Friday, July 22, 2016

No Sec. 69C additions when assessee is covered by presumptive taxation Scheme of Sec. 44AD

a) The assessee, being a civil contractor, had declared its profits under section 44AD. The Assessing O􀁹icer made additions under Section 69C for unexplained expenditure.
b) The assessee was of the view that the AO could not disturb the profits declared as per the scheme of presumptive taxation. The CIT(Appeals) dismissed this ground of appeal and upheld the additions made by AO.
c) The aggrieved-assessee filed the instant appeal.
The ITAT held as under:
1) The provisions of the section 44AD are quite unambiguous to the effect that in case of an eligible business based on the gross receipts/total turnover, the income under the head 'profits & gains of business' shall be deemed to be @ 8% or any higher amount. It is undisputed that 'deemed' means presuming the existence of something which actually is not.