2012 (12) TMI 1207 - AT - Income Tax

Summary

Issues involved: Assessment order u/s 143(3) for AY 2007-08 challenged on grounds of limitation and improper assessment of income without deduction for expenses.

Ground 1 - Limitation Issue:
The appellant contested the assessment order served beyond the prescribed time limit, but later withdrew the appeal. The issue was dismissed.

Ground 2 - Assessment of Income:
The appellant, a firm, declared income from civil contracts but the Assessing Officer concluded that the amount received was for brokerage services, not civil work. The AO rejected expense claims and assessed the entire amount as income. The CIT(A) upheld this decision. The appellant appealed, arguing that even if assessable as professional receipts, expenses should be allowed, including deductions u/s 40(b) for partner salaries and interest.

Assessment of Income Details:
The Tribunal found that the amount received was for professional services, not civil contracts. The appellant failed to prove expenses claimed, but it was evident that some expenditure was incurred. The Tribunal estimated 60% of the gross receipts as income earned for services provided. The AO was directed to re-calculate the total income assessable, considering the estimated expenditure and partner deductions.

The Tribunal partially allowed the appeal, emphasizing the need for the appellant to substantiate expense claims and directing a re-calculation of assessable income based on estimated expenditure and partner deductions.