Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (3) TMI 1121 - AT - Income TaxRevision u/s 263 - assessing officer has estimated the net profit at 9% of the gross contract receipts without causing necessary enquiry with regard to the adopting low profit and without applying mind - Held that:- The facts are materially the same as in the assessment year under consideration also. Therefore, following the aforesaid decision of the Tribunal, we hold that the CIT was not justified in revising the assessment order. It further needs to be mentioned that the CIT without himself deciding what should be the net profit rate has again left it to the discretion of the AO. This shows that the CIT himself was not sure about the rate of profit to be adopted. We set aside the order of the CIT and restore that of the assessing officer. Estimation of profit at 12.5% of the gross contract receipts - Held that:- Estimation of net profit at 12.5% of the gross contract receipts is high and excessive. The ITAT Visakhapatnam bench as well as the ITAT Hyderabad benches have been consistently adopting the profit rate of 8 to 9% net of depreciation in case of assessees engaged in contract works and from profit so estimated further deduction towards remuneration and interest payment to the partners u/s 40(b) is allowed. Therefore, in tune with the consistent view of the Tribunal, we direct the assessing officer to estimate the profit at 9% on gross contract receipts net of depreciation and thereafter allow deduction u/s 40(b) of the Act towards interest and remuneration payment to the partners. The AO must see to it that income so computed should not go below the returned income. Accordingly, assessee’s appeal is partly allowed.
|