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2016 (5) TMI 1266 - ANDHRA PRADESH HIGH COURT

2016 (5) TMI 1266 - ANDHRA PRADESH HIGH COURT - TMI - Estimation of gross receipts - Held that:- In the present case, the gross receipts, no doubt, are far in excess of ₹ 40 lakhs and, as such, Section 44AD of the Act is not attracted. The Tribunal, however, held that Section 44AD of the Act serves as a guidance in estimating net profit even in cases where the gross receipts exceed ₹ 40 lakhs also. The Tribunal has referred to the earlier orders passed in several other cases where pr .....

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is perverse. In the present case, we are satisfied that the order of the Tribunal does not suffer from any such infirmity - I.T.T.A.Nos. 452, 453 454 & 455 of 2015 - Dated:- 22-12-2015 - SRI RAMESH RANGANATHAN AND SRI M.SATYANARAYANA MURTHY, JJ. For The Petitioner : NARASIMHA SARMA COMMON JUDGMENT: (per Hon ble Sri Justice Ramesh Ranganathan) These appeals, under Section 260-A of the Income Tax Act, 1961 (for short the Act ), are preferred against the common order passed by the Income Tax Appell .....

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stimation of net profit at 8% was reasonable; and such a rate is in tandem with the spirit of the provisions of Section 44AD of the Act, which could be considered as a guideline for the purpose of applying a particular net profit rate in the case of civil contractors. With regards the works entrusted to the sub-contractor, the Commissioner of Income Tax (Appeals) followed the decision of this Court in Indwell Constructions vs. CIT 232 ITR 776, and held that no deduction from the income estimated .....

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e order under appeal before us, the Tribunal affirmed the order passed by the Commissioner of Income Tax (Appeals) holding that, when the books of accounts were rejected, the only method available to the Assessing Officer was to estimate the profit; the profit ratio cannot be a constant factor for each and every year; the profit ratio would fluctuate depending upon various factors such as the place of execution of the contract, availability of raw material, labour and assessee s own funds etc; w .....

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Reddy, the Tribunal had estimated the profit between 12.5% to 8% depending upon the factual situation; a bare reading of the earlier order of the Tribunal, in M.Bhaskar Reddy, showed that the Tribunal, after considering the judgment of the Supreme Court in State of Kerala vs. C.Velukutty 60 ITR 239 and the decision of the Special Bench of the Tribunal in Arihant Builders, Developers and Investors P. Ltd. 291 ITR 41 (SB), and by taking a clue from Section 44AD of the Act, had estimated profits at .....

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estimated the profit only at 8% even though it had estimated the profit at 12.5% for the earlier assessment year 1992-93; the Commissioner of Income Tax (Appeals), after referring to the order of the Tribunal in Krishnamohan Constructions and Arihant Builders, Developers and Investors P. Ltd. 291 ITR 41 (SB), had estimated the profit at 8% for the main contract, and at 5% on sub-contract; the Tribunal was uniformly estimating the profits between 8% to 12.5% depending upon the factual situation, .....

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