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of <h1>Revenue appeal partially granted, profit estimations confirmed. Deductions upheld, with limitations. Interest on partners' capital appeal dismissed.</h1> <h3>Asst. Commissioner of Income-tax, Circle – 1, Anantapur Versus M/s C. Gopal Reddy And Company</h3> The Tribunal partly allowed the revenue's appeal, confirming profit estimations at 8% on main contracts and 6% on sub-contracts. Deductions for ... - Issues involved: The appeal pertains to the rejection of books of account by the Assessing Officer (AO) u/s 145 of the Income Tax Act, estimation of profits on contracts, deductions allowed, and treatment of interest on capital of partners.Rejection of Books of Account and Estimation of Profits:The assessee, engaged in civil contract works, filed its return of income admitting total income. The AO rejected the books of account due to self-made vouchers and unverifiable expenses, estimating profits @ 12.5% on contract receipts and 8% on sub-contracts. The CIT(A) upheld the rejection of books due to self-made vouchers but reduced the profit percentage to 8% on contracts and 6% on sub-contracts. The CIT(A) directed the AO to recompute the total income, allowing deductions for remuneration of working partners, interest on partners' capital accounts, and depreciation.Deductions Allowed and Interest on Capital of Partners:The revenue appealed against the CIT(A)'s decision, arguing that the estimated profits were low and the deductions for depreciation, remuneration to partners, and interest on partners' capital were not justified. The Tribunal, following a previous decision, confirmed the profit estimation at 8% on main contracts and 6% on sub-contracts. Regarding depreciation, it was deemed to have been already given full effect. The Tribunal also allowed interest and salary to partners subject to limitations specified in the Act.In conclusion, the Tribunal partly allowed the revenue's appeal, confirming the profit estimations and deductions while dismissing the appeal on the issue of interest on capital of partners.
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