TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 980
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....relief in respect of certain additions, while confirming the others. Challenging the relief granted, Revenue preferred ITA Nos. 33/Hyd/2017, 1075/Hyd/2017, 692/Hyd/2019, 693/Hyd/2019 and 735/Hyd/2020; whereas aggrieved by the additions that are sustained, assessee preferred ITA Nos. 635 and 636/Hyd/2019. Revenue Appeals in ITA Nos. 33/Hyd/2017, 1075/Hyd/2017, 692/Hyd/2019, 693/Hyd/2019 & 735/Hyd/2020: 3. First coming to the appeals preferred by the Revenue, in all these five appeals, Revenue has raised four issues challenging the findings of the learned CIT(A), namely, (i) allowing depreciation after estimation of income, (ii) allowing deduction under section 80-IA of the Act, (iii) estimating the FMS income and adjudicating on the income from other sources offered by the assessee himself, and (iv) exclusion of works allotted to sub-contractors. First issue is common for the assessment years 2013-14, 2014-15, 2015-16 and 2017-18, second issue is common for all the appeals, third issue is involved for the assessment years 2012-13 and 2014-15 whereas fourth issue is there in assessment year 2012-13. For the sake of convenience, we deal the grounds issue-wise. 4. Insofar as the is....
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....nd contract receipts and confirming the estimation of income, held that after the estimation of income, the assessee is entitled for deduction towards depreciation as all other deductions deemed to have been allowed under section 30 to 38 of the Act. Allowance or otherwise of the depreciation after the estimate was not in issue at all. 8. However, in the case of CIT vs. Y. Ramachandra Reddy [2014] 50 taxmann.com 129 (AP), an appeal preferred by the Revenue, the Hon'ble jurisdictional High Court, considered the issue relating to the feasibility of allowing the depreciation after estimation of income in cases where section 44AD of the Act has no application because of the turnover being the above the threshold limit, and held that,- "12. For example, Section 44AD of the Act provides for determination of the income of an assessee from the business at 8% of the total turnover or the gross receipts of the previous year under certain circumstances. Sub-Section (2) is to the effect that if any deduction allowable under Sections 30 to 38, which takes in its fold the deduction such as depreciation and interest, shall be deemed to have been effected. The procedure under that section, ....
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....61 Act." 9. While dealing with this issue for the assessment year 2013-14, learned CIT(A) referred to the decision of the Third Member in assessee's own case for the assessment year 1991-92 and 1992-93 wherein it was held that depreciation was allowable as a deduction after estimation is resorted to. He also referred to the Circular No. 29-D/XIX-14 in F.No. 45/239/65-ITJ dt 31/08/1965 issued by the CBDT. Learned CIT(A), then, followed the binding precedent of the Hon'ble jurisdictional High Court in the case of Y. Ramachandra Reddy (supra) and granted relief to the assessee allowing depreciation after rejection of books of accounts and estimating the income. 10. For this year, learned CIT(A) followed this view taken for the assessment year 2013-14 by his predecessor and allowed depreciation to the assessee. We, therefore, do not find anything illegality or irregularity in the order of the learned CIT(A), granting depreciation to the assessee by following the binding precedent. We, therefore, uphold the findings of the learned CIT(A) and dismiss this ground of appeal for all these years. 11. Now issue relates to allowance of deduction under section 80-IA of the Act for all t....
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....ssessee is entitled for deduction under section 80-IA of the Act. This finding holds good as on the date. 15. In view of the identical facts involved for all these years, we do not find any illegality or irregularity in the order of learned CIT(A) following the binding precedent in the well considered view of a Co-ordinate Bench of the Tribunal taken for the earlier assessment years by order dated 16/03/2012 (supra). We, therefore, uphold the findings of the learned CIT(A) for all the assessment years and dismiss this ground of Revenue in all the appeals. 16. Turning to the issue relating to the Facility Management Services (FMS), for the assessment years 2012-13 and 2014-15 learned Assessing Officer added the entire receipts relating to the FMS as 'income from other sources'. In appeal, it was contended by the assessee before the learned CIT(A) that the assessee had to incur expenditure for deriving such an income and when the income earned from other projects was estimated, the income from FMS also needs to be estimated. 17. Learned CIT(A) agreed with the submissions on behalf of the assessee and opined that the entire receipt cannot be considered as 'income'. Considering the ....
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.... authorities estimated the element of income by dividing the contracts executed by the assessee into two broad categories, namely, on contracts and sub contracts undertaken; the own contracts are further subdivided into contract works got executed through subcontractors and the contract works executed by the assessee himself, whereas the subcontractor bifurcated into the sub contracts done through outsiders and sub contracts executed by the assessee himself. Assessee further submits that the rate of profit was adopted by the authorities like in respect of own contracts to the extent got done through the subcontractors, the amount of commission received as reduced by the estimated expenditure by treating it as income and the amount was reduced from the gross receipts, in respect of own contract works done by the assessee itself, 12.5% of the receipts as reduced by the Department recoveries, in respect of sub contracts got done through the outsiders, the amount retained or the amount of commission paid by the subcontractors is treated as income and income on the balance of the amount received from the principal contractor is estimated at 8% and the aggregate of the amount was reduced....
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.... the earlier assessment years for this purpose, that the Department is consistently adopting this procedure and there is no reason for deviating from the same. 25. Since the learned CIT(A) followed the consistent view adopted by the Revenue for the earlier assessment years and also the binding precedent of the decision of the Hon'ble Apex Court in the case of Brij Bhushan Lal (supra), we do not find anything illegality or irregularity in the findings returned by the learned CIT(A) and, accordingly, uphold the same. Consequently, we dismiss ground No. 2 of the appeal of Revenue for the assessment year 2012-13. With this, all the grounds of appeals of the Revenue stand answered in the negative and stand dismissed. 26. In the result, all the appeals of Revenue are dismissed. Assessee Appeals in ITA Nos. 635 & 636/Hyd/2019: 27. Now coming to the appeals preferred by the assessee, in these two appeals, the assessee challenged the direction of the learned CIT (A) to the learned Assessing Officer to adopt the profit rate of 12.5% on contract receipts and to tax the interest income as 'income from other sources'. 28. On the aspect of profit rate, as stated above, brief facts of the c....
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....inancial charges, the estimation of profit at 12.5% on own contract works before depreciation is not justified. He accordingly submitted that the same should be reduced to 9% to 10%. 32. Per contra, learned DR heavily relied on the order of the learned CIT (A). He submitted that the learned CIT(A) has followed the decision of his predecessor for the preceding year in assessee's own case, therefore, the same should be upheld. 33. We have gone through the record in the light of the submissions made on either side. We have also considered the various decisions cited before us by both sides. Only dispute in the grounds raised by the assessee in these appeals is regarding the estimation of profit @ 12.5% on contract executed by self. We find that the learned CIT(A), following the order of his predecessor learned CIT(A) in assessee's own case for the earlier years, directed the learned Assessing Officer to estimate the profit at 12.5% on contract work executed by self. It is the submission of the learned Counsel for the assessee that such estimation at 12.5% is not at all justified for the impugned assessment year especially when the financial charges had substantially gone up to almos....
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.... said fixed deposits and the authorities below did not allow the same as deduction. Learned DR on the other hand, supported the findings of the learned CIT(A) on this aspect. 38. We have heard both sides. We find identical issue had come up before the Tribunal in assessee's own case in assessment years 2008-09 & 2009-10. In ITA Nos. 1247/Hyd/2012 & ITA No.1248/Hyd/2012 order dated 28/10/2013, a Co-ordinate Bench of the Tribunal decided the issue against the assessee by observing as under: "16. We have considered the rival submissions and perused the orders of the lower authorities. The issue before us is the head under which the interest income derived by the assessee from the bank deposits made towards margin money, or for securing bank guarantee has to be assessed. It is the contention of the assessee that this interest income is inextricably linked to the business of the assessee and hence, it has to be assessed under the head business and not as income from other sources, and consequently, it is the claim of the M/s. KMC Constructions Ltd., Hyderabad assessee that the Assessing Officer, having estimated the assessee's income from business and assessed the same to tax, no....