depreciation 58,97,727 82,65,004 23,67,277 Sales Tax 6,54,678 10,75,725 4,21,047 Royalty 2,09,219 7,89,592 5,80,373 Labour Cess 0.00 3,13,993 3,13,993 Total 67,61,624 1,04,44,314 36,82,690 It is also noted that estimation of trading results in the case of contractor is @ 8% of contract recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Interest (+)283919 Profit as per Estimation 4503349 Profit shown by assessee 4737173 Further Addition if any 0 Taking into consideration the submissions of the ld.AR of the assessee and orders of the lower authorities and also the decision as relied on by the assessee in the present case, we hold that the ld. CIT(A) is not justified in sustaining the addition of Rs. 34,00,450/- and the same is deleted. Thus Ground No. 1 of the assessee is allowed and Ground No. (i) and (ii) of the Revenue are dismissed. Considering all these relevant facts, the Bench hold that the ld. CIT(A) was not justified in sustaining the part addition i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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