INCOME TAX ACT, 1961

Section 144

Assessment - Best judgment assessment - Net profit rate in making assessment of income -

Issue arose for consideration as to whether in facts and circumstances of the case, where AO had adopted net profit rate in making assessment of income on the basis of best judgment assessment, any further adjustment of profits arrived at by applying net profit rate by way of allowance of depreciation of assets used in business is permissible. Held: Issue raised in present appeal was that once Tribunal had determined profit on the basis of net profit basis @ 8% of the contract value, it was no longer open for Tribunal to re-do computation on the 12.5% of net profit. On perusal of order, it appeared that, though Tribunal had taken note of directions of this Court, however, it had failed to apply judgment rendered by this Court in the case of M/s. Shri Ram Jhanwar Lal [IT Appeal No. 10/2006 : 2010 TaxPub(DT) 0135 (Raj-HC)]. Present appeal was allowed to the extent of modifying the order of the Tribunal for determining the profit rate @ 8% instead of 12.5% on gross contract receipt as earlier determined by the Tribunal subject to allowing depreciation, interest and remuneration to partners. Accordingly, matter was remanded back to AO for recomputing the amount of tax.

REFERRED : Ram Jhanwar Lal v. ITO IT Appeal No. 10/2006 : 2010 TaxPub(DT) 0135 (Raj-HC) CIT v. Jain Construction Co. & Ors. (2000) 245 ITR 527 (Raj) : 2000 TaxPub(DT) 0876 (Raj-HC)

FAVOUR : In assessee's favour by way of remand

A.Y. :

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