Appellate Tribunal affirms CIT(A)'s 6% business income estimate, includes scrap sales.

The Appellate Tribunal upheld the CIT(A)'s decision to estimate business income at 6% instead of 8% for AY 2012-13, following principles set by ITAT Hyderabad. The Tribunal also affirmed that income from scrap sales should be considered part of business income, dismissing Revenue's appeal on both grounds. The decision was pronounced on 8th June 2018.

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Issues:
1. Estimation of business income at 6% instead of 8% by the CIT(A).
2. Treatment of income from sale of scrap separately.
3. Grounds of appeal raised by the revenue before the Appellate Tribunal.

Estimation of Business Income at 6%:
The case involved an appeal by the Revenue against the CIT(A)'s order for AY 2012-13. The AO had estimated the income of the assessee at 8% of gross subcontract receipts due to non-compliance by the assessee. However, during the appellate proceedings, the assessee submitted that 6% profit on subcontract works was reasonable, citing relevant ITAT decisions. The CIT(A) observed that the works executed were mainly as a subcontractor, and hence, directed the AO to reduce the profit estimation to 6% from 8%, which was accepted as reasonable. The Appellate Tribunal upheld this decision, noting that the CIT(A) followed the principles laid down by the ITAT, Hyderabad, and dismissed the Revenue's appeal due to the lack of comparable cases presented.

Treatment of Income from Sale of Scrap:
Regarding the treatment of income from the sale of scrap separately, the CIT(A) held that since scrap was generated from the civil works executed, no separate addition was necessary once the income was estimated. The Appellate Tribunal agreed with this reasoning, stating that scrap generated in the normal course of business should be considered part of the business income. Therefore, the ground raised by the Revenue on this issue was also dismissed.

Grounds of Appeal Raised by the Revenue:
The Revenue raised multiple grounds of appeal before the Appellate Tribunal, including challenging the CIT(A)'s estimation of income at 6% instead of 8%, and questioning the treatment of income from scrap sales. However, the Tribunal found that the CIT(A)'s decision was in line with established principles and dismissed the Revenue's appeal on both grounds. The Tribunal emphasized that the CIT(A) had correctly applied the principles regarding profit estimation for subcontract works and the treatment of scrap income, leading to the dismissal of the Revenue's appeal.

In conclusion, the Appellate Tribunal upheld the CIT(A)'s order, affirming the estimation of business income at 6% instead of 8% and the treatment of income from scrap sales as part of the overall business income. The Revenue's appeal was dismissed, and the decision was pronounced on 8th June 2018.

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