What did the Tribunal hold?

The Tribunal agreed that directions for applying a 4.5% net profit rate on sub-contract receipts were inadvertently omitted. The Tribunal allowed the corrigendum application to include this direction.

The assessee requested a corrigendum to an ITAT order, pointing out that directions regarding the estimation of income on sub-contract receipts were inadvertently missed in the original order. The original order had applied a 9% net profit rate on direct contract receipts.

What were the issues?

Whether directions regarding the estimation of income on sub-contract receipts were inadvertently missed in the ITAT's original order and if a corrigendum should be issued to include them.

J M Mhatre Infra Pvt Ltd., Panvel vs ACIT | ITAT Mumbai 2023

In relation to the order passed in aforesaid to 1670/Mum/2023 vide order 22/09/2023, a letter has been submitted for a request of corrigendum which reads hereunder:- “We refer to the consolidated order dated 22.09.2023 of the Honourable Tribunal in the aforesaid appeals in the case of our abovenamed clients for income-tax assessment years 2012-13 to 2017-18.

2. In this connection, we would like to inform you that the Honourable Tribunal in para 34 on page no 33 of the aforesaid order, while dealing with assessment years 2012-13 to 2014-15 (post-search), has held that, "As held above in the regular assessment appeals for A.Ys 2012-13, 2013-14 and 2014-15, we have applied 9% on the direct contract receipts and 4.59% on sub- contract receipts. Accordingly, for these years also we are applying net profit rate of 9% on the direct contract receipts." It can be seen that the Honourable Tribunal has 2 M/s. J M Mhatre Infra Pvt. Ltd estimated the income of the appellants at 9% of the direct contract receipts and 4.5% of sub-contract receipts; however, while giving directions, it seems that the Honourable Tribunal has inadvertently, missed to give directions regarding sub- contract receipts. Thus, if accepted, the direction ought to have been- Accordingly, for these years also we are applying net profit rate of 9% on the direct contract receipts and 4.5% on the sub-contract receipts.

Further, while dealing with assessment years 2015-16 to 2017- 18, the Honourable Tribunal in para 37 on page no 34 of the order has held that. In these years also we are applying net profit rate of 9% on the direct contract receipts The Honourable Tribunal further, directed that, Accordingly, we direct the ld. AO to apply net profit rate on 9% direct contract receipts for AY 2015-16, 2016- 17 and 2017-18 and consequently, this issue is partly allowed. Here also, it is submitted that Honourable Tribunal has inadvertently, missed to give directions regarding sub-contract receipts. Thus, if accepted, the direction ought to have been- Accordingly, for these years also we are applying net profit rate of 9% on the direct contract receipts and 4.5% on the sub-contract receipts 4. It is pertinent to mention that the income was suo moto estimated by the appellants only for assessment years 2012-13 to 2015-16 by applying certain percentages to direct contract receipts and sub-contract receipts Further, no such estimation was done for assessment years 2016-17 and 2017-18 This fact is already given in the fact sheet submitted to the Honourable Bench during the course of hearing on 20th July, 2023 5 It is submitted that not giving directions regarding estimation of income on sub- contract receipts may result in confusion with the Assessing Officer inasmuch as the appellants have earned both direct contract receipts and sub-contract receipts in all six years involved and it may not be possible for the Assessing Officer to arrive at taxable income of the assessee-company.

3 M/s. J M Mhatre Infra Pvt. Ltd In view of the above, we on behalf of our clients request you to pass a corrigendum to the order and amend the directions so as to include the estimation of income at 4.5% on sub- contract receipts. Please let us know should you require any further information and/ or clarification in the aforesaid matter.”

On perusal of the order and material facts placed on record, we agree that while applying the net profit rate of 9% on direct contract receipts, the Tribunal inadvertently has missed to give direction with regard to sub-contract receipts, 4.5% of net profit should be applied. Accordingly, we hold that our aforesaid finding given at para 34 last three lines reads as under:

34………………………………………………………………………………. Accordingly, for these years also we are applying net profit rate of 9% on direct contract receipts and 4.5% on sub- contract receipts. 4. Further, in para 37 also we hold that for the A.Y.2015-16 to 2017-18 net profit rate of 9% is applied on direct contract receipts and 4.5% on sub-contract receipts. 5. Thus, the aforesaid lines shall be read in para 34 & 37 of our order. Accordingly, corrigendum application filed is allowed.

J M MHATRE INFRA PVT LTD.,PANVEL vs. ACIT, CC-1, THANE

What did the Tribunal hold?

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