TaxTMI 
TaxTMI 
2012 (11) TMI 708
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....Assessing Officer, even though the learned Assessing Officer had not allowed any deduction under section 30 to 38 of the Act while estimating the profit of the appellant at Rs.2,76,238/- and subsequently assessing the income of the appellant at Rs.55,24,770/- for the year under appeal. 4. That the learned CIT (Appeal) erred in law and on facts in ignoring amendments to Section 40(a)(ia) made by Finance Act, 2008 retrospectively w.e.f. 01-04-2005 while approving application of provision of section 40(a)(ia) of the Act by the learned Assessing Officer while assessing the income of the appellant at Rs.55,24,770/-." 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act, 1961 dated 17/12/2007 were that the assessee was subjected to tax for A.Y. 2005-06 under the status of AOP. Return of income was filed at Rs.NIL. It was noted by the AO that the assessee-AOP is engaged in the business of civil construction. The AOP had undertaken the work of Kandla Port Trust, Nirman Building, New Kandla. The gross contract receipt were shown at Rs.55,24,769/-. AO has also noted that the said Kandla Port Trust had deducted the tax at source on the s....
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....ent was made to sub-contractors and the tax deducted thereon was belatedly deposited to the Government account. It was found by the AO that on payment of Rs.55,24,769/- to member-sub-contractor the assessee deducted tax at source of Rs.61,878/- when the amount was credited/paid in the respective account on 31.3.2005. However, the amount so deducted as per the accounts was in fact deposited in Government account on 9.6.2005, when the same ought to have been deposited on or before 31.5.2005. By narrating the provisions of section 40(a)(ia), it was held by the AO that the assessee had not deposited the tax which was deducted u/s.194C of IT Act before the expiry of the time prescribed u/s.200(1) of IT Act. In the result, the claim of deduction of labour charges payment was held as not admissible to the assessee. Resultantly, the entire payment was disallowed. The AO has clarified that on account of the entire amount of disallowance of the total receipts Rs.55,24,770/- no separate addition on account of estimated profit was required. Accordingly an assessment was made which was challenged before ld.CIT(A). 4. The ld.CIT(A) has called for a remand report. The basic facts, such as, ....
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.... loss. Therefore, the AO has rightly raised an issue that the pap carried out a joint venture is supposed to offer an income irrespective of appropriation of income against the members or otherwise. The app did not offer any income, the estimation of income made by the AO @ 5% on the total turnover and considering the nature of business of the app, I found AO is justified in making this addition. The addition is, therefore, Upheld. The app's Ground No.1 is Dismissed." 5. From the side of the assessee ld.AR Mr.S.N. Soparakr and from the side of the Revenue ld.Sr.DR Mr. Awijit Rakshit appeared. 6. Having heard the submissions of both the sides, we are of the considered view that the issues raised by this appellant in the grounds of appeal require read judication at the end of the ld.CIT(A). Before us, a joint venture agreement dated 30th day of January-2004 is placed on record. There is a supplementary agreement; (i) signed on 8th day of February-2005. There is one more agreement in respect of the said contract signed by a contractor on one hand and on another hand signed by Chairman of Kandla Port Trust. These agreements and the terms and conditions laid down therein are impor....
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....ts payable to a contractor or sub-contractor, being resident, for carrying out ay work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139." Plainly speaking, assessee had to make deduction before 31st March of the year in question and as long as such amounts were deposited before last date of filing of the return, requirements of law would be fulfilled. It was on this basis that tribunal was of the opinion that the assessee committed no wrong and was therefore, entitled to seek deduction of Rs.32,94,149/- from the income which amount the assessee had deducted from payments of contractors and had also deposited with Revenue before the last date of filing of the return. We do not find any illegality in order of tribunal. Tax Appeal is therefore, dismissed." 6.2. Next is the question of the invocation of section 40A(2)(b) by the AO and thereafter applying the estimated profit at 5% on the said amount. For the purpose of invocation of this section one of the essential ingredie....