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2022 (4) TMI 668 - ITAT BANGALOREEstimation of income from contract business - Estimation of profits of the assessee at more than 40% - Application of specified rate of 8% of gross receipts - applicability of presumptive provisions of section 44AD - HELD THAT:- There is no dispute that the assessee's has earned a revenue as contract receipts and this fact is also supported by Form 26AS which shows that tax is being deducted at source on these receipts. The assessee is required to maintain books of accounts as the presumptive provisions of section 44AD is not application basis the turnover exceeding ₹ 1 crore which the assessee failed to do so. There is no hard and fast rule for estimating income from the civil construction business. However, section 44AD prescribes estimation from contract business in cases specified there at the rate of 8% of gross receipts. Though the assessee does not fall within the prescription of section 44AD, the presumptive rate of net profit of 8% incorporated in section 44AD reflects a legislative approved rate of net profit, that can be considered as fair and reasonable to estimate income from contract business in cases like that of the assessee, where the books of accounts are not maintained and when the details furnished are not found acceptable to the AO. The Hon'ble Delhi High Court in the case of Subodh Gupta [2014 (12) TMI 479 - DELHI HIGH COURT] has upheld the estimation of profits at 8% is reasonable when no evidence to the contrary is produced by the revenue. Therefore, considering the judicial precedence and overall facts and circumstances of the case, we are of the considered view that it would be fair and proper that the income from contract business of the assessee be estimated at 8 percent of the gross receipts.- Decided in favour of assessee.
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