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I.T.O. Nangal Vs. Prag Raj Sharma, Contractor VPO Khamera Tehsil Anandpur Sahib Distt. Ropar
September, 25th 2014

                      CH ANDIG ARH BENCHES ` A' CH ANDIG ARH


                                 ITA No. 385/CHD/2014
                             Assessment year 2010-11

I.T.O. Nangal                     V             Prag Raj Sharma, Contractor
                                                VPO Khamera
                                                Tehsil Anandpur Sahib
                                                Distt. Ropar
                                                ADNPS 7263H
(Appellant)                                     (Respondent)

                       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



      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

             Sd/-                                            Sd/-

      (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
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