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2023 (11) TMI 1193 - AT - Income TaxEstimation of income from contract business - splitting of turnover/business income - declaring profit @ 6% u/s 44AD - whether reference can be drawn from the rate specified under the provisions of section 44AD in order to estimate income from contract business? - as submitted that the AO has accepted business income offered by the assessee @ 6% on the part turnover and for the rest of turnover he fairly submitted that Net Profit @ 8.5% may be adopted in the absence of books of account and audit report - DR objected that assessee has wrongly field return of income and split its turnover in two parts - assessee has offered Income from Other sources showing gross receipt and claimed expenditure u/s. 57, for which the assessee was unable to produce any documentary evidence HELD THAT:- Assessee is a contractor and has received payment from Mysore City Corporation for which the contractee has deducted TDS u/s. 194C. In the assessment order the AO has noted that assessee has split business income which shows that the AO has accepted that it is business income of the assessee. There is no doubt that the amount received by the assessee from Mysore City Corporation should be considered under Chapter IV – Part D - Profits & gains of business or profession. We further note that on the amount the assessee has offered it as business income during the impugned assessment year declaring profit @ 6% u/s 44AD to which the AO has accepted. Therefore, the rest of the amount should have also been considered by the AO under Chapter IV – Part D - Profits & gains of business or profession. During the hearing, the ld. AR fairly offered 8.5% Net Profit rate looking to the past trend of the assessee which is fair enough as profit of the business of the assessee shown under the head Income from Other Sources and accordingly in the peculiar facts of this case, we hold that Net Profit @ 8.5% is to be adopted on the balance turnover of Rs. 3,09,23,045. Appeal by the assessee is partly allowed.
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