Allowed

Manda Builders v. I.T.O.WARD-21,BIKANER

Rajasthan HC2 Jan 2020ITA/69/2009

Case brief

AI extract

What is this about?

In this Income Tax Appeal, the Division Bench allowed the appellant's challenge against the Tribunal's order determining a 12.5% net profit rate. The Court held that the Tribunal must adhere to the previously established 8% rate and apply depreciation, ruling the matter remitted for recomputation.

What did the court decide?

The appeal was allowed, modifying the Tribunal's order to determine profit at 8% instead of 12.5%, and the matter was remitted for recomputation of tax.

Manda Builders Vs I.T.O.WARD-21,BIKANER — Income Tax | Rajasthan HC (2020)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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D.B. Income Tax Appeal No. 69/2009

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Manda Builders Shiv Shakti Vihar, Jaipur Road Bikaner. Through its Partner Shri Ramnivas Manda S/o Shri Bhinwa Ram Ji Aged 49 years, resident of Shiv Shakti Vihar, Jaipur Road, Bikaner.

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----Appellant

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Versus

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Income Tax Officer Ward 2(1) Bikaner.

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			----Respondent
For Appellant(s)	:	Mr. Lokesh Mathur
For Respondent(s)	:	Mr. KK Bissa, AGC

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HON'BLE THE CHIEF JUSTICE MR. INDRAJIT MAHANTY HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

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Order

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02/01/2020

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The present Income Tax Appeal under Section 260A of the Income Tax Act, 1961 seeks to challenge the judgment and order dated 03.8.2009 passed by Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in Appeal No.365/JU/2005.

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Learned counsel for the appellant submits that the assessee had earlier come before this Court in D.B. Income Tax Appeal No.111/2006 and the said appeal came to be allowed by order dated 28.8.2008, which reads as follows :-

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“The controversy, involved in the present case, is squarely covered by the judgment of this Court dated 03.07.2008, passed in IT Appeal No.10/2006 M/s Shri Ram Jhanwar Lal Vs. I.T.O. bikaner & Ors.

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In that view of the matter, this appeal is also allowed for the same reasons, and the matter is sent back to the learned Additional Tribunal, for deciding the matter afresh,

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(2 of 4)

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[ITA-69/2009]

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keeping in view the observations and directions, given in aforesaid judgment dated 03.07.2008.”

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It would be incumbent here to take note of the fact that the present assesee had filed the aforesaid appeal seeking to challenge the earlier order of the Income Tax Appellate Tribunal holding that the net profit rate @ 8% was applied on the contract receipts but no deduction was allowed on account of depreciation since the assessee being aggrieved by the fact that the Income Tax Appellate Tribunal earlier had determined net profit rate @ 8% while accepting the rate @ 8%, as the rate was essentially aggrieved by the fact that the Tribunal had further directed no separate deduction on account of depreciation.

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It appears appeals from the earlier order, this Court had relied upon a judgment rendered by Division Bench of this Court in Income Tax Appeal No.10 of 2006 in the case of M/s. Shri Ram Jhanwar Lal Vs. I.T.O., Bikaner & Ors., decided on 03.7.2008 wherein following issue was raised :

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“Whether in the facts and circumstances of the case, where the Assessing Officer has adopted net profit rate in making assessment of the income on the basis of best judgment assessment, any further adjustment of the profits arrived at by applying net profit rate by way of allowance of depreciation of the assets used in business is permissible ?” 5. This question was answered in the affirmative in favour of the assessee by placing reliance on the judgment of Division Bench of Rajasthan High Court in the case of CIT Vs. Jain Construction Co., reported in 245 ITR 527, therefore, this Court in the earlier appeal while allowing the assessee’s appeal had specifically directed the Income Tax Appellate Tribunal to decide

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(3 of 4)

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[ITA-69/2009]

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the matter afresh while keeping in view the observations and directions given in the aforesaid judgment dated 03.7.2008 in the case of M/s. Shri Ram Jhanwar Lal Vs. I.T.O., Bikaner & Ors.

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It appears on perusal of impugned order herein i.e. 03.8.2009 that the Income Tax Appeal No.365/JU/2005, for the Assessment Year 2001-02 while taking note of the fact that this Court had allowed earlier appeal by the assessee yet proceeded to determine net profit @ 12.5% (instead of 8% as earlier determined) and thereafter directed allowing depreciation, interest and remuneration to partners.

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Consequently the present issue that has been raised by the appellant in the present appeal is that once the Appellate Tribunal had determined profit on the basis of net profit basis @ 8% of the contract value, it was no longer open for the Income Tax Appellate Tribunal to re-do computation on the 12.5% of net profit. On perusal of impugned order, it appears that, though, the Tribunal has taken note of the directions of this Court, however, it had failed to apply the judgment rendered by this Court in the case of M/s. Shri Ram Jhanwar Lal (supra) nor the judgment rendered in the case of Jain Construction (supra).

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Consequently, the present appeal is allowed to the extent of modifying the order of the Tribunal for determining the profit rate @ 8% instead of 12.5% on gross contract receipt as earlier determined by the Tribunal subject to allowing depreciation, interest and remuneration to partners. Accordingly, the appeal is allowed and the matter stands remitted back to the Income Tax Authorities concerned for recomputing the amount of tax.

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Although, learned counsel for the Revenue sought to justify the order passed by the Tribunal on the basis of determination of

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(4 of 4)

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[ITA-69/2009]

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question of facts this Court ought not to entertain challenge thereto yet in the circumstances as noted hereabove, we find no reason to accept such contention by way of earlier order determined to the extent of net profit as determined by the ITAT earlier and in view of the judgment of this Court in Jain Construction (supra) where this Court had directed allowing depreciation and another deduction as applicable to the assessee. Keeping in view the aforesaid facts into consideration we are unable to accept the submissions of the learned counsel for the Revenue.

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(DR. PUSHPENDRA SINGH BHATI),J 30-Sanjay/-

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(INDRAJIT MAHANTY),CJ

Manda Builders v. I.T.O.WARD-21,BIKANER

Case brief

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What did the court decide?

Manda Builders v. I.T.O.WARD-21,BIKANER

Case brief

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What did the court decide?

What the court decided

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