BOHI CONSTRUCTION COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, in relation to the assessment year 1974-75. The assesses is a partnership firm. The question referred to us for our opinion is :

(2.) DURING the year in question, the assessee was paid Rs. 16,90,765 for works executed for Heavy Engineering Corporation, Ranchi. The Income-tax Officer assessed the profits at 10% on the basis of the gross receipts. The assessee, being aggrieved by the order of the Income-tax Officer, appealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner dissected the amount paid to the assessee into two categories. A sum of Rs. 4,57,375 which was the value of the materials supplied by the Heavy Engineering Corporation to the assessee was deducted nut of the total sum paid to the assessee. On the balance sum of Rs. 12,33,390, the Appellate Assistant Commissioner held that 12 1/2% of profit on that amount was reasonable. In regard to the balance of the sum of Rs. 4,57,375, the Appellate Assistant Commissioner assessed the profit at the rate of 5%. The assessee, being aggrieved by the order of the Appellate Assistant Commissioner, levying tax on the income from the value of the materials supplied, i.e., Rs. 4,57,375, appealed to the Tribunal. The finding of the Tribunal reads as follows :

(3.) LET a copy of this judgment be transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, in terms of Section 260 of the Income-tax Act, 1961.