1976 (3) TMI 50

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..... e circumstances of the case, and in view of clause 12 of the contract in question, the Tribunal was justified in law in holding that the cost of materials supplied by the Government could partake the character of trading receipt ? " In this reference we are concerned with assessment years 1968-69 and 1969-70. The assessee is a registered partnership firm and carried on business as contractors. The Income-tax Officer while working out the figure of the total receipts of the assessee for each of these two assessment years under reference included the amount representing the cost of materials supplied by the Government for the construction work in each of these two years under reference and thereafter applied the percentage rate to these to .....

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..... lic Works Department stores of the engineer-in-charge..." Annexure " A " to the statement of the case is a copy of the contract between the assessee and the Government. The original of the contract was produced at the time of the hearing before us and we find that schedule " A " to the contract set out the materials to be supplied front the Public Work Stores for works contracted to be executed, their quantity and the rates it which they were to be charged for. Thus, it is clear that by the very terms of the contract the items set out in schedule " A " to the contract, namely, cement, steel, G.I. pipes, that is, galvanized iron pipes and bricks in the quantities and at the rates set out in the schedule were to by supplied by the Public W .....

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..... tegory (1) since, at the time of entering into the contract, it was clearly agreed between the Government (Public Works Department) and the assessee-firm as to the materials which were to be supplied and the price which was to be charged by the Government for the supply of these materials. It was on the footing that these quantities at these rates were to be supplied, that the contractor agreed to receive a particular amount as and by was of consideration for carrying out this contract. In view of the fact that the total amount of the contract included all these items, cost of materials is totally immaterial since, in substance, the contractor was to receive by the very terms of the contract only the net receipts reached after deducting fro .....

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