TaxTMI 
TaxTMI 
1991 (6) TMI 101
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....an estimate of the expenditure on bulldozers as follows: "Bulldozer: True it is, generally he is getting Rs.500 per hour for bulldozer. But the expenses are not met except by the assessee which works out to Rs. 300 and the assessee is left with only Rs.200 profit per working hour. The working is given below. 1. Cost of diesel per hour 20 @ liters @ Rs. 4 Rs. 80 2. Cost of oil per hour 1-1/2 liters @ Rs. 20 Rs. 30 3. Cost of Hydrolic oil 1 litre @ Rs. 35 Rs. 35 4. Cost of greae 1 Kg. per hour @ Rs. 25 Rs. 25 5. Operators charge per hour @ Rs. 50 Rs. 50 . (including salary and idling charges) . . . 6. Supervisor's payment per hour Rs. 10 Rs. 10 7. Commission charges for arranging the . . . . dozer to commission agents @ Rs. 20 Rs. 20 8. Maintenance charges and cost of spare . . . Parts per hour Rs. 50 Rs. 50 . Total . Rs. 300 . . . . Balance Profit per working hour . . Average working hours 8 hours per day . . Av....
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....5,07,290. He noticed the additions made to the assessee's income in the previous year relevant to the ass. yr. 1987-88 and such additions cam to Rs.2,51,245. He also gave credit for the difference in the opening balance in a sum of Rs. 9,765. Thus in all he found that the assessee had sources to explain to the extent of Rs. 2,61,010. The balance in a sum of Rs. 2,46,280 was sustained as unexplained investment. The computation is as follows: "Deficit as per the appellant's statement of Rs. & payments 3,53,475 Add: . On account of credit in the account with CP Jose . & Co., after considering the surplus available form . the earlier year as discussed above 13,947 . Expenditure by way of filling up of land 35,000 . Educational expenses of children 12,000 . Household expenses 36,000 . investment in residential building 2,06,868 . Less : admitted 1,50,000 . . 56,868 . 5,07,290 Less : . . Addition income assessed from contract receipts 85,995 . from Kerala state construction co., . . . . . ....
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....and we are not persuaded by the arguments of the assessee's counsel for a further. reduction in the quantum. This ground is decided against the assessee. 8. Another ground in the assessee's appeal is against the addition of Rs.13,947. 9. We have heard rival submissions. We decline to interfere for the reasons stated by the first appellate authority. 10. In the Revenue's appeal, the grievance is about the reduction of the estimated receipts from Rs. 14,25,000 to Rs.6,08,000 for one bulldozer. The crux of the grievance is that the CIT(A) Should have estimated the hire charges at least for 200 days instead of 160 days in an year. The fact of the case may be briefly stated follows : From the papers seized in the course of the search, the ITO found the bulldozer is hired out at Rs. 450 to Rs. 500 per hour for a minimum working hours of 8 hours per day. From the letters he found that the assessee was stipulating that the bulldozer has to be worked out for a minimum period of 250 hours in a month. HE multiplied the hourly rate of Rs. 475 by 250 hours and found that the bulldozer can earn about 1,18,750 as gross receipts. For the whole year, he estimated the income at Rs. 14,25....
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.... and practical considerations. We decline to interfere. 12. Another grievance of revenue is against the relief granted by the CIT(A) in the estimate of income from 5 road rollers. The grievance is that the CIT(A) should not have equated the number of working days of the four road rollers to the use of one road roller for 365 days. The facts of the case are as follows: The ITO noticed that the road rollers is hired out at Rs. 500 per day. He estimated the number of working days at 250 per road roller and arrived at a gross receipt of Rs. 5,00,000 (Rs. 500 x 250 x 4). For one road roller which was sold during the year, he estimated the gross receipt at Rs. 25,000. The CIT(A) found from the seizer papers that the road roller NO.3 was given on hire only for a period of 165 days. On that basis, be estimated the number of days for the other three road rollers at 200 days on the basis of the materials available from record. This was equivalent to hiring of one road roller for 365 days. He did not disturb the hire rate of Rs. 500 per day fixed by the ITO. In this manner he estimated the gross receipts at Rs 1,82,500, on which a deduction of 50per cent towards expenditure is allowed b....
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....TD 220 (Ahd); and (iv) CIT vs. super Drills (1988) 73 CTR (AP) 97 : (1990) 174 ITR 640 (AP) He further held that merely because the bulldozer was let out on hire the investment allowance cannot be denied. In this view of the matter, he relied on the following decisions : (i) Jaikishandas vs. CIT (1951) 20 ITR 540 (Lah); (ii) New Savan Sugar and Gur Refining Co. Ltd vs. CIT (1969) 74 ITR 7 (SC); and (iii) CIT vs. Vikram Cotton Mills Ltd. (1988) 67 CTR (SC) 169 : (1988) 169 ITR 597(SC) On facts he held that the assessee had used the bulldozer in his own contract business in addition to giving it on hire when not required by him for his own use. However, he denied the relief on the ground that the assessee did not maintain regular books of account and his income was always estimated as a percentage of the contract receipts and proceedings were initiated against him for non-maintenance of the accounts under s. 44AA of the IT Act, 1961 and therefore, the conditions stipulated in s. 32a(a)(ii), viz., creation of investment allowance reserve was not fulfilled by the assessee. Thus he sustained the disallowance. Both the assessee and the Revenue are on appeal against the dec....
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....learned Chartered Accountant for the assessee furnished before us copies of the profit and loss account for the year ended 31st March, 1987 and the balance sheet as at 31st March 1987 which are already on the record of the ITO. He also produced before us a ledger in a small note book containing 90 pages in which accounts are found upto 55 pages. Sri Srinivasan, C.A. admits that he did not have a day book or a cash book. Nor did he have the accounts on double entry system of accounting. But he has a ledger containing the necessary accounts from which the profit and loss account and the balance sheet were prepared and filed before the ITO. We have scrutinised the ledger and the profit and loss account and the balance sheet. The figures in the profit and loss account and the balance sheet are from the ledger produced before us. In the profit and loss account, the assessee has created a reserve of Rs. 5,80,060 for investment allowance and such reserve is reflected in the balance sheet. The reserve is also found in the ledger at page 46 under the caption "Investment allowance". Therefore, the ITO erred when he stated that the assessee did not create the reserve. The very profit and loss....
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.... of which has not been disputed by the Department, has to be taken as entitling the assessee to the benefit of that provision. "The Hon'ble High Court in coming to that conclusion relied on its own decision in P. Appavu Pillai vs. CIT (1965) 58 ITR 622 (Mad) wherein their Lordships had to deal with obsolescence allowance which has to be written off in the books of account under s. 10(2)(Vii) of the IT Act, 1922. In that context their Lordships had to consider the meaning of the expression "books of the assessee" and observed as follows : "The expression 'books of the assessee' in the context in which is appears in s. 10(2)(vii) does not give any indication of the particular type of accounts which the assessee should maintain. That the accounts maintained by the assessee are defective in the sense that they do not lead to a correct assessment of the income. profits and gains of the business, has nothing whatever to do with the allowance that can be granted under s. 10(2)(vii). If the assessee has accounts in which the relevant entry with regard to this allowance appears, it would seem to be a sufficient compliance with the first proviso to s. 10(2)(vii)." This decision was render....
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....'article' or 'thing'. Therefore, it cannot be said that the assessee is not engaged in production activity. Investment allowance is available if the assessee uses the machinery in construction works also. As a contractor it cannot be said that he is not engaged in construction activity. For all these reasons, we reject the Revenue's ground of appeal. 24. The last point at issue in the assessee's appeal is whether he is entitled to depreciation on the second bulldozer which was purchased a day before the last day of the previous year. The assessee has furnished the relevant particulars, but failed to claim depreciation on the same before the ITO. He has raised the issue before the learned CIT(A) for the first time. The first appellate authority did not specifically deal with the plea of the assessee for depreciation on the second bulldozer. Sri R. Srinivasan, the learned C.A., contends that the assessee had purchased the new D-50 bulldozer bearing NO.8910 on 30th March, 1987 from Bharath Earth Movers Ltd., but was put to use in the Ammonium Sulphate Caprolactam Project site at Udyogamandal, Eloor, on 31st March, 1987. It is the Revenue's Contention that as the bulldozer itself wa....