TMI Blog2018 (1) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... we uphold the order of the Ld. CIT(A) and dismiss the appeal of the revenue on this ground. See CIT Vs. LOK holdings [2008 (1) TMI 365 - BOMBAY HIGH COURT] and Eveready Industries Limited Vs. CIT and Anr (2009 (12) TMI 226 - CALCUTTA HIGH COURT). - I.T.A.No.505/Vizag/2014 - - - Dated:- 10-1-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri Debakumar Sonowal, DR For The Respondent : Shri G.V.N. Hari, AR ORDER PER D.S. SUNDER SINGH, Accountant Member: This appeal filed by the revenue is directed against order of the Commissioner of Income Tax (Appeals) {CIT(A)}, Vijayawada vide Appeal No.602/CIT(A)/VJA/13-14 dated 27.6.2014 for the assessment year 2011-12. 2. The assessee is a civil contractor filed its return of income declaring total income of ₹ 3,73,54,496/-. The case was selected for scrutiny and during the course of assessment proceedings, the A.O. found that some vouchers in respect of gravel, sand purchase, metal chip purchases and labour charges were incurred on self-made vouchers and some of them were not maintained properly. The assessee explained that the expenditure w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2010-11 and held that the interest income is required to be assessed as business income and not as income from other sources. Accordingly, deleted the addition made by the A.O. 4. With regard to the estimation of income on deemed sales of ₹ 155.96 crores and ₹ 185.05 crores, the CIT(A) observed that the assessee had transferred an amount of ₹ 155.96 crores to its sister company i.e. M/s. Agri Gold Farms India Pvt. Ltd. representing the instalments collected on its account after deducting the related marketing expenses as evidenced by the ledger extract produced by the assessee. Accordingly, held that it is not justified to hold the transferred amount as such and estimating the income on such amount. Similarly, in the case of refund of advances amounting ₹ 184.08 crores, the CIT(A) observed that the assessee has refunded the amounts received from the customers as advances for breach of contract and there was a decrease in the liabilities to that extent as well as the assets. Therefore, CIT(A) held that there was no element of sales involved in refund of advances, accordingly, deleted the addition made by the A.O. with regard to the est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on the refund of advances, unjustifiably deleted the additions. 10. On the facts and circumstances briefly submitted in the statement of facts, it is prayed that the Hon'ble ITAT may restore the matters considered by it as just to the AO for appropriate examination and due assessment. 6. Ground Nos.1, 10 11 are general in nature, which does not require specific adjudication. 7. Ground No.8 is related to the pending appeal before the Hon ble High Court against the order of the ITAT, which also does not require specific adjudication. 8. Ground Nos.2 to 6 are related to the estimation of income. As discussed above, the A.O. estimated the income @ 12.5% on construction contracts and 8% on sale of plots clear of depreciation and all other expenses which is partly confirmed by the CIT(A). 9. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The revenue s case is that the A.O. had considered all the facts and estimated the income @ 12.5% on construction contracts and 8% on sale of plots, hence the same required to be upheld. The assessee s case is that the assessee has maintained the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of offering the interest income under the head business income was followed by the assessee for the last so many years, which was accepted by the department. The assessee has placed the surplus funds received from the customers as deposits in banks for temporary period and earning interest income. Hence, the interest income earned by the assessee is inter-related to the business activity carried on by the assessee. Accordingly, the assessee has admitted the same as business income. The issue of assessment of interest under the head business income was considered by this Tribunal in the assessee s own case for the assessment year 2010-11 in ITA No.452/Vizag/2012 and held that the interest income on deposits made out of surplus funds from the business receipt for temporary periods is assessable under the income from business. The Hon ble ITAT while adjudicating the issue relied on the decision of Hon ble Bombay High Court in the case of CIT Vs. LOK holdings and Hon ble Kolkata High Court in the case of Eveready Industries Limited Vs. CIT and Anr (2010) 323 ITR 312. For ready reference, we extract the relevant paragraph of the Hon ble ITAT order, which reads as under: 6.6 Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the ledger extract before the CIT(A) and the Ld. CIT(A) after examining the details furnished by the assessee concluded that there was no deemed sales and it is merely a transfer entry without any profit element, accordingly, deleted the addition. On careful verification of the submissions and the orders of the lower authorities, we find that there was no sales element involved and it is a simple transfer of the balances payable to the Agrigold Farms and Estates Pvt. Ltd. and there was no case for estimation of income or for treating the transfer of amounts as sales. The Ld. D.R. did not bring any evidence during the appeal hearing to controvert the finding of the Ld. CIT(A) or to substantiate the deemed sales. Therefore, we do not find any reason to interefere with the orders of the Ld. CIT(A) and the same is upheld. 13. The next issue in deemed sales is ₹ 184.08 crores relating to the refund of advances to the customers by the assessee. The assessee has received the booking advances and instalments against the purchase of property products and sale consideration. In case if the plots or flats are not available for whatever reasons in the existing project layout or com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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