Punjab and Haryana High Court laying down principles of assessment in the case of Contractors in the case of TELELINKS &MATTEWAL CO-OP L/C SOCIETY (P&H) 20-11-14

In ITA 269/2014 AO rejecting a/c books-[Telelinking v/S CIT Bathinda] applied 12% rate in case of contractor applying Prabhat Kumar 323 17R 675 (P&H) and ITAT Chd in ESS Buildings [ITA 707/1997] CIT(A) reduced to 6% ITAT restored to 12%

In  Mattewal CO-OP L/C Society ITA 225/2014 AO rejecting account books applied rate of 8% CIT (A) reduced it to 6% ITAT reduced it to 5.5%.

Punjab & Haryana High  restorted the matter to AO saying.(Para 13)

1. In Prabhat Kumar revenue appeal was dismissed

2 Further Prabhat kumar is not binding precedent because it was held that applying net profit in a given situation is question of fact.

3. The decision of HC is binding on question of law only

Net Profit to be determined on basis of (Para10)

1. Past Tax History of Assessee.

2. Assessment orders passed and accepted by Department

 3. Nature of assessee’s business

4.. An appraisal of value of contract

5. Prevailing market conditions visa vis assessee’s  business

6.Price of raw material, labour etc

7.Price index of government

8. Assessment of other assessee’s only after determining point of similarity