TaxTMI 
TaxTMI 
2004 (12) TMI 77
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.... committed an error in law in making applicable the decision of the Supreme Court in the case of Brij Bhushan Lal Parduman Kumar v. CIT [1978] 115 ITR 524. In the instant case wherein the contractee is a co-operative sugar factory and not a Government Department/establishment and the clause of the contract had provided an option to the contractor/assessee to procure the material in case the contractee failed to do so and also the debit notes for an amount of Rs. 1,03,61,602 were made available." The assessee had filed return of income on December 31, 1996, and the same was processed under section 143(1)(a) of the Income-tax Act, 1961, on January 7, 1997. On January 9, 1997, the assessee had filed a revised return of income declaring tota....
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....996-97 came to be dismissed by accepting the reasoning given by the Commissioner Income-tax (Appeals). Both the appellate authorities below referred to the decision of the Supreme Court in the case of Brij Bhushan Lal Parduman Kumar v. CIT [1978] 115 ITR 524 and held that the contractee had confirmed to have purchased the construction material even to the extent of differential amount of Rs. 70,82,160 and even in the absence of the debit notes, the assessing quantum of income would not be affected. The Revenue does not agree with the view taken by both the appellate authorities below, mainly on the ground that the contractee in the case of Brij Bhushan Lal Parduman Kumar [1978] 115 ITR 524 (SC) was a Government establishment/Department, ....
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....actee. Whereas the balance material worth Rs. 71,95,772 was lying with the contractor/assessee and it was the property of the contractee. Based on this additional information that is made available to him and placed before us along with the affidavit, Mr. Porwal submitted that the deficiency which was noticed by the Assessing Officer has been made up and therefore the order passed by the Assessment Officer cannot be sustained and, on the other hand, the view taken by both the lower appellate authorities requires to be con firmed. We are of the considered opinion that the debit notes which are placed before us for the first time cannot be subjected to verification in this tax appeal and the said verification is required to be undertaken b....
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....to be indicated by the engineer-in-charge. All the stores and materials brought to the site shall become and remain the property of the Government and shall not be removed off the site without the prior written approval of the Garrison Engineer. It was under these circumstances that the Supreme Court held in favour of the assessee. It further noted that having regard to the terms and conditions on which supply of stores/materials is made there was not even a theoretical possibility of any element of profit being involved in the turnover represented by the cost of such stores/material. Since no element of profit involved in the turnover of costs of stores/materials supplied by the M.E.S. to the assessee, the income or profits derived by the ....