I.T.O. Nangal Vs. Prag Raj Sharma, Contractor VPO Khamera Tehsil Anandpur Sahib Distt. Ropar
September, 25th 2014
IN THE INCOME TAX APPELL ATE TRI BUN AL
CH ANDIG ARH BENCHES ` A' CH ANDIG ARH
BEFO RE SHRI BH AVNESH S AI NI, JUDI CI AL MEMBER
AND SHRI T.R. SOO D, ACOCUNTANT M EMBER
ITA No. 385/CHD/2014
Assessment year 2010-11
I.T.O. Nangal V Prag Raj Sharma, Contractor
Tehsil Anandpur Sahib
Appellant By Shri J.S. Nagar
Respondent By Shri Par ikshit Aggarwal
Date of hearing 15.9.2014
Date of Pronouncem ent 23.9.2014
PER BHAVNESH SAINI, JM
This appeal by the assessee is direct ed against the order of Ld. CIT(A),
Chandigarh dated 23.1.2014 f or assessm ent year 2010-11 challenging the order
of the Ld. CIT(A) in delet ing the addit ion made by the Assessing Off icer u/s
40(a)(ia) of IT Act.
2 Brief ly stated the f acts of the case are that the business income of the
assessee was computed by applying an estimated Net Prof it Rate of 8% to the
total r eceipts. The Assessing Off icer noted t hat the assessee has debited
interest paid to NBFCs of Rs. 22,38,949/- to prof it and loss account but had not
deduct ed tax a sour ce f rom this interest out go as he was required to do under
the Law. The Assessing Off icer accordingly added t otal interest of above
amount to t he income of the assessee u/s 40( a)(ia) of IT Act to the already
estimate business income.
3 It was subm itted bef ore the Ld. CIT(A) that since the income is estimated
by applying Net Pr of it Rate, theref ore no f urther addition should be made.
Reliance has been placed on the judg ment of Hon'ble Supreme Court in the
case of Devi Prasad Vishwanath Prasad, 72 ITR 194, decision of Hon'ble High
Court of Punjab & Haryana in case of Santosh Jain, 296 ITR 324 and decision
of ITAT Hyderabd Bench in the case of M/s Hycons Inf rastructure in ITA No.
1787/ Hyd/2011. The Ld. CIT(A) accepted the claim of the assessee because
once Net Prof it Rate is applied, no f urther adjustment should be made to the
estimated prof it and accordingly he delet ed the addit ion.
3 W e have heard the Ld. represent atives of both the parties and perused
the material available on record.
4 The Ld. D.R f or the revenue relied on the order of the Assessing Off icer
without point ing out any inf irmity in the order of the Ld. CIT(A).
5 The Ld. Counsel f or the assessee r eiter ated the submissions made bef ore
the authorit ies below and relied upon the judgment made bef ore the Ld. CIT(A)
and also upon the decision of ITAT, Hyder abad Bench in case of Teja
Constructions V ACI T, 129 TTJ(Hyd)( UO)57 in which it was held as under:
"Once est imation of income is made, f urther disallowance under section
40(a)(ia) f or non-deduction of TDS is not warranted; t hat apart, of the
assessee has paid the impugned amount and (the amount is)not payable
at the end of the year on the date of balance sheet, then the provisions of
section 40(a)( ia) ar e not applicable."
On going through the above judgment we f ind that the issue is covered in
f avour of the assessee by above judgment relied upon by the Ld. CIT(A) as well
as quoted above. Since the business income of the assessee is computed by
applying Net Prof it Rate of 8%, no f urther disallowance out of expenditure
claimed should have been made. Departmental appeal has no merit and is
accordingly dism issed.
6 In the result, appeal of the revenue is dismissed.
Order Pronounced in the Open Court on 23.9.2014
(T. R. SOOD) (BH AVNESH S AINI)
ACCOUNTANT M EMBER JUDICI AL MEMBER
Dated : 23.9.2014
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR