75th Founding Day Lecture Meeting on “India@2030” Know More

December 2010

S. 40A(3) read with S. 145(3) — Assessment made u/s.143(3) read with S. 145(3) — No disallowance made u/s.40A(3) — Whether AO’s order could be considered as erroneous — Held, No.

By Jagdish D. Shah
Jagdish T. Punjabi
Chartered Accountants
Reading Time 2 mins
fiogf49gjkf0d

New Page 1

Part B : UNREPORTED DECISIONS



Singhal Builders Contractors
v. Addl. CIT


ITAT ‘A’ Bench, Jaipur

Before R. K. Gupta (JM) and

M. L. Gusia (AM)

ITA No. 393/JP/2010

A.Y. : 2005-06. Decided on : 3-9-2010

Counsel for assessee/revenue :

Mahendra Gargieya/Irina Garg



7. S. 40A(3) read with S. 145(3) — Assessment made u/s.143(3)
read with S. 145(3) — No disallowance made u/s.40A(3) — Whether AO’s order could
be considered as erroneous — Held, No.

Per R. K. Gupta :

Facts :

The assessment was made by invoking provisions of S. 145(3).
Net profit @12% on contract receipts subject to allowance of depreciation and
interest to banks was adopted. The CIT found that disallowance to be made
u/s.40A(3) was not considered by the AO while applying net profit rate, hence,
his order was erroneous and prejudicial to the interest of the Revenue. The
submissions of the assessee were rejected.

Held :

The Tribunal noted that as per the Allahabad High Court
decision in the case of CIT v. Banwarilal Banshidhar, (229 ITR 229), once the
net profit rate is applied by invoking the provisions of S. 145(3), no further
disallowance can be made u/s.40A(3). Further, since no contrary decision was
available, it held that the initiation of proceedings by the CIT u/s.263 was not
justified.

Download PDF

You May Also Like

S. 28 and S. 37(1) — Exchange loss arising on application of AS-11 — Allowable as business loss/expenditure — Ultimate utilisation of fund for investment purpose would not affect the al-lowability of loss.

S. 11 read with S. 12A(1)(b) — Non-filing of Auditor’s Report in Form 10B — Whether AO’s action of denying exemption justified — Held, No.