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Pr. Commissioner of Income Tax, Alwar Versus M/s Rajendra Mittal Construction Co. Pvt Ltd.

2017 (12) TMI 364 - RAJASTHAN HIGH COURT

Rejection of books of accounts - N.P. determination - Held that:- NP rate is to be taken average of last five years which will come to 4.066, therefore, in our considered opinion 5% which is assessed by the tribunal is just and proper, therefore, first issue is answered in favour of the assessee. - Addition of interest income and other income - Held that:- Taking into consideration, the interest amount paid on the loan which was taken and interest which is on unpaid amount and other income, .....

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partment and cross objection filed by the assessee was partly allowed. 2. This court while admitting the appeal on 30.5.2017 framed following substantial question of law:- (i) Whether the Tribunal was legally justified in restricting the addition of ₹ 96,27,290/- to ₹ 30,74,814/- made by Assessing Officer by invoking the provisions of section 145(3) and applying net profit rate of 5% instead of 8% specifically when huge discrepancies were found in the books of accounts? (ii) Whether .....

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d vide order dated 4th March, 2013. While framing the assessment, the AO made addition of ₹ 96,27,290/- on account of profit addition by adopting the net profit @ 8% of total contract receipts ₹ 18,25,57,305/- (i.e. 1,46,04,584 - 49,77,294). The assessee aggrieved by this order preferred an appeal before ld. CIT (A), who after considering the submissions partly allowed the appeal. While allowing the appeal, the ld. CIT (A) adopted the net profit @ 5% on the turnover declared by the a .....

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nt with regard to the percentage of net profit declared and assessed by the AO, the average net profit rate (AY 2005-06 3.75%, AY 2006-07 4.0%, AY 2007-08 4.57%, AY 2008-09 5.57%, AY 2009-10 3.86%- after adjusting addition of ₹ 3 lacs) would be 4.35%. Accordingly, considering all these factors and other deficiencies as noted above, it would be fair to apply the net profit rate of 5.00% to the turnover declared by the appellant at ₹ 16,10,42,167/-. This would result in estimated net p .....

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xpenses of income which was added amounting to ₹ 3,16,339/- and ₹ 7,03,275/-. 6. However, the same was considered by the tribunal observing as under:- 7.1. The ld. Counsel for the assessee reiterated the submissions as made in the written brief. It is contended by the ld. Counsel that both the interest paid and earned is in course of business. In net the interest payment is ₹ 1,48,640/-. In the event of interest received is taxed separately, interest payment also needs to be al .....

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#8377; 7,03,275/-, the ld. Counsel for the assessee has demonstrated that it is part of the contract business and therefore, once the net profit is applied for assessing the income, such receipts cannot be separately added to the income. While accepting the contention of the ld. Counsel, we direct the AO to delete the addition. This ground of the assessee is allowed. 7. Counsel for the respondent has contended that in the case of same assessee, average NP which has been applied is reproduced as .....

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