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TMI Blog2012 (8) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, the assessee is a civil contractor and his business income is of contract work from Government departments. In the assess- ment year under consideration, the gross contract receipt of Rs. 4,71,00,968 was the basis on which the Assessing Officer applied the proviso to section 145(3) and calculated the net profit at the rate of 8 per cent. of the gross con- tract receipt after consideration of expenses debited in the trading and the profit and loss account, depreciation and interest salary paid to the partners. In appeal, the learned Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer rejecting the books of account and computing income as per estimate but on the basis of relevant facts and after noticing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this effect by the Central Board of Direct Taxes, vide circular dated August 31, 1965. 5. The first claim with regard to the interest was disallowed by the Tribunal on the basis of the decision of the Income-tax Appellate Tribunal, Delhi Bench, Delhi (A) in the case of Deputy CIT v. Allied Construction [2007] 291 ITR (AT) 16 (Delhi) [SB] ; [2007] 105 ITD 1 (Delhi) [SB], the other grievance was also turned down on the basis of provisions of section 44AD of the Act by holding that since the coming into effect of that section from April 1, 1994, the Act itself now provides for a method of estimating the income from business of civil construction or supply of labour for civil construction work. Despite noticing that the section was app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sources". The Karnataka High Court noticed that the investment of amount in fixed deposits by the asses- see was only to provide a bank guarantee to the contractee in order to acquire the contract work. On such facts, it held that the interest income could not be treated as income from other sources and had to be treated as business income only. In that case, reliance was also placed upon a judgment of the Supreme Court in the case of CIT v. Govinda Choudhury and Sons reported in [1993] 203 ITR 881 (SC). In the Calcutta High Court judgment in the case of CIT v. Tirupati Woollen Mills Ltd. the facts were slightly diffe- rent. The assessee earned income from fixed deposits and other deposits which was sought to be assessed as income from ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the Tribunal was not justified in adopting the principles underlying section 44AD of the Act when the said section itself was not applicable. In the present case, it appears from the orders of the Assessing Officer, the Com- missioner of Income-tax (Appeals) as well as of the Tribunal that all of them have been guided by the provisions or the principles emanating from the provisions of section 44AD of the Act. In such circumstances, in our view, the question of law actually falling for consideration would be whether the authorities under the Act including the Tribunal have erred in being guided by the principles underlying section 44AD of the Act when that section is clearly not applicable to the case of the appellant as his gross ..... X X X X Extracts X X X X X X X X Extracts X X X X
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