2013 (5) TMI 687

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....ring a total income of Rs. 5,53,821/-. On such return, the Assessing Officer passed a scrutiny assessment. After rejecting the book results, the Assessing Officer made addition of Rs. 26,01,754/- at an estimated disallowance of 25% of the expenditure. The issue was carried in appeal by the assessee. CIT(A) gave partial relief to him and reduced the disallowance to Rs. 4,14,387/- by taking an estimate of the assessee's net profit at 7% and arriving at net profit at Rs. 15,12,735/- and thereafter, grant a benefit of salary to partners and interest to partners. 3. The revenue carried the matter in appeal before the Tribunal. In response to the revenue's appeal, assessee also filed the cross-appeal. In such proceedings, the Tribunal passed a....

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....to the partners at Rs. 10,98,348/-. Therefore, this disallowance of Rs. 17,28,840/- is confirmed against disallowance of Rs. 26,01,574/- made by the Assessing Officer." 4. From the reproduced portion of the order of the Tribunal, it can be seen that the Tribunal adopted the profit rate of 8% before depreciation; salary and interest to the partners. For such purpose, the Tribunal placed reliance on a decision of Rajasthan High Court in case of Commissioner of Income Tax vs. Jain Construction co. and ors. reported in 245 ITR 527. 5. The assessee thereupon, moved an application for rectification before the Tribunal and contended that before depreciation; salary and interest to the partners, the assessee had already reflected net profit r....

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....rofit rate of 8% under Section 44AD of the Act, can depreciation still be claimed thereafter? It was, in this background, the High Court had answered the question in favour of assessee. When the Tribunal, therefore, applied such a decision and specifically provided for working-out depreciation after computing profit at the rate of 8%, in our opinion, there was no ambiguity or uncertainty. Simply because the assessee himself had declared profit at 8.13% on such parameters, would not permit the Tribunal to change such a directive in exercise of rectification powers. Power of rectification can be exercised for correcting an error apparent on the face of the record and not for reviewing an order. In the present case, decision of the Tribunal to....