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2016 (2) TMI 602

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..... ision contained u/s 44AD of the Act, directed for allowing deduction towards interest and remuneration payment to partners after estimation of income by rejecting books of accounts in case of a firm engaged in executing contract work. Even thereafter in a series of decisions, this Bench of the Tribunal has consistently held a view that deduction towards interest and remuneration payment to partners is to be allowed from profit estimated after rejecting books of account in case of a firm engaged in the business of works contract. In the aforesaid view of the matter, we direct the AO to allow deduction towards payment of interest and remuneration to the partners after estimating the profit - ITA No. 817/Hyd/2015 - - - Dated:- 22-1-2016 - P .....

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..... onstructions Pvt. Ltd. being the principal contractor determined the gross amount payable to assessee at ₹ 1,47,58,896/- and the recoveries of ₹ 54,96,518/- were reduced towards diesel and lubricants. 2.2 This amount of ₹ 54,96,518/- towards diesel and lubricants was debited to profit and loss account by the assessee. 2.3 During the course of assessment proceedings the Assessing Officer has issued notice u/s. 133(6) to Sri Sai Sreenivasa Constructions Pvt.Ltd. and also to South Central Railway Guntakal calling for details on the recoveries made from the bills. 2.4 Sri Sai Sreenivasa Constructions confirmed recovery of ₹ 56,94,518/- towards diesel and lubricants 2.5 The Assessing Officer called for the det .....

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..... actors as a worker. During the transfer, / have misplaced books of accounts, vouchers and other important papers / documents Of my own and firms also. 2.8 After considering the submissions of assessee, the Assessing Officer observed that the expenses towards diesel and lubricants constitute 38.6% of the gross contract receipts of ₹ 1,47,58,896/- for which no evidence was submitted either by the deductor or by the assessee firm. On the other hand the firm booked expenditure under the head hire of vehicles of ₹ 70,230/- only. Therefore, in the absence of any evidence in support of claim of expenditure towards diesel and lubricants even after repeated opportunities such amount was disallowed by the AO. 3. Aggrieved with the .....

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..... ceipts from own contracts and profit at 4% on the sub-contract receipts. The learned Commissioner of Income-Tax (Appeals) ought to have seen that the contract works undertaken by the appellant is for the Government organization wherein the profit margin would be less. Even in the case of sub contract works, the estimation of profit at 4% is excessive. 3. The learned Commissioner of Income-Tax (Appeals) erred in holding that the departmental recoveries are not deductible while estimating the income from contracts. 4. The learned Commissioner of Income-Tax (Appeals) erred in holding that deduct ion u/s 40(b) is not allowable from the income estimated. 5. The learned Commissioner of Income-Tax (Appeals) erred in confirming levy .....

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..... ofit is to be estimated. We find that, in a recent decision, the Income-tax Appellate Tribunal, Hyderabad Bench in case of ACIT V/s. M/s Teja Constructions (ITA No.1191/Hyd/2011 dated 17-2-2012 directed to estimate profit in the case of different categories of contracts by observing in the following manner:- However, the issue is covered by the order of the Income-tax Appellate Tribunal in the assessee's own case for the earlier year. For that year the Income-tax Appellate Tribunal has estimated the profits of the assessee @9% on own contract works, 8% on contracts taken by the assessee on subcontracts and @ 5% on contracts given by the assessee to 3rd party on sub-contracts. Following the aforesaid decision of the co-ordinat .....

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