9911796707
TMI Blog1977 (5) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, while holding that in estimating the net profit of the structural contracts the percentage is to be calculated on the gross receipts, it should have been decided also whether the percentage adopted by the authorities concerned need any modification ?" The reference is at the instance of the assessee, N. K. Sengupta, Calcutta. The assessment years involved are 1957-58, 1958-59, 1959-60 and 1962-63. The facts found or admitted as appearing in the statement and the annexures thereto may be shortly noted as hereunder: The assessee is a contractor and in the relevant assessment years undertook jobs under various Government departments like the Construction Board of the Government of West Bengal. The books of accounts w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned should not be included in such net receipts for the purpose of application of this flat rate. From this order of the Appellate Assistant Commissioner, the department came up on further appeal before the Income-tax Appellate Tribunal. The assessee also filed cross objection. The Tribunal held that the Appellate Assistant Commissioner was not justified in directing the application of the flat rate of 12.5% on the net receipts only, i.e., receipts without the value of the materials, and held that the assessments made by the Income-tax Officer on the gross receipts of the assessee including the cost of materials supplied by the contractee were correct. But the Tribunal in disposing of the cross-objections filed by the assessee hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total receipts as the assessee contended that there was no element of profit in such an item. The contentions of the assessee were ultimately accepted by the Tribunal and the Tribunal held that the income of the assessee had to be calculated only on the actual receipts and that the cost of materials supplied by the Government should not be included in the assessee's receipts. The Madras High Court observed in the judgment as follows: "The question is whether the Tribunal was right in setting aside the addition of the cost of the materials to the actual receipts returned by the assessee. It is not the case of the revenue that the obligation to supply the materials like cement, steel, etc., was not undertaken by the Government even at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als supplied by the Government should not be included in such turnover. On a reference therefrom the Kerala High Court held as follows: "It is clear that the Tribunal has proceeded on the basis that there is an element of profit involved even in the supply of materials by the State Government. Even so they were prepared to say that there was no such element involved in the hire charges. We are unable to discern any difference between these. Further, we are unable to see any material on the basis of which it was possible to postulate that the turnover represented by the cost of materials in any manner contributed to the profit of the assessee. If anything, the materials indicate that there is no such element of profit. Annexures "D" and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Reference No. 184 of 1969 [Gopendra Krishna Saha v. Commissioner of Income-tax [1978] 113 ITR 421 (Cal) (Appendix No. 2)], Sabyasachi Mukharji J. decided a similar question and held that the rate of gross profits was to be applied on the gross value of the bill. In that case, the contractor was not able to satisfy the authorities below as to the terms of the contract and estimate had to be made under section 13 of the Indian Income-tax Act, 1922. Mukharji J. held that where there was a contract which provided sufficient limit beyond which the tender could not be quoted and there was a stipulation that the contract was to be quoted at a particular rate excluding the cost of materials to be supplied by the contractee, then in such a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice on the basis of market value or otherwise would be charged. On such facts it may be found that an element of profit was there on such apply. Whether the assessee submitted its tenders for the said contracts anticipating on being assured of supply of such materials are also not known. These material facts have to be found before the questions referred can be answered. In this view, we remand the matter back to the Tribunal. The Tribunal is directed to ascertain the terms and conditions of the contracts in question, if any, in respect of supply of materials and determine whether the assessee bid for such contracts taking into account such materials which were in fact supplied. If it is found on such facts that there was an element of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
