TaxTMI 
TaxTMI 
2016 (9) TMI 1691
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....014. 2. The prime issue to be decided in this appeal is as to whether the ld CIT(A) is justified in confirming the estimate of net profit @ 8% adopted by the ld AO, by holding the transportation and hire receipts as an independent stream of income other than contract receipt and treating the interest income as income from other sources, in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is a partnership firm engaged as civil contractor and the return of income for the Asst Year 2011-12 was filed on 3.3.2012 declaring taxable income of Rs. 76,22,020/- . The ld AO observed that the authorized representative of the assessee appeared from time to time and complied partly in response to questi....
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....ntracts stood at 15% with a component of 10% towards contractor's profit and 5% towards overhead expenses. Since the assessee had been executing the contract work in remote areas of Palamau District, therefore remoteness had a bearing on the expenses on material purchased and labour charges. Accordingly, considering the nature of work carried on by the assessee, the ld AO estimated the net profit at 8% of Gross receipts for contract work of Rs. 14,20,82,769/- and determined the net profit at Rs. 1,13,66,621/- and granted deduction towards interest paid to partners (Rs. 14,84,611/-) ; Remuneration to partners (Rs. 9,00,000/-) and Depreciation (Rs. 25,08,960/-) and arrived at the net taxable profit from contract business at Rs. 64,73,050/-. ....
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....d by the assessee itself would be 8% and there is no need to estimate the business profit separately at 8% . It was argued that transport and hire charges are part of business receipts and that in the past, the same was considered as contract receipts. Hence the same cannot be considered as independent income in totality. It was submitted that ld AO had applied the net profit at the rate of 8% on gross payment received inspite of the fact that assessee books of accounts were audited and assessee was not liable to be assessed u/s 44AD of the Act on presumptive basis as total receipts of the assessee exceeded Rs 40 lacs. It was therefore requested to adopt 6% as net profit of the assessee in toto as income from business. 4.1. The ld CIT(A)....
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....ncorrect. 2. For that Transportation Receipts cannot be considered as income in totality. In past Ld. CIT(A) and Ld. AO had accepted the Transportation Receipts as part of Contract receipt and considered a reasonable rate of profit on the total receipts disclosed from Civil Contract and Transportation Contract. Expenses on Vehicle maintenance and Hire Charges were claimed in the Audited Profit and Loss Account. 3. For that Ld. CIT(A) was not justified in considering the interest income as income from other sources separately. Ld. CIT(A) himself for earlier assessment year treated the interest income as incidental to business and no separate addition was made. Hon'ble ITAT dismissed the Appeal filed by Revenue against the o....
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....a period of 3 years to get the lien on deposits released / discharged. Hence the business nexus of maintaining the fixed deposits is proved and hence the interest income derived thereon should be construed as income from business. The ld AR further argued that similar issues of dispute came up before this tribunal in assessee's own case for the Asst Year 2009-10, wherein the ld AO had determined the net profit at 8% of contract receipts and treated the transportation and hire receipts as a separate stream of business income and interest income was treated as income from other sources. The assessee in that year had reported net profit of 5.7 / 5.8% of receipts. He argued that the ld CIT(A) in Asst Year 2009-10 decided to treat the transpo....
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....ld AO. In this scenario, the right way is only to estimate the net profit based on comparable cases / the past history of the assessee. We find that the revenue had not brought any material on record by way of comparable cases to justify the adoption of net profit rate of 8% . We find that the past history of the assessee shows adoption of 6% as net profit which had been accepted by this tribunal in Asst Year 2009-10. We find that this tribunal for Asst Year 2009-10 had held that 6% of contract receipts and transportation receipts should be adopted as net profit from business. But if the same is adopted, as fairly conceded by the ld AR, it would result in determination of income below the returned income. Hence in these facts and circumstan....