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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: Sh. Saktijit DeyDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-III, Kanpur dated 05.07.2018.
The only grievance of the revenue was that the ld. CIT(A) has erred in law in directing the Assessing Officer to recalculate the addition by applying 8% rate of Net Profit after duly considering the opening value of work-in-progress.
The assessee is engaged in the construction business and mainly executes Government Authority contracts. The AO estimated the profit @ 8% by rejecting the books of accounts and determined net profit at 8% as against 2.57% crores
2 Sai Constructions & Building disclosed by the assessee. While computing the net profit, the AO has taken closing work-in-progress.
The facts relevant to the adjudication of the case are that the turnover of the assessee was of Rs.37.06 crores including closing working-in-progress of Rs.22.17 crores. The AO has added the closing work-in-progress while computing the total turnover without giving benefit of opening work-in-progress of Rs.21.69 crores.
The ld. CIT(A) directed to recomputed the addition by applying 8% rate of NP after duly considering the opening value of work-in-progress which is as per the Accounting Standards. Hence, we decline to interfere with the order of the ld. CIT(A) and the matter is being remanded back to the file of the AO for computation of net profit @8% after taking into consideration the opening stock, work in progress during the year and the closing stock.
In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 09/03/2022.