AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 205
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.... Whether on the facts and in the circumstances of the case the Tribunal is correct in law in directing the Assessing Officer to allow depreciation and interest payments from the estimate of profit made at 12%? 2. Whether on the facts and in the circumstances of the case the Tribunal is correct in law in directing the Assessing Officer to grant reliefs on those items which are not claimed by the assessee? 3. Whether on the facts and in the circumstances of the case the Tribunal is correct in granting depreciation though it was already granted by the Assessing Officer? The respondent is a civil contractor, and is an assessee under the Act. He submitted returns for the Assessment Year 1994-95 declaring loss of Rs. 15,24,198/-. Thereafter, r....
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....bmits that though the Commissioner was justified in taking the net profits at 12%, having regard to the nature of business undertaken by the respondent, he was not correct in permitting deduction of depreciation and interest. He submits that the exercise undertaken by the Commissioner, or for that the Assessing Officer is akin to the one provided for under Section 44AD of the Act, which provides for comprehensive exercise of arriving the net profits at a fixed percentage and that would be inclusive of the allowance of depreciation and interest. He submits that the exercise being comprehensive in nature, the two components cannot be dealt with, separately. Sri A.V. Krishna Koundinya, learned Senior Counsel for the respondent, on the other ha....
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....r by way of appeal preferred by the respondent. The Commissioner took into account, the nature of business as well as the non-dependability of the books of account, and took the view that the net profits must be arrived at on total/gross receipts. As regards the allowance of current depreciation and interest, he took the view that there is nothing in law which disentitles the respondent to claim it. He left the matter to the Assessing Officer to workout the details. The appellant as well as the respondent filed appeals before the Tribunal. Through the order under appeal, the Tribunal upheld the order of the Commissioner, in all respects. Though the respondent filed an appeal feeling aggrieved by the enhancement of the percentage of net prof....
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....ns of sections 30 to 38 shall, for the purposes of sub- section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed: Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub- section (1) subject to the conditions and limits specified in clause (b) of section 40. (3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (4) The provisions of Chapter XVIIC shall not apply to an el....
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....; (b) eligible business means (i) any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and (ii) Whose total turnover or gross receipts in the previous year does not exceed an amount of one crore rupees. For example, Section 44AD of the Act provides for determination of the income of an assessee from the business at 8% of the total turnover or the gross receipts of the previous year under certain circumstances. Sub-Section (2) is to the effect that if any deduction allowable under Sections 30 to 38, which takes in its fold the deduction such as depreciation and interest, shall be deemed to have been effected. The procedure under that section, however, applies only when the turnover is....
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....assessee is entitled to claim deduction of interest, be it under Section 36(1)(iii) of the Act or any other relevant provision and of depreciation under Section 37 of the Act, in the ordinary course of assessment, there is no reason why the same facilities be not extended to him, merely because the profit is determined on the basis of estimation as was done in the instant case. We are of the view that depreciation and interest, which are otherwise deductable in the ordinary course of assessment, remain the same legal character, even where the profit of assessee is determined on percentage basis. The conclusions arrived at by us, get support from the Circular dated 31.08.1965 issued by the Central Board of Direct Taxes. Though the Circular ....