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M/s Power Liners Versus A.C.I.T., Circle-3, Jaipur

2018 (1) TMI 512 - ITAT JAIPUR

Disallowance made U/s 40(a)(ia) - AO has rejected the books of account of the assessee and estimated the income of the assessee by applying N.P. rate - Held that:- Once the n.p. rate is estimated, the AO cannot based this disallowance on the same books of accounts for the purpose of disallowance by invoking provisions of section 40(a)(ia) of the Act or general disallowance u/s 37 of the Act. The estimation made by the AO of net profit will take care of every addition related to business income o .....

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- BOMBAY HIGH COURT] - ITA No. 194/JP/2017 - Dated:- 8-1-2018 - SHRI VIJAY PAL RAO, JM AND DR. ARJUN LAL SAINI, AM For The Assessee : Shri Rohan Sogani (CA) For The Revenue : Shri P.P. Meena (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 29/12/2016 of ld. CIT(A)-I, Jaipur for the A.Y. 2012-13. The assessee has raised following grounds of appeal: 1. In the facts and circumstances of the case and in law CIT(A) has erred in confirming the actio .....

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40(a)(ia) of the Income Tax Act, 1961. The action of Id. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing of the said disallowance of ₹ 16,17,487/-. 3. In the facts and circumstances of the case and in law the Id. CIT (A) has erred in confirming the action of the Id. AO in disallowing a sum of ₹ 14,30,423/- of service tax under section 43B of the Income Tax Act, 1961. The action of the CIT(A) is illegal, unjustifi .....

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2 of the assessee s appeal is regarding disallowance made U/s 40(a)(ia) of the Income Tax Act, 1961 (in short the Act). The ld AR of the assessee has submitted that the Assessing Officer has rejected the books of account of the assessee and estimated the income of the assessee by applying N.P. rate, therefore, once the income of the assessee is estimated by applying the N.P. rate then no further disallowance is called for U/s 40(a)(ia) of the Act. In support of his contention he has relied upon .....

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ax is not deducted at source. The said amendment is explanatory in nature and therefore, it is applicable retrospectively. The ld AR of the assessee has relied on the decision of Hon'ble Supreme Court in the case of CIT Vs Vatika Township Pvt. Ltd. 109 DTR 33 and submitted that the Hon ble Apex Court has observed that if legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, then the presumption would be .....

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at the income of the assessee was determined by the Assessing Officer on the basis of the estimation and best judgment after rejecting the books of account U/s 145(3) of the Act. The Assessing Officer has applied N.P. rate of 8% on the total receipts of ₹ 1,53,44,942/- and accordingly, the addition of ₹ 2,18,277/- was made by the Assessing Officer. The ld CIT(A) has confirmed the addition of the Assessing Officer by rejecting the contention of the assessee. The amount was already pai .....

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as under: 2.4 We have heard the rival contentions and perused the material available on record. In the instant case, the books of accounts were rejected u/s 145(3) of the Act and thereafter the AO has estimated net profit @ 5.05% on contract receipt after deduction of depreciation, interest and remuneration paid to partners as against net profit of 2.39% declared by the assessee. From the perusal of the assessment order, it is noted that there have been discussions between the AO and the assesse .....

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to apply net profit of 5.05% which has been agreed upon by the assessee. It is therefore seen that issue of allowance of payments of machinery hire charges has been duly taken into consideration by the AO while estimating the N.P. rate of 5.05% Further, it is noted that the decision of Hon'ble Kolkatta High Court in the case of Arjun Bhowmick (supra) directly support the case of the assessee. In that case, the view taken by the Kolkotta Bench of the ITAT has been confirmed by the Honble High .....

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anas Sand Toll Tax collection (supra) has taken a similar view in the matter following the decision in case of Hon'ble Andhra Pradesh High Court in the case of Indwell Construction (232 ITR 776). In light of above, we see no reason for AO to invoke provisions of section 154 of the Act. Hence, the order passed by the AO u/s 154 is quashed and the original order passed u/s 143(3) of the Act is sustained. Following the order of the Coordinate Bench of this Tribunal (supra) we delete the additio .....

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. In support of his contention, he has relied upon the decision of Hon ble Bombay High court in the case of CIT Vs Knight Frank (India) Pvt. Ltd. 242 Taxman 313 (Bom) and submitted that the Hon'ble High Court has held that the assessee had not claimed any deduction on account of the service tax payable in order to determine its taxable income, there can no occasion to invoke Section 43B of the Act. 7. On the other hand, the ld DR has relied on the orders of the authorities below. 8. We have .....

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