ITO, WARD 14(2), KOLKATA, KOLKATA vs. M/S B.B.C. PROJECT SERVICES PVT. LTD., KOLKATA

O R D E R

PER S.S.Godara, Judicial Member:

ITO Wd-14(2) Kol Vs. M/s B.B.C. Project Services Pvt Ltd. Page 2 3. We find in this backdrop of pleadings that CIT(A)’s order qua the instant twin issue(s) reads as follows:- “5. I have considered the submissions of the AR of the appellant and have also gone through the assessment order on the issue at hand. I find that facts emerging from records reveal that the appellant submitted primary documents in support of return already filed i.e. copy of return (ITR-6), Audited Accounts, Tax Audit Report u/s 44AB, Computation of Income etc. on 02.11.2012. Perusal of audit report i.e. Form 3CD reveals that the company maintained books of account as detailed against item 9(a) & (b). It also appears that Tax Audit Report has been submitted by Auditor after due examination of all the books of account as specified therein. 5.3 I find from the particulars available at Schedule 12 that ₹6,64,83,650/- was debited in the P&L A/c as incentive to agents. The payment of incentives to agents cannot be equated as commission payments by any means. Hence, the provision of Section 194H have no applicability for such payments and consequently, the question of disallowance u/s. 40(a)(ia) does not arise. I further find that the appellant has not complied before the AO. The appellant has not even produced complete books of account before me and I find from the record that there has been repeated non-compliance by the appellant before the AO. Therefore the books of account are liable to be rejected. However, I also agree with the logistic contention of the AR that disallowance of entire incentive to agents amounting to ₹6,64,83,650/- would only result in an absurd net profit rate of 13.90% in this particular line of business in which the appellant company is engaged in. Considering the facts and circumstances of the case as well as the normal profit rends in this line of business, I am of the view that book profit declared is liable to be rejected. The income of the company may be estimated keeping in view materials available on record. In this regard, I have already decided the appellant’s appeal for the AYs 2001- 11 & 2011-12 by adopting the theory of estimation. Following the same principle, total income is estimated @ 0.4% of total turnover of ₹48,47,08,894/- which works to ₹19,38,835/-. The AO is directed accordingly. The appellant get a relief of ₹6,54,70,185/- (6,74,09,020 – 19,38,835).”