Income Tax Appellate Tribunal - Jaipur
Rajendra Mittal Construction Company ... vs Acit, Alwar on 15 September, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy [email protected]. No. 17/JP/2014
Arising out of ITA No. 331/JP/2014
fu/kZkj.k o"kZ@Assessment Year : 2010-11.
M/s. Rajendra Mittal Construction Co. cuke The JCIT
P. Ltd., Vs. Range-2,
1/81 RHB Bhiwadi, Tijara, Alwar.
Alwar.
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vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by: Shri R.A. Verma (Addl.CIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA)
lquokbZ dh rkjh[k@ Date of Hearing : 28.08.2017.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 15/09/2017.
vkns'k@ ORDER
PER SHRI KUL BHARAT, JM.
This Cross Objection No. 17/JP/2014 arising out of ITA No. 331/JP/2014 by the assessee is directed against the order of Ld. CIT (A), Alwar dated 17.02.2014 pertaining to the A.Y. 2010-11.
2. This Cross Objection was fixed for hearing in pursuance of the order passed in M.A. No. 32/JP/2017 arising out of C.O No. 17/JP/2014 in ITA No. 331/JP/2014, wherein this Tribunal observed that, one of the ground related to allowance of depreciation, financial expenses, bad debts and the director's salary 2 ITA No. 331/JP/2014 & C.O. No. 17/JP/2014. Rajendra Mittal Construction Co. Pvt. Ltd.
from the net profit rate was not decided. Therefore, the Cross Objection was fixed for hearing for this limited purpose.
3. Ground no. 1 of the Assessee's Cross Objection reads as under:-
"1. The Ld. CIT(A) has erred on facts and in law in confirming the application of Sec. 145(3). He has further erred in confirming the trading addition of Rs. 30,74,814/- by applying N.P. rate of 5% on the turnover declared by the assessee as against N.P. Rate of 3.79% declared by the assessee. He has further erred in not allowing the claim of depreciation, financial expenses, bad debts and the director's salary form the net profit rate applied by him."
3.1 Ld. Counsel for the assessee submitted that the Tribunal had decided the issue of applying net profit and the decision of the CIT(A) was confirmed. Ld. Counsel submitted that the Ld. CIT(A) ought to have allowed the claim of depreciation, financial expenses, bad debts and director's salary from the net profit applied by AO. Ld. Counsel for the assessee reiterated the submissions as made in the written submission dated 27/04/2016.
3.2 Ld. Counsel has placed reliance on the decision of the case of DCIT vs. Kirodimal Modi in ITA No. 119/JP/2010 dt. 10.09.2010 for A.Y. 2007-08. In support of the contention that depreciation paid allowable from the net profit rate applied. 3.3 Ld. D/R opposed the submissions.
3.4 We have heard the rival contentions, perused the material available on record. The Ld. CIT(A) decided this issue in Para 4.21 of his order reads as under:-
"4.21 Thus, considering the past history of the appellant with regard to the percentage of net profit declared and assessed by the AO, the average net profit rate (AY 2005-06 3.75%, AY 2006-07 4.0%, AY 2007-08 4.57, AY 2008- 09 5.57, AY 2009-10 3.86% - after adjusting addition of Rs. 3 lacs) would be 3 ITA No. 331/JP/2014 & C.O. No. 17/JP/2014. Rajendra Mittal Construction Co. Pvt. Ltd.
4.35%. Accordingly, considering all these factors and other deficiencies as noted above, it would be fair to apply the net profit rate of 5.00% to the turnover declared by the appellant at Rs. 16,10,42,167/-. This would result in estimated net profit of Rs. 80,52,108/- as against the net profit of Rs. 49,77,294/-. Accordingly a trading addition of Rs. 30,74,814/- made by the AO would be confirmed and the appellant would get a relief of Rs. 65,52,476/- under this head. Besides this, the appellant would be liable to tax on the interest income of Rs. 3,16,339/- and other income of Rs. 7,03,275/- declared in the return of income filed."
3.5 The contention of the assessee is that this Tribunal has not adjudicated the issue related to allowability claim of depreciation, financial expenses, director's salary and bad debts, when net profit is applied by the Assessing Officer, we find that in respect of bad debts it is observed by the Ld. CIT(A) that no separate addition was made by the AO. Therefore, the submission of the assessee for allowance of bad debt is rejected. Another contention of the assessee is that the AO has assessed the interest income of Rs. 3,13,339/- separately and at the same time has not allowed the claim of interest payment of Rs. 4,64,479/-. We find merit into the contention of the Ld. Counsel for the assessee that when the Assessing Officer has assessed interest income separately, then the expenditure in the nature of interest should have also been allowed. Under these facts, the Assessing Officer is directed to verify the genuinity of the expenditure of the interest and if he finds the expenditure is genuine he would allow the same.
4ITA No. 331/JP/2014 & C.O. No. 17/JP/2014.
Rajendra Mittal Construction Co. Pvt. Ltd.
Similarly, in respect of depreciation and director's salary also, the Assessing Officer would verify the claim and decide in accordance with law. Hence, the Ground No. 1 of the Cross Objection is partly allowed.
4. In the result, assessee's Cross objection No. 17/JP/2014 partly allowed. Order pronounced in the open court on Friday, the 15th day of September 2017.
Sd/- Sd/-
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(VIKRAM SINGH YADAV) ( KUL BHARAT )
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Jaipur
Dated:- 15/09/2017.
Pooja/
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. The Appellant- M/s. Rajendra Mittal Construction Co. Pvt. Ltd., Alwar
2. The Respondent- The JCIT, Range-2, Alwar
3. The CIT(A).
4. The CIT,
5. The DR, ITAT, Jaipur
6. Guard File (C.O. No. 17/JP/2014 arising out of ITA No.331/JP/2014 ) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar