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of <h1>Court rules inclusion of material costs as profits in turnover calculation unsupported by evidence. Costs should not contribute to profits.</h1> <h3>MP Alexander And Co. Versus Commissioner of Income-Tax.</h3> The court ruled against the department, finding that the inclusion of the sum as profits on materials supplied by the Government in the computation of the ... ' Whether, on the facts and in the circumstances of the case, the inclusion of any sum as profits on materials supplied by the Government under its agreement with the assessee is right in law ? ' Issues:1. Whether the inclusion of any sum as profits on materials supplied by the Government under its agreement with the assessee is right in lawRs.Detailed Analysis:The case involved the question of whether profits on materials supplied by the Government should be included in the computation of the assessee's turnover. The assessee had entered into contracts with the State Government for certain works, and the contracts included the cost of materials supplied by the Government. The Tribunal had included the cost of materials in the turnover for calculating profits, despite the assessee's contention that these amounts should be excluded as they did not contribute to profits. The Tribunal justified its decision by stating that the cost of materials had contributed to the profits made by the assessee.The Tribunal's order highlighted that the contract should be considered as a whole, and the estimate of profits should be based on the gross receipts. The Tribunal believed that even though the supplies were made by the Government, there was an element of profit involved in the supply of materials. However, certificates issued by the Executive Engineers stated that the percentage of profit was calculated only on labor charges and not on the cost of departmental materials supplied for the work. The court found that the conclusion reached by the Tribunal was unsupported by any material and was unsustainable.In conclusion, the court answered the question in the negative, favoring the assessee and ruling against the department. The court emphasized that there was no basis to include the cost of materials in the computation of profits, as there was no evidence to suggest that these costs contributed to the profits earned by the assessee. No costs were awarded in the judgment.
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