1979 (4) TMI 5

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.... registered firm carrying on business of executing contracts and works on behalf of the Government. During the accounting period relevant to the assessment year 1972-73, the assessee derived income from one such contract with the M.E.S. department. The ITO computed the assessee's income from the contract on estimate basis after rejecting his account books. He estimated the income at 12 1/2% on an ....

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....and not to the cash receipts only. It further held that the rate of profit ought reasonably be fixed at 9% and not 1% as held by the AAC. At the instance of the assessee, the Tribunal has referred the following question of law for our opinion: " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the rate of profit should be applied to the ....

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.... that the Tribunal was not justified in holding that the cost of material supplied by the M.E.S. was liable to be included in computing the profits from the contract in the present case. But the same cannot be said to be true about the deposits retained by the M.E.S. dept. Even the learned counsel for the petitioner conceded that the same were liable to be included in the total receipts for the pu....