TMI Blog2002 (11) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... such business. Whether a contractor or a sub-contractor, the assessee is admittedly engaged in the business of civil construction or supply of labour for civil construction within the meaning of section 44AD of the Income-tax Act. On the wording of section 44AD of the Act, there is no doubt that a sub-contractor would also come squarely within the purview of that provision. We are therefore not in a position to accept the argument that a sub-contractor is not covered by section 44AD - - - - - Dated:- 7-11-2002 - Judge(s) : P. K. BALASUBRAMANYAN., A. S. NAIDU. JUDGMENT The judgment of the court was delivered by P.K. BALASUBRAMANYAN C.J.-In this writ petition, an assesses under the Income-tax Act, 1961 (hereinafter referred to as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, in his return of income, 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". What is argued on behalf of the assessee is that section 194C of the Act provides for deduction at source at two per cent. of the amount paid or found payable to the contractor and one per cent. of the amount payable to a sub-contractor and in view of the inconsistency between that provision and the presumptive income specified in section 44AD of the Act, it must be held that section 44AD is arbitrary and unreasonable. It is pointed out that under section 194C(2) the amount deductible in the case of a sub-contractor is only one per cent. of the sum found payable by the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 993. But, the constitutional validity of that section came up for consideration before the Supreme Court in Union of India v. A. Sanyasi Rao [1996] 219 ITR 330. The Supreme Court after noticing that article 14 of the Constitution of India applies equally to tax laws held that there was nothing in the legislative measure to offend article 14 of the Constitution and that the said section read with section 206C of the Act was not unconstitutional. But, their Lordships clarified that section 44AC was an adjunct of section 206C of the Act and section 44AC of the Act did not dispense with a regular assessment as provided, in accordance with sections 28 to 43C of the Act. We think that the ratio of the said decision applies equally to section 44AD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion speaks of any assessee engaged in the business of civil construction or supply of labour for civil construction and provides for a presumptive profit from such business. Whether a contractor or a sub-contractor, the assessee is admittedly engaged in the business of civil construction or supply of labour for civil construction within the meaning of section 44AD of the Income-tax Act. On the wording of section 44AD of the Act, there is no doubt that a sub-contractor would also come squarely within the purview of that provision. We are therefore not in a position to accept the argument that a sub-contractor is not covered by section 44AD of the Act. For the reasons aforesaid, we find no merit in this writ petition. The writ petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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