Profit estimation and depreciation claims turn on proved business loss and substantive vehicle ownership, not later formal registration.

Declared branch profit was not to be mechanically enhanced where the lower result was explained by proven flood damage causing business loss, and the estimated addition was therefore deleted. Depreciation on a Jeep was also held allowable because the vehicle had been purchased and paid for by the assessee, insurance stood in his name, and beneficial ownership was proved; later registration under the Motor Vehicles Act did not by itself defeat the claim. The commentary thus states that an evidenced business loss can rebut profit estimation, and that depreciation depends on substantive ownership rather than timing of formal registration.

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Issues: (i) Whether the addition made by estimating higher profit from the branch business was justified despite losses caused by floods. (ii) Whether depreciation on the Jeep could be disallowed on the ground that registration stood in the assessee's name only later.

Issue (i): Whether the addition made by estimating higher profit from the branch business was justified despite losses caused by floods.

Analysis: The declared branch profit of 9.1% was considered in the background of extensive flood damage affecting a substantial part of the work. Since the lower result was attributable to a proven business loss caused by floods, the declared profit could not be treated as abnormally low so as to warrant further estimation.

Conclusion: The addition based on estimated higher profit was not justified and was deleted in favour of the assessee.

Issue (ii): Whether depreciation on the Jeep could be disallowed on the ground that registration stood in the assessee's name only later.

Analysis: The Jeep had been purchased by the assessee, insurance stood in his name, and the consideration had been paid by him. On these facts, ownership was treated as having passed to the assessee, and delayed registration under the Motor Vehicles Act did not by itself defeat the claim to depreciation.

Conclusion: The disallowance of depreciation was unjustified and the claim was allowed in favour of the assessee.

Final Conclusion: Both the estimation addition and the disallowance of depreciation were set aside, resulting in full relief to the assessee.

Ratio Decidendi: Where a lower disclosed profit is explained by established business losses, income should not be mechanically estimated upward; and depreciation cannot be denied merely because formal registration of a purchased vehicle was completed later if ownership is otherwise proved.

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