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TMI Blog2015 (9) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... s engaged in business of execution of contract. For the AY under consideration, assessee filed its return of income on 13/11/06 declaring loss of Rs. 65,48,374. During the assessment proceeding, AO noticed that assessee in the relevant PY has obtained contract work relating to erection and procurement of 200 & 300 MW thermal power project and has sub-contracted the same to other contractors. Further, he found that during the relevant PY assessee has obtained engineering, procurement and construction of EPC contract from Lanco Amarkantak Power Pvt. Ltd. (LAPPL) for 300 MW thermal project at Korba District, Chattisgarh. From the details available on record, AO noticed that during the year, assessee has received payments of Rs. 14.49 crores fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, was not convinced with the submissions of assessee. He observed that assessee has given on sub-contract whatever work it had obtained from LAPPL and assessee has also paid entire bills to the subcontractors, hence, assessee is only submitting the bills to the contractee for the work done by sub-contractors. He opined that as the work has already been completed, income has to be estimated on work-in-progress. AO referring to the AS-7 of ICAI as well as a number of judicial authorities, ultimately, held that income @ 8% has to be estimated on the total expenditure of Rs. 16,22,21,839 shown as work-in-progress by assessee and accordingly completed the assessment. Being aggrieved of the assessment order, so passed, assessee preferred appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he materials on record available before him, deleted the addition made by AO on account of estimation of income on contract work by holding as under: "4.2. I have considered the submissions made by the appellant, gone through the order of the AO and also perused every other information placed be There is no dispute that the appellant is an EPC (Engineering, Procurement and Commissioning) contractor, rendering work to Lanco Amarkantak Power Private Ltd., (LAPPL). The appellant has given some works to other players subcontracts. For the year under consideration the appellant received advances from contractor in the months of July 2005 and March 2006 & by March 2006 the works were under progress. As per records the works assigned to the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant in the next assessment year and accordingly the appellant has also filed the return. Thus, since no cogent material has been brought on record by the AO for curbing out income from the advances received for the year ending 31.03.2006, the action of the AO is not sustainable. In the circumstances, the AO is directed to delete the same." 6. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. As can be seen, only on the basis of TDS certificate enclosed by assessee in the return of income, AO has concluded that the amount received by assessee from LAPPL is a contract receipt and accordingly proceeded to estimate the income. However, as can be seen from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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