The Cit, Mumbai City-20, Mumbai v. Mr.r.ashokan With Ms.suchitra Kamble For The

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1076 OF 2007 The CIT, Mumbai City-20, Mumbai )..Appellant Vs. Smt.Sushila Chaturvedi )..Respondent ---- Mr.R.Ashokan with Ms.Suchitra Kamble for the appellant. Mr.Harnansingh Khalse for the respondent. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Date : 18.03.2009. P.C. 1. The substantial questions of law as enumerated in paragraph-4 of this appeal are as under :- (a) The substantial question of law arises in the present appeal is regarding the correct interpretation of Sec.144 and Section 44AD and other provisions of the act and whether on the facts and in the circumstances of the case and in law, the Hon’ble Tribunal is right in reducing the estimated profit/income of the assessee to 6% as against 30% of the gross receipts as estimated by the assessing officer ? (b) Whether the Tribunal erred in ignoring the fact that the Assessee had not declared closing balance of Rs.39,87,021/- in the books of account and the Assessing officer had estimated income @ 30% of gross receipt to cover this balance ? (c) Whether order of the Tribunal is based on the facts on records ? : 2 : 2. On perusal of the record, we find that cogent and logical reasons have been given by the ITAT for estimating the profit of the assessee at 6% of the gross receipts. The assessee was a Civil Contractor but since the turn over of the assessee was higher than Rs.40 lakhs, by virtue of the proviso to section 44-AD, the said section was not applicable to the assessee. Under section 44-AD in respect of a Civil Contractor whose income is less than Rs.40 lakhs, provision has been made for assessing estimated profit as 8% of gross receipts. Since the said section is not applicable to the assessee, there is a eliment of discretion available to the assessing officer which discretion has to be exercised in a logical and non arbitrary manner. We find that the ITAT has proceeded on the basis that a fixed rate of 2% of gross receipt is the tax deductable at source from all contractors big or small. The ITAT has held that this rate of TDS can be used to arrive at a reasonable estimated income and on this basis it has held that if 6% of gross receipts of the Contractor can be considered as his reasonable income, then his tax liability will be 1.8% in cases where tax rate is 30% i.e. for an individual and 2.1 % where tax rate is 35% i.e. for a firm, company etc. It is on such basis that estimated income has been fixed at 6% of gross receipts. In this view of the matter, we do not : 3 : find that the impugned order is illogical, unreasoned or arbitrary and in the facts of the case, we are not inclined to interfere. The questions of law therefore, would not arise and the appeal stands summarily dismissed. (R.S.Mohite,J) (F.I.Rebello,J)