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TMI Blog2004 (11) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... h Oct., 2002. During the course of assessment proceedings, when assessee was asked about the gross receipts, assessee filed revised return disclosing the gross receipts at Rs. 36,58,267 but computed the income @ 5 per cent under s. 44AF instead @ 8 per cent under s. 44AD. Whereas income in respect of the payment of Rs. 16,85,044 was declared at Rs. 1,34,800 in the original return, the income in respect of the total payments of Rs. 36,58,267 was declared at Rs. 1,82,910 in the revised return. 3. During the course of assessment proceedings, it was claimed by the assessee that no books of account had been maintained by him and the profits in respect of the payments were required to be assessed under s. 44AF, which is applicable in respect of retail traders. It was pleaded before the AO that provisions of s. 44AD were not applicable in this case. The AO on consideration of the terms and conditions of the agreement between the assessee and M/s Unitech Ltd. held that the assessee had executed the contract work and accordingly, income was to be computed in accordance with provisions of s. 44AD. Assessee appealed to the CIT(A) but without any success. Hence, this appeal. 4. Before me, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession": Provided that nothing contained in this sub-section shall apply in respect of an assessee whose total turnover exceeds an amount of forty lakh rupees in the previous year. (2) Any deduction allowable under the provisions of ss. 30 to 38 shall, for the purposes of sub-s. (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed: Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-s. (1) subject to the conditions and limits specified in cl. (b) of s. 40. (3) The written down value of any asset used for the purpose of the business referred to in sub-s. (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (4) The provisions of ss. 44AA and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of change in source prior approval shall have to be obtained by you. 14. The deduction on account of rT1oisture content beyond 3 per cent shall be made. This will have effect both on quantities as well as transportation. In case moisture content is more than 3 per cent, the deduction will be done after ascertaining the moisture content. 15. The supply shall be completed by 31st May. 16. The payment shall be made to you after 30 days from the date of submission of your fortnightly bills. 17. Rejected material will be shifted back by you at your own risk and cost. 18. Income-tax deduction as applicable shall be made from your bills," It is evident from the terms and conditions stated above that the assessee has not simply sold the sand to the assessee. As pointed out earlier, the sand is available at site on payment of royalty to the State Government. The assessee has to engage labourers for loading and unloading of the same. The assessee has to engage vehicle for carriage of sand upto the site. The sand is to be unloaded from the vehicle. The assessee was also required to pay octroi in respect of the said supply of sand. It is evident from these facts that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akh rupees. (2) Any deduction allowable under the provisions of ss. 30 to 38 shall, for the purposes of sub-s. (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed: Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-s. (1) subject to the conditions and limits specified in cl. (b) of s. 40. (3) The written down value of any asset used for the purpose of the business referred to in sub-s. (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (4) The provisions of ss. 44AA and 44AB shall not apply insofar as they relate to the business referred to in sub-s. (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, in the income from the said business shall be excluded. (5) xxxx Explanation: For the purposes of this section, the expression 'civil construction' includes- (a) The construction or repair of any building, bridge, dam or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e method in certain areas to facilitate better tax compliance. Accordingly, a new s. 44AD has been inserted in the IT Act with a view to providing for a method of estimating income from the business of civil construction or supply of labour for civil construction work... ... ... ...... ...... 31.2 The expression 'civil construction' will include the construction or repair of buildings, dams, bridges or other structures, or of roads or canals. It will also include the execution of any other works contract. It will, thus, include work related to electrical fittings, plumbing job, landscaping work, etc." 9. In this case, the assessee has executed the work of supplying and transportation of sand from particular area to a civil contractor. In other words, the assessee is a sub-contractor to the civil contractor for execution of part of the work involved in the construction of the road. Reference to s. 194C is considered to be relevant. The said section is in regard to deduction of tax from payments to contractors and sub-contractors. Expln. 3 to s. 194C defines the word "work" as under: "Explanabon III.: For the purposes of this section, the expression 'work' shall also include- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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