TMI Blog2018 (7) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Apparently, the write off of advance TDS deposit cannot be allowed u/s 36(1)(vii) of the Act. As regards write off of loans from Vivek Steels and Pawan Jhunjhunwala, in view of the judgement of the Hon’ble Supreme Court in the case of T.R.F. Ltd vs Commissioner of Income Tax (2010 (2) TMI 211 - SUPREME COURT) the deduction should be allowed. Accordingly, this ground of the assessee is allowed in part. Income from lease of factory premises is to be assessed under the head “income from property” or under the head “income from other sources - Held that:- The factory building, is a part of the plant and building of the assessee. This is let out for commercial use. When the assessee earns income from utilization of this factory building, the income from the same is assessable under the head “income from business”. This entitles the assessee to claim depreciation on the factory building. Even otherwise, the block of assets concept was brought into the statute by the Finance Act, 1998. After the introduction of this block of assets concept, depreciation on written down value has to be allowed irrespective of the fact whether individual items of machinery has been introduced or not. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbha Road, New Delhi and M/s. Rajesh Projects (India) Pvt. Ltd. (RPPL) at Pitampura , New Delhi. The works so obtained was assigned on subcontract to M/s Safeco Projects Pvt. Ltd. at 7, Lyons Range, Kolkata- 700 001, on a back to back basis. The assessee had enclosed copy of the agreements entered with these parties, copies of invoices raised by the sub-contractor M/s. Safeco Projects, copy of certificate issue u/s 197(1) of the Act, in the case of M/s. Safeco Projects, by the ITO, TDS, Ward59(3), Kolkata, copies of ledger account of M/s. Safeco Projects Pvt. Ltd. in the books of the assessee company and the copy of the assessee s company s ledger account in the books of M/s. Safeco Projects Pvt. Ltd. as evidence. The Assessing Officer observed that none of the bills raised by the assessee and the bills raised by the sub-contractor, give description of the place where the work has been executed. He also observed that one of the recipients, down the line of the payment, confirmed on oath, on more than one occasion, that his concern has not performed or executed any kind of work of earth filling for the amount received from M/s Rahee Industries Ltd. He also observed that, when search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is clear that on account of contract job it has received ₹ 19,65,76,691/- and paid ₹ 19,18,44,148/-. Therefore, the difference amount of ₹ 47,32,543/- is the margin of profit which is apparent from this statement. This amount of profit therefore has arised to the assessee company which is apparent from the account. There may be some hidden profit or some profit which by way of claiming cash expenditure by the sub-contractors may have passed on to the assessee company. But from the above discussion it is very clear that in reality no such work of earth filling was at all done. These are all book entries, so it cannot be denied that the principals from whom the assessee company i.e. M/s. Rahee Industries have procured this earth filling job are the real beneficiaries of this transaction as they have by taking accommodation entries from M/s Rahee had booked bogus expenses on account of contract job given to M/s Rahee for earth filling. M/s Rahee Industries at present M/s. RajeeInfratech is basically a manufacturer of Railways equipment. In the year of search they have diversified to major area of works contract in the form of civil construction and these contracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer providing adequate opportunity to the assessee. Number of contentions have been raised regarding the evidentiary value of the statements recorded. We rejected these contentions in view of the factual findings given by the Assessing Officer as confirmed by the ld. CIT(A) as the assessee has failed to controvert the same. 6.1. Now we come to the issue of estimation. During the course of examination on oath of the Directors of M/s. Safeco Projects, it was recorded that commission paid in such transactions was 1% of gross receipts inclusive of TDS. This gives the percentage of commission that the assessee charges. When the Assessing Officer relies on these statements to reject the contentions of the assessee, then the entire statements have to be considered as evidence. Thus, the estimation of commission at 5% of the turnover, in our view is excessive and has not basis. It is an arbitrary figure. The assessee had shown income of 2.4%, in this case inclusive of TDS. In our opinion this is reasonable. Hence no further addition on this account needs to be made. Thus, the addition of ₹ 50,96,291/-, as sustained by the ld. CIT(A) is hereby deleted. 7. Ground No. 2, is on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a part of the plant and building of the assessee. This is let out for commercial use. When the assessee earns income from utilization of this factory building, the income from the same is assessable under the head income from business . This entitles the assessee to claim depreciation on the factory building. Even otherwise, the block of assets concept was brought into the statute by the Finance Act, 1998. After the introduction of this block of assets concept, depreciation on written down value has to be allowed irrespective of the fact whether individual items of machinery has been introduced or not. We uphold this contention of the assessee. Hence this ground of the assessee is allowed. Hence the appeal for the Assessment Year 2010-11 is allowed. 9. Assessment Year 2011-12 The first issue is allowability of claim of bad debts. In this year, the assessee claims that there was excess billing and an amount of ₹ 39,23,335/-, was due from GPT Infraprojects Ltd. As this was not irrecoverable, the same was written off. The undisputed fact is that when these bills were raised it was taken as the income of the assessee, under these circumstances, consistent with the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
