TMI Blog2022 (6) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... oods shall be adjusted to include the tax component also and it was so understood by the ICAI the turnover shall include the tax component unless the assessee maintains a separate tax account in respect of sales tax or/and VST/CST wherein credit is made on collection and debit is made on payment. Admittedly in this case, the assessee did not get their accounts audited for this particular assessment year though it was not so for the earlier assessment years. In these circumstances, we are of the considered opinion that for the purpose of quantifying the turnover of the assessee, the sales tax or/and VST/CST cannot be excluded. On this account, we cannot find fault with the observations of the Ld. CIT(A). Now coming to the net profit re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he previous year relevant to the AY.2017-18 and, therefore, u/s.44AD of the Income tax Act, 1961 ( the Act ) a sum equal to 6% of the total turnover or gross receipts shall be deemed to be the profits and gains of their business chargeable to tax. 3. Such return of income was processed u/s.143(1) of the Act determining the total income at Rs.77,14,296/- by making an addition to the extent of Rs.64,53,580/- by invoking the provisions u/s.44ADA of the Act. For reaching this conclusion, the basis that appears from the record is that the receipts to the tune of Rs.1,29,07,148/- in respect of which TDS was deduction u/s.194J of the Act was not disclosed in the return of income. Feeling aggrieved by such an action of the learned Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay Tyre International Ltd [1983] 15 Taxman 29 (SC) and Mc Dowell Co. Ltd., Vs. CIT [1985] 22 Taxman 11 (SC). On this premise, Ld. CIT(A) proceeded to estimate the taxable income at 25% of the total turnover/gross receipts of Rs.2,00,85,193/- and directed the learned Assessing Officer to recomputed the income under the head profits and gains of business/profession at Rs.50,21,298/- as against the income of Rs.75,85,685/- computed u/s.154 of the Act. 5. Assessee is, therefore, before us in this appeal contending that while estimating the net profit on the turnover, the Ld. CIT(A) included the VAT/CST/Service Tax which do not have any profit element. 6. Learned AR contended that the provisions u/s.44BB of the Act are in pari materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat u/s.145A of the Act, while dealing with the method of accounting, it stipulates that for the purpose of determining the income chargeable under the head profits and gains of business/profession, the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation. 8. He accordingly submitted that the value of sales tax and VAT/CST is includable in the turnover of the assessee. He further submitted that even as per the guidance note on terms used in financial statement published by the ICAI, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Facts are not in dispute and on the other hand, the submissions made on behalf of the assessee are clear to the effect that the assessee got the accounts audited for the AYs.2014-15 to 2016-17 and subsequently for AY.2020-21. However, according to the assessee, for this AY.2017-18, the turnover is less than Rs.2 Crores threshold limit and, therefore, no accounts are audited nor produced before the authorities but the assessee proceeded to opt for presumptive tax. Entire issue in this case revolves around the question whether or not the sales tax or/and VST/CST is includable while quantifying the turnover to determine the applicability of Section 44AD of the Act. According to the assessee, though the term turnover is not defined in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a separate tax account in respect of sales tax or/and VST/CST wherein credit is made on collection and debit is made on payment. Admittedly in this case, the assessee did not get their accounts audited for this particular assessment year though it was not so for the earlier assessment years. In these circumstances, we are of the considered opinion that for the purpose of quantifying the turnover of the assessee, the sales tax or/and VST/CST cannot be excluded. On this account, we cannot find fault with the observations of the Ld. CIT(A). 13. Now coming to the net profit relevant for taxation is concerned, Ld. CIT(A) estimated the same at 25% of the gross turnover but the figures furnished by the assessee by way of written submissions, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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