TaxTMI 
TaxTMI 
2019 (1) TMI 1406
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....ter called as 'the Act') for Asst. Year: 2009-10, wherein the Assessee has also preferred the Cross Objection as against the ITA No.27(Asr)./2013 filed by the Revenue Department. 2. The appeal of the assessee has been taken for adjudication first. The briefly stated the facts of the case are that the Assessing Officer while relying upon the judgment passed by the Jurisdictional ITAT, Amritsar Bench in the case of Assessing Officer v. Pooja Construction Co. in ITA No. 750(Asr)/1992 (69 ITD 147) applied the gross profit rate @ 10%, considering the case of the assessee being a Civil Contractor. Further the Assessing Officer also made an addition u/s 40A(3) for Rs. 4,77,187/- as well as u/s 40(a)(ia) for Rs. 13,30,500/- respectively. Furt....
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....y would suggest the profit to match the risk involved, so that a higher risk would entail a higher rate of profit. Further, again, the assessee as the person undertaking the work would, both in theory and in practice, be entitled to a larger share of the profit, i.e., even if the same is to be considered as in the range of 7% to 8%. Considering these facts, we modify the estimation of the assessee's net profit rate to, even as conceded to by the Id. AR, the assessee's counsel, during hearing, 5% of the turnover. The disallowance on account of depreciation (u/s. 32(1)) and interest (u s. 361 (iii)) shall not survive in view of the estimation of the net profit rate. That leaves us with the addition u/s. 68 qua a secured loan s. Thoug....
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....ditions where maximum part of the receipts was taken by the main contractor as the conditions of contract work vary from contract to contract as also the profitability changes depending upon such conditions. Moreover, depreciation and interest charges debited in the accounts never been considered by the Assessing Officer. It is undisputed fact that the working in the state of J&K is not congenial and all the time depends upon the natural calamities as well as terrorist activities, hence in the aforesaid circumstances, in our considered opinion the estimation of net profit rate @6% on the gross receipt would be quite reasonable and would meet the ends of the justice. 4. Now coming to the confirmation of the addition of Rs. 13,30,500/- qua....
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....ined in Sections 30 to 43D. Section 40 provides for certain disallowances in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under Section 29 is to be made under section 145 on the basis of the books regularly maintained by the asses-see. If those books are not correct or complete, the Income-tax Officer may reject those books and estimate the income to the best of his judgment. When such an estimate is made it is in substitution of the income that is to be computed under Section 29. In other words, all the deductions which are referred to under Section 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in Secti....
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.... is clear that once books of account are rejected u/s 145(3) of the Act and income is derived at certain %age of gross receipt then there is no further scope for any further disallowance including u/s 40(a)(ia) and 40A(3) of the Act as made in the instant case. Hence, we do not have any hesitation to delete the additions mentioned above as affirmed by the ld. CIT(A). 5. Now coming to the appeal in ITA No.27(Asr)/2013 filed by the Revenue Department. The ground No.1 & 2 relates to the estimation of Net Profit rate @ 8% by the ld. CIT(A). In view of the observation and conclusion drawn in the appeal of the assessee, grounds Nos.1 and 2 stands dismissed. Now coming to the ground Nos.3 to 6, all are connected with each other and we hav....