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THE PRINCIPAL COMMISSIONER OF INCOME TAX, RAJKOT Versus BACKBONE CONSTRUCTION P. LTD

2016 (2) TMI 129 - GUJARAT HIGH COURT

Profit estimation - ITAT reducing the profit estimated from 16% to 8% - Held that:- The entire examination was on the basis of evidence on record and would not call for any question of law. It is true that the provisions of section 44AD of the Act would not ipso facto apply to every acts of the Tribunal merely adopting a yardstick in absence of any other concrete evidence to enable itself to estimate the true profit of the assessee.

With respect to further additions, the Tribunal corr .....

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5 for assessment year 2008-09, the revenue has suggested following question for our consideration: a. Whether, on the facts and circumstances of the case, the ITAT is right in reducing the profit estimated from 16% to 8% by CIT(A)? b. Whether, on the facts and circumstances of the case, the ITAT is right in deleting the disallowance made u/s.40A(3) of the Income Tax Act, of ₹ 5,47,500/- without discussing the merit of the issue, merely on the ground that once when profit is estimated there .....

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of book results, proceeded to make additions on the basis of gross profit rate. The CIT(A) in a detailed judgment came to the conclusion that the net profit of the assessee should be estimated at the rate of 16% of the contract receipts in all the assessment years. 4. The assessee dissatisfied with such decision of the CIT(A), approached the Tribunal. The Tribunal in the impugned order reduced the gross profit rate at 8% making following observations: 9. We find that no basis for making estimati .....

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during the year was of under-sea project. In respect of tender documents, it was explained that the net profit embedded in the project was 11.11% as well as loss of 22.20%, which was verified from work order No.ED/C.E./MRW/Work-4-07/220 dated 25.4.2007 and work order No.ED/C.E.MRW/Work-1/07/218 dated 25.4.2007 respectively. 10. The DR has not disputed the above explanation of the assessee. 11. Considering the entire facts and circumstances of the case, we find that the estimate of net income fr .....

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