Tribunal revises profit rates for contractual receipts and plot sales, with no precedential effect.

The Tribunal upheld the CIT(A)'s estimation of profits at 8% for contractual receipts but revised the profit rate for the sale of plots to 8% from the initial 5%. The appeal was partly allowed, with the decision not setting a precedent for future cases. The case outcome was pronounced on 22nd January 2021.

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Issues:
Estimation of net profit on gross receipts @15% instead of 8% for contractual receipts and 5% for sale of plots.

Analysis:
The Revenue's appeal for AY.2011-12 contested the CIT(A)'s order estimating the assessee's profits from contractual receipts and sale of plots at 8% and 5%, respectively, instead of the 15% adopted by the Assessing Officer. The CIT(A) based the estimation on judicial precedents and the nature of the taxpayer's contractual works. The Tribunal found the CIT(A)'s estimation for contractual receipts reasonable, as contractual assignments involve lower business risk and assured returns. The appeal on this issue was dismissed.

Regarding the estimation of profits from the sale of plots at 5%, the Tribunal noted that the assessee did not provide all corresponding details of plots sold. The authorized representative argued in favor of the 5% profit rate, but the Tribunal disagreed. It observed that the sale of vacant plots did not involve additional labor or construction expenses, resulting in higher margins than 5%. Thus, the Tribunal exercised its jurisdiction to re-estimate the profit rate for plot sales at 8%, clarifying that this decision would not set a precedent for future cases. The appeal was partly allowed on this issue.

In conclusion, the Tribunal upheld the CIT(A)'s estimation of profits at 8% for contractual receipts but revised the profit rate for the sale of plots to 8% from the initial 5%. The decision was pronounced on 22nd January 2021.

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