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| The Tax Publishers2019 TaxPub(DT) 3928 (Kol-Trib) INCOME TAX ACT, 1961
Section 40A(3)
Where income of assessee on total contract receipts had been reached by applying the net rate of profit after reduction and, thus, no further addition could be made under section 40(a)(ia), accordingly disallowance made under sections 40A(3) and 40(a)(ia) was liable to be deleted as income was estimated by AO.
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Business disallowance under section 40A(3) - Validity of - -
Issue arose under consideration as to whether disallowance under section 40A(3) and section 40(a)(ia) could be made when profits had been estimated as a percentage of turnover, in the case of assessee. Assessee relied on judgment of Supreme Court in case of Pradeep Singh Wazir v. CIT & Anr. in 2017 (3) TMI 1268 (SC) : [Civil Appeal No(S).3891/2017 (Arising out of SLP(C) No(s).30221/2015), 10-3-2017], wherein it was held that income of assessee on total contract receipts had been reached at by applying the net rate of profit after reduction and, thus, no further addition could be made under section 40(a)(ia). Held: As decided in Pradeep Singh Wazir v. CIT & Anr. [Civil Appeal No(S).3891/2017 (Arising out of Special Leave Petition (C) No(s). 30221/2015), dt. 10-3-2017], the income of assessee on total contract receipts had been reached by applying the net rate of profit after reduction and, thus, no further addition could be made under section 40(a)(ia). No contrary decision was brought to notice by Department. Thus, disallowance made under sections 40A(3) and 40(a)(ia) was liable to be deleted as income was estimated by AO.
REFERRED : Pradeep Singh Wazir v. CIT & Anr. [Civil Appeal No(S).3891/2017 (Arising out of Special Leave Petition (C) No(s). 30221/2015), dt. 10-3-2017]
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 133A
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