MOHAMMAD RAFIQ,J. - (1.) These two income tax appeals are directed against the common judgement dated 24.7.2017 passed by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short-'the ITAT') allowing the two appeals filed by the Revenue and dismissing the cross objections filed by the assessee.
(2.) Appellant-assessee is a Civil Contractor. The case of the appellant was picked up for scrutiny and assessment order under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was framed. The Assessing Officer while framing the assessment order rejected the books of account and estimated the profit and applied net profit @ 13%, thereby he made an addition of Rs. 19,72,584. The Assessing Officer also made addition on account of income from interest on FDR and discounts received from suppliers of material, treating the same as income from other sources. The Assessing Officer computed the taxable income at Rs. 56,78,516 against the income of Rs. 7,08,390 declared by the assessee in respect of assessment year 2011-12. Aggrieved thereby, the assessee preferred appeal before the CIT(A), who partly allowed the same and estimated the net profit @ 11.5% and deleted the addition made on account of interest from FDR treating the same as business profit. The CIT(A) also deleted the addition made on account of various unverifiable payments. The Revenue aggrieved thereby preferred appeal before the ITAT. Similar orders were passed by the Assessing Officer in respect of assessment year 2012-13 by holding that interest income on FDR of the assessee as income from other sources. The CIT(A) reduced the G.P. rate under Section 145(3) from 13% to 11.75% and treated the income from FDR and NSC as business income. The ITAT while partly allowing the appeal filed by the Revenue reduced the discount received by the assessee from various suppliers against the purchases made against the cost of raw material consumed in contract work and treated the income from FDR and NSC as income from other sources, but maintained the order passed by the CIT(A) on other aspects and dismissed the cross objection filed by the assessee. This Court admitted the appeals filed by the assessee on 24.04.2018 on the following substantial question of law: "Whether in facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was justified in holding the interest income from FDR and NSC as income from other sources by not considering the same as business income and part of total receipts?"
(3.) We have heard Dr. S.L. Jain, learned counsel for the appellant-assessee and Shri Daksh Pareek, learned counsel for the respondent-revenue.;