ANTONY DOMINIC, J. -
(1.) Aggrieved by the order passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A. No.224/2015 concerning the Assessment Year 2010-11, the Revenue has filed this appeal.
(2.) The assessee is a contractor undertaking construction works. Assessee filed its return for the assessment year 2010-11 returning an income of Rs 4,06,96,700/- and claimed refund of Rs. 32,92,907/- on account of excess tax paid through TDS. The return was selected for scrutiny under Section 143(3) and notice under Section 143(2) was issued to the assessee. After completing the procedural formalities, the Assessing Officer passed Annexure-A order whereby Rs. 1,75,00,000/- was added to the total income returned and the assessment was completed. The assessee filed appeal before the Commissioner of Income Tax (Appeals) who by Annexure-B order found it appropriate to consider gross profit, instead of net profit, as the basis for levy of tax. Thereafter, the first appellate authority made reference to the gross turnover, gross profit and percentage of gross profit returned by the assessee for the Assessment Years 2009-10, 2010-11 and 2011-12 and found that average gross profit returned was 16.94%. Then, he took note of the fact that for the assessment year in question, the assessee had returned gross profit at 16.5% only. On that basis, it was ordered that 0.44%, being the difference in the average gross profit and the returned gross profit, should be applied and ordered that the addition to total income be restricted to Rs. 39,83,347/-.
(3.) The assessee carried the matter in appeal to the Tribunal. The Tribunal made extensive reference to the orders of the statutory authorities and thereafter, directed that Rs. 31,07,29,889/- be excluded from the total turnover and that the additional 0.44% be levied on Rs. 59,45,76,475/-. The reasoning of the Tribunal is contained in paragraph 10 of its order which reads as under:
"10. However, the Ld. CIT(A) has discarded the said estimation made by the Assessing Officer and has gone into estimation of the income of the assessee on the basis of average gross profit of three years as under:
Out of the average gross profit of 16.94%, if the gross profit declared by the assessee at 16.50% is reduced, the difference comes to 0.44% which has been directed by the Ld. CIT(A) to adopt on the total turnover. While estimating the income, the Ld. CIT(A) has committed an error that cost of material amounting to Rs. 24,39,40,964/- and the cost of shuttering materials at Rs. 5,05,85,544/-, Kerala VAT at Rs. 1,12,17,821/-, Goa VAT at Rs. 3,95,726/- and other expenses where no profit element has been involved, were excluded which totals to Rs. 31,07,29,889/-. Therefore, the said amount of Rs. 31,07,29,889/- included in the turnover, has to be essentially excluded while estimating the income and accordingly, the Assessing Officer is directed to apply the gross profit rate of 0.44% after excluding the said turnover of Rs. 31,07,29,889/- at Rs. 59,45,76,475/-. It is ordered accordingly. Thus assessee gets the part relief and appeal of the assessee is partly allowed.";