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2012 (12) TMI 591 - AT - Income TaxRejection of books – Adoption of higher net profit rate @ 12% by AO - Assessee is a partnership firm engaged in the construction of roads – CIT(A) reduce net profit rate to 8% - Held that:- Following the decision in assessee’s own case there must be valid ground with revenue to enhance the net profit rate to 12%. In absence of these, addition cannot be sustained. In favour of assessee Addition on account of interest income - Assessee has not shown bank interest, whereas TDS was claimed as per TDS certificate - Assessee contended that interest figure debited to the P&L account is the net figure – Held that:- Since the assessee has not produced books of account and failed to establish his case for setting off of interest paid against the interest income, which is assessable u/s 56. Following the decision in case of Dr. V. P. Gopinathan (2001 (2) TMI 10 - SUPREME COURT) that where an assessee had invested money in a fixed deposit, in a bank, on interest and had taken loan, on the security of that deposit from the same bank, on interest, the interest paid by the assessee, on the loan would not go to diminish his income from interest, on the fixed deposit, paid by the bank. In favour of revenue Addition on account of margin on sub-contract works – To the tune of 6% which was half of net profit - Assessee claimed that value of sub-let work be reduced from its gross receipts - AO was of the opinion that the assessee had not produced books of account and he would definitely retain some profit margin – Held that:- Following the decision in case of Pran Nath Gupta (2009 (11) TMI 53 - PUNJAB AND HARYANA HIGH COURT) that the payment made to subcontractors is to be deducted from Gross receipt. In favour of assessee
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