Presumptive taxation under section 44AD-civil construction business

 Assessee was a civil contractor engaged in the business of executing civil construction works for Government organisation and also Private Sector. Assessee had declared gross receipts with a net profit ration of 5.64%. For AO noticed certain discrepancies in books of account and rejected the books invoking section 145. Consequently determined total income by estimating the net profit ration of 15 per cent of gross receipts. Held: Section 44AD covers cases of civil construction where the gross receipts from contract business do not exceed 40 lakhs (now Rs 100 lakhs). The assessee, in the instant case, does not fall within the prescription under section 44AD. However, the presumptive rate of 8 per cent under section 44AD could be considered as fair and reasonable to estimate income from contract. In cases like that of instant case where books of account were not found reliable by AO. Therefore, income from contract business would be estimated at 8 per cent.

Nishikant T. Pante v ACIT (2014) 60 SOT 146 (Pune `A' Trib)

Relied: Eastern Construction Co. v ITO (1997) 59 TTJ 723 (Del-Trib)