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Commissioner of Income Tax (International Taxation And Transfer Pricing) Versus Shandong Tiejun Electric Power Engineering Co.

2017 (9) TMI 1164 - GUJARAT HIGH COURT

A.O. power to assess income on presumptive basis u/s 44BBB(1) - assessee has maintained books of account as prescribed u/s 44BBB(2) - whether books of account maintained by assessee are not proper and do not reflect the correct income of assessee? - Held that:- In the present case, the CIT (Appeals) as well as the Tribunal both held that the assessee had fulfilled all requirements of sub-section (2) of section 44BBB. It is not the case of the revenue that the assessee had not maintained the book .....

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counts. The Commissioner (Appeals) in fact elaborated that the assessee had the past experience from which it could estimate the total cost and had presented figures to show the percentage completion of the project. These figures match with the actual income and expenditure statements of the subsequent financial years. In fact the entire project was completed by the time the Commissioner (Appeals) decided the appeal. - Decided against revenue - Tax Appeal No. 623 of 2017 - Dated:- 18-9-2017 - MR .....

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) of the Act, if assessee has maintained books of account as prescribed u/s 44BBB(2) of the Act although books of account maintained by assessee are not proper and do not reflect the correct income of assessee? [B] Whether, the Hon ble ITAT has erred in law and on facts of the case, in holding that A.O. has erred in rejecting books of accounts of assessee relying on the decision of Hon ble Gujarat High Court decision in the case of CIT vs. Advanced Construction Co. (P) Ltd. reported in 275 ITR 3 .....

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sfies certain conditions therein. Assessee could claim lower profit and gain than what is referred in sub-section (1). Assessee availed of such provision of sub-section (2) of section 44BBB of the Act while filing the return before the Assessing Officer. The Assessing Officer was not satisfied on various grounds, principally, that the assessee had followed the accounting system of AS-7 which was not applicable, the assessee should have offered tax in terms of section 44BBB of the Act and lastly .....

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standard AS-7 was applicable to the assessee. The assessee had pointed out to the Assessing Officer that the true cost of the project was estimated on the basis of experience of the assessee in executing similar works in the past. The assessee had also submitted detailed break-up of the estimated profit and loss account for the entire project for five financial years. The assessee had also submitted the details of the budgeted costs to the revenue. The assessee had produced the audited financial .....

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therefore relied and referred to the decision of this Court in case of Commissioner of Income-Tax vs. Advanced Construction Co. (P) Ltd. reported in 275 ITR 30 and reversed the order of the Assessing Officer. 4. The Tribunal on somewhat similar grounds rejected the Revenue's appeal. Hence, the present appeal. 5. Section 44BBB of the Act reads as under: 44BBB. Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain .....

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ny person on his behalf on account of such civil construction, erection, testing or commissioning shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession . (2) Notwithstanding anything contained in subsection (1), an assessee may claim lower profits and gains than the profits and gains specified in that sub-section, if he keeps and maintains such books of account and other documents as required under sub-section (2 .....

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of erection of plant or machinery or testing or commissioning thereof in connection with a turnkey power project approved by the Central Government would be taxed at the rate of 10% of the amount paid or payable to the assessee or to any person on behalf of the assessee on account of such civil construction, erection etc work. Sub-section (2) of section 44BBB of the Act would however give an option to the assesee to claim lower profit if the assessee keeps and maintains the books of accounts an .....

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