TaxTMI 
TaxTMI 
2007 (11) TMI 300
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....1) of the Income Tax Act, 1961 (for short "the Act") for the assessment year 1987-88 for the opinion of this Court:- "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the adoption of the net profit rate of 8% and then allowing deduction of the amount paid by the assessee as freight charges to the Truck Operators' Union from the gross receipts?" 2. Briefly noticed, the facts are that the assessee was a firm of labour contractors doing loading and unloading work of gunny bags from mandi to godowns and from the godowns to Railway Station and vice versa. The assessee received payment of Rs.25,40,127/- from the FCI for the assessment year 1983-84 and made payments on account of freight ....
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....s left to deduct any amount from gross receipts as the net profit rate embraces within it all expenses envisaged by an assessee. Our attention was drawn to various provisions of the Act, namely, Sections 29, 144 and 145 for resolving the controversy in its right perspective. 6. It would be expedient to reproduce the aforementioned sections as they stood at the relevant time which read thus:- "29. The income referred to in section 28, shall be computed in accordance with the provisions contained in sections 30 to 43A." "144. If any person- (a) fails to make the return required by any notice given under sub-section (2) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that sec....
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....e an assessment in the manner provided in section 144." 7. After carefully analysing the aforesaid provisions, the legal position that emerges may be summarized thus. 8. Section 29 of the Act prescribes that the income referred to in Section 28 which is assessable under the head "profits and gains of business or profession" shall be computed in accordance with the provisions contained in Section 30 to 43A of the Act. Section 145 of the Act provides for computation of income under Section 29 on the basis of books of account and method of accounting regularly followed by the assessee. However, where the Assessing Officer is not satisfied with the correctness or completeness of said books, he may reject the same and estimate the income t....
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....n additions on account of interest and salary paid to the partners in the profit and loss account. It was held that it was not correct in law to make the separate addition representing the interest and remuneration paid to the partners to the income already estimated and assessed from contracts. It was observed as under (head note of ITR) : "The pattern of assessment under the Income-tax Act, 1961 is given by section 29 which states that the income from profits and gains of business shall be computed in accordance with the provisions contained in sections 30 to 43D of the Act. Section 40 provides for certain disallowances in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under....
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....acquiring the materials from the department concerned and the inclusion of the value of the materials in the actual receipts returned by the assessee cannot be included as the assessee cannot be said to have earned any profit in the supply of the said materials by the departments for use in the buildings. It was only on the basis of the actual receipts from the Government that the income was to be calculated. In the present case, the assessee had claimed deduction on account of freight expenses from gross receipts which is not in the nature of capital cost as was the case before the Madras High Court and the Tribunal was thus, not correct in placing reliance upon the aforesaid decision to decide the issue in favour of the assessee. 12. D....