AGRAWAL BROTHERS Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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N.S.CHOPRA, A.M. : -
(1.) AGGRIEVED by the consolidated order dt. 24th Nov., 1987 of the CIT(A), relating to asst. yrs. 1985-86 and 1986-87, the assessee firm is in appeal on the following grounds of objections : (i) The CIT(A) erred in confirming the application of net profit rate of 12.5% of the contract receipts. (ii) The CIT(A) erred in confirming the disallowance of deduction under S. 80HH in the asst. yr. 1985-86 and under S. 80-I of the IT Act, 1961, in the asst. yr. 1986-87.
(2.) Learned Representatives of the parties are heard. The assessee firm though maintained books of account and the same were duly audited, but the expenses claimed therein were not supported by vouchers and the details of the work-in-progress were also not maintained. The tax authorities below, therefore, rightly invoked proviso to S. 145(1). It is to be further seen that in the immediate preceding year 1984-85, the net profit rate of 12.5% was applied to the net receipts, after deducting the cost of material supplied and the same was sustained in appeal by the CIT(A) and the assessee was satisfied thereby. Further, it is to be seen that in the asst. yr. 1986-87, the assessee itself has shown net profit, which works out to 12.28%. We, therefore, do not find any error in the tax authorities below adopting the net profit rate of 12.5% before depreciation.
So far as allowability of deductions under S. 80HH in the asst. yr. 1985-86 and Ss. 80HH and 80-I in the asst. yr. 1986-87 are concerned, in our judgment, the assessee is entitled to the same. The assessee was engaged in the business of construction of overhead water tanks, which require construction of piles. The construction of piles itself is a process of manufacture. In this connection, reference may be made to the order of the Tribunal dt. 22nd Jan., 1992 in ITA No. 846/Ind/1985 in the case of ITO vs. M/s. P. D. Agarwal & Ors. and so also the judgment of Honble Bombay High Court in the case of CIT vs. Pressure Piling Company (1980) 126 ITR 333 (Bom). The Assessing Officer is, therefore, directed to allow deduction under S. 80HH in asst. yr. 1985-86, under S. 80HH and 80-I in the asst. yr. 1986-87.
(3.) IN the result the appeals are partly allowed.;
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