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2009 (11) TMI 938 - HC - Income TaxRejection of books - estimation of income - allocation of expenditure between civil work and consultancy work - assessee was engaged in both as a consultant and contractor for setting up of acqua farms for various parties - HELD THAT:- Tribunal, noticing that separate accounts are not maintained, treated the expenditure as attributable to both civil work as well as the consultancy work and accordingly allotted ₹ 2 lakhs towards civil work and disallowed only so much of the balance of ₹ 2,01,414 pertaining to consultancy work. Counsel for the assessee though contended that the disallowance is arbitrary could not establish before us that the accounts are correct and complete. Details of expenditure and the purpose for which it was spent, were also not available on record. Therefore, in our view, the Tribunal rightly disallowed a sum of ₹ 2 lakhs towards civil work and allowed at least 50 per cent of the claim attributable to consultancy work. We find, no substantial question of law involved in the finding of the Tribunal. Therefore, we answer this question in favour of the Revenue and against the assessee. Accrual of income - Amount received for execution of the work - whether the amount received by the assessee for execution of the work, if materialised, can be treated as income? - HELD THAT:- The assessee has no case that the amount is repaid or repayable. The Tribunal rightly found that it is business income assessable u/s 28(i)/(iv) of the IT Act. We find no justification to interfere with the order of the Tribunal, We therefore answer this question also against the assessee. Consequently, appeal for the year 1993-94 will stand dismissed. Estimation of income from civil work at 8 per cent of the total contract receipts - In this case, we find the order of the Tribunal is quite favourable to the assessee because as against the estimation of 10 per cent made by the AO, the Tribunal has reduced the estimation to 8 per cent of the total works turnover. There is logic and reason in estimation of income from civil construction work at 8 per cent because under the presumptive scheme, s. 44AD provides for assessment of income on civil construction work at 8 per cent where the contractor's turnover is below ₹ 40 lakhs. Even though counsel for the appellant contended that s. 44AD has no application as the contract amount is above ₹ 40 lakhs, we do not think, there is justification to interfere with the order of the Tribunal because in the first place, the Tribunal has granted part relief to the assessee by reducing the estimated income from 10 per cent to 8 per cent. Secondly, what the Tribunal has done, is only to follow s. 44AD as a guideline for estimation of income from civil work. We, therefore, find no justification to interfere with this part of the order of the Tribunal. It is worthwhile to note that while confirming the estimation of income at reduced percentage, the Tribunal cancelled separate addition made by the AO under the head 'Other income' which is a huge amount of ₹ 15,44,353. We are of the view that after getting deletion of addition of ₹ 15,44,353, the assessee cannot canvass for modification of other part of the order of the Tribunal confirming estimation of income at the reduced percentage of 8 per cent which is a reason for deleting the separate addition without considering it independently on merit.
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