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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 09/JP/2018
PER VIJAY PAL RAO, JM :
This appeal by the revenue and cross objection by the assessee are directed against the order dated 13th October, 2017 of ld. CIT (A)-3, Jaipur for the
assessment year 2013-14. The revenue has raised the following grounds :-
“ 1. On the facts and in the circumstances of the case, the CIT (A) has erred in restricting the NP rate @ 6% in place 11% as
2 ITA No. 09/JP/2018 & CO No. 04/JP/2018 M/s. Gupta K.N. Construction Co., Jaipur.
applied by the AO invoking the provisions of section 145(3) of the Income Tax Act, 1961 subject to depreciation interest and remuneration to the partners.
The appellant craves leave to add, alter, amend, withdraw or insert any ground or grounds of appeal before or at the time of hearing of the appeal.”
The only issue raised by the revenue in this appeal is regarding the addition
made by the AO by applying NP at 11% was restricted by the ld. CIT (A) by applying
NP rate at 6%.
We have heard the ld. D/R as well as the ld. A/R and considered the relevant
material on record. At the outset, we note that in the assessee’s appeal against the
impugned order and sustaining the addition by the ld. CIT (A) at NP rate of 6% was considered by this Tribunal vide order dated 20th June, 2018 in ITA No.
1024/JP/2017. The Tribunal has considered this issue in para 3.4 as under :-
“ 3.4. We have heard the rival contentions and perused the materials available on record. Brief facts of the case are that the assessee is engaged in the business of civil construction work during the year under consideration. The assessee has performed civil work construction work for various State Government Department like JDA, PWD, RIICO etc. The assessee is a partnership firm and it has claimed depreciation of Rs. 24,12,851/- and interest to third parties of Rs. 29,22,964/- and remuneration to partners of Rs. 40.00 lacs is claimed which resulted into the net income of Rs. 29,29,969/-. It is noted that the AO had applied the 11% net profit on gross contract receipt. However, the ld. CIT (A) has estimated the net profit rate @ 6% subject to allowability of depreciation, interest to partner and remuneration paid to partner. During the course of hearing, the ld. AR
3 ITA No. 09/JP/2018 & CO No. 04/JP/2018 M/s. Gupta K.N. Construction Co., Jaipur.
of the assessee relied upon the decision of Hon’ble Rajasthan High Court in the case of the assessee in DBIT No. 187/2016 dated 21.11.2017 wherein the Hon’ble High Court has confirmed the net profit @ 5.5% by observing as under :-
“ 6. After the matter was argued, now Mr. S.L. Jain counsel for respondent has appeared. The matter was admitted on 9th November, 2016 and when the matter was adjourned on 14th November, 2017, at the request of assessee, we made it clear that the Court will proceed with the matter as this is one of the oldest matter pending before the Jaipur Bench. However, he has sought to rely upon the decision of this Court in case of Commissioner of Income Tax vs Gupta K.N. construction Co. [2015] 371 ITR 325 (Raj.) decided on 18 August 2017 and the judgement of Tribunal dated 4th March, 2016 where the Tribunal after considering the aforesaid judgement held the net profit @ 11% is on higher side and applied net profit @ 5.5%.
In that view of the matter, it will not be useful for the parties to adjourn the matter.
Hence, in view of the above, the issue is answered in favour of the assessee and against the department.
The appeal stands dismissed.”
Since the Hon’ble Rajasthan High court has confirmed the application of net profit rate @ 5.5% in the case of the assessee, therefore, we respectfully follow the decision of Jurisdictional High Court (supra) and apply the net profit rate of 5.5%. Thus Ground No. 2 of the assessee is allowed.”
Therefore, the common issue raised by the department in the present appeal stands disposed off vide order dated 20th June, 2018 of the assessee’s appeal whereby the
Tribunal has accepted the NP at 5.5% as against 6% applied by the ld. CIT (A). In view of the finding of the Tribunal vide order dated 20th June, 2018 in assessee’s
appeal, the ground raised by the revenue in this appeal stands dismissed.
4 ITA No. 09/JP/2018 & CO No. 04/JP/2018 M/s. Gupta K.N. Construction Co., Jaipur.
C.O. NO. 4/JP/2018 :
In the Cross Objection, the assessee has raised the following grounds :-
“ 1. That the learned CIT (A), Jaipur was fully justified in applying net profit rate of 6% subject to depreciation interest and remuneration to partners.
That the learned CIT (A), Jaipur has erred in law and facts in not allowing third party interest from net profit determined by applying net profit theory.”
Ground No. 1 is in support of the order of the ld. CIT (A) and further that
issue was already decided in the appeal of the assessee, hence it becomes
infructuous.
Ground No. 2 of the cross objection is regarding third party interest.
We note that this issue was also considered by the Tribunal while deciding
the assessee’s appeal. Therefore, the ground no. 2 also becomes infructuous.
In the result, appeal of the revenue and cross objection of the assessee are
dismissed.
Order is pronounced in the open court on 26/10/2018.
Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur Dated:- 26/10/2018. Das/
5 ITA No. 09/JP/2018 & CO No. 04/JP/2018 M/s. Gupta K.N. Construction Co., Jaipur.
आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
The Appellant- The DCIT, Circle-7(1), Jaipur. 2. The Respondent – M/s. Gupta K.N. Construction Co., Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 09/JP/2018 & CO No. 04/JP/2018)
vkns'kkuqlkj@ By order,
सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत
6 ITA No. 09/JP/2018 & CO No. 04/JP/2018 M/s. Gupta K.N. Construction Co., Jaipur.