TaxTMI 
TaxTMI 
2014 (5) TMI 1119
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....g net taxable income as Rs. 4,99,500/-. Petitioner claimed depreciation of Rs. 25,67,785/- as per the depreciation chart and submitted accounts, i.e. trading, profit and loss accounts, balance sheet, deprecation chart etc. 4. As a condition of receiving contract and for execution thereof, petitioner used to take Fixed Deposit Receipts (hereinafter referred to as "F.D.R.") furnished with the Department as Security and therefore petitioner claimed that the interest earned on such fixed deposits cannot be treated "income from other sources" and instead the said income was his "business income". 5. Petitioner's return was selected for scrutiny as a consequence whereof respondent no. 2 issued notice under Section 143 (2) and 142 (1) of Act, 1961. Respondent no. 2 took the view that expenses incurred by Firm are not properly vouched, the disclosed turn over was not to be accepted and hence it calculated profit by following a flat rate of 8 per cent on the gross receipt of Rs. 12,68,14,480/- with the condition that no penal action shall be taken against petitioner and consequently passed order on 13.10.2011. It determined income from business of civil contracts at Rs. 1,01,45,15....
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....te to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded. (5) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier assessment year, are lower than the profits and gains specified in sub-section (1), and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum payable by the assessee on the basis of assessment made under sub-section (3) of section 143. (6) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report....
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....have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (5) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded. (6) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier assessment year, are lower than the profits and gains specified in sub-sections (1) and (2), and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum payable by the assessee on the basis of assessment made under sub-section (3) of section 143. (7) Notwithstanding anything contained in the foregoing provisions of this section, an....
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....isions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the total turnover or, as the case may be, the income from the said business shall be excluded. (5) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB. (6) Nothing contained in this section shall apply to any assessment year beginning on or after the 1st day of April, 2011." 7. Counsel for petitioner, though relied on a Division Bench judgment of this Court in Commissioner of Income Tax, Kanpur Vs. Bishambhar Dayal and Company, Kanpur 1994 U.P.T.C. 215, but the aforesaid decision relates to Assessment year 1987-88 while the aforesaid provisions were inserted in 1994 and onwards. Moreover, in para 2 of the aforesaid judgment itself, the Court h....
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....s. KPTCL in order to acquire a contract work. Therefore, it cannot be treated as an income from other sources and interest accrued on such fixed deposits has to be treated as business income only. Our view is also supported by the judgment of the Supreme Court in the case of CIT Vs. Govinda Choudhury and Sons reported in (1993) 203 ITR 881. 5. In the result the appeal is dismissed. The question of law is answered against the Revenue." 9. The above dictum is clearly applicable in the case in hand also. The F.D.R. have not been received by Assessee for the purpose of investing money or otherwise, but it is a part and parcel of his regular business activities in which he has to furnish security to the Department to obtain civil contracts and if an interest has been earned thereon, in my view, it will qualify to be an "income on business" and not as "income from other sources". 10. It is also brought to the notice of this Court that in similar circumstances, where the department has treated income on F.D.R. as business income in respect to another construction company, i.e. M/s Gupta Construction Company, Income Tax Appeal No. 250 of 2013 (Commissioner of Income Tax Vs. ....