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2018 (7) TMI 1749 - AT - Income TaxTreating the liaisoning consultancy receipts as contractual receipts and applying NP @ 8% - Held that:- Keeping in the view the nature of work got done through the sub contractor and the documents produced by the assessee there is no scope of any doubt about the genuineness of the work done and payment made by the assessee to the sub contractor. Even if the AO has wanted to verify the genuineness of the claim then it was open to the AO to summons the concerned persons and examine. Undisputedly the entire work is carried under a composite contract/ work order and assessee is working as one enterprise then in our view the production of separate trading account for each activity is not called for. As regards the net profit apply at 8% we find that the AO has not applied any comparable case or the prevailing rate in the particular industry therefore, the estimation of the net profit @ 8% by the AO is without any basis. Since, we have already decided the issue of rejection of accounts therefore, this issue becomes academic in nature. However, we find that having regard to the fact that this is the first year of the business activity of the assessee and therefore, the income declared by the assessee at GP rate 7.44% in our view cannot be defaulted with. Accordingly, we set aside the order of the authorities below on account of adopting the net profit at 8%. It is well settled law that the rejection of books of account may not necessary lead to an addition to the declared income of the assesee if the income declared by the assessee is reasonable and in line with the comparable bench mark. Having regard to the facts and circumstances of the case we are of considered opinion that no addition is called for even if the books of account are rejected u/s 145(3) of the Income Tax Act. Non grant of TDS credit arising on the amount received by the assessee under the work order - Held that:- As per the provisions of 219 of the Act tax credit on account of TDS is available in respect of the corresponding income offered to tax by the assessee. Since, in the case in hand the TDS was deducted on the amount which was received by the assessee as mobilization advance and the said amount has to be recognized as income of the assessee in the subsequent year however, due to the succession of business of the assessee’s partnership firm by the company the said TDS in the name of the assessee firm will not automatically available for credit to the said company. Accordingly, we direct the AO to allow the credit of the TDS available in the account of the assessee firm which has ceased to exist due to the succession of the business activity by the company in the subsequent year whenever the said receipt or part of the receipt is recognized as income by the company.
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