2014 (5) TMI 1119

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....ioner claimed depreciation of Rs. 25,67,785/- as per the depreciation chart and submitted accounts, i.e. trading, profit and loss accounts, balance sheet, deprecation chart etc. 4. As a condition of receiving contract and for execution thereof, petitioner used to take Fixed Deposit Receipts (hereinafter referred to as "F.D.R.") furnished with the Department as Security and therefore petitioner claimed that the interest earned on such fixed deposits cannot be treated "income from other sources" and instead the said income was his "business income". 5. Petitioner's return was selected for scrutiny as a consequence whereof respondent no. 2 issued notice under Section 143 (2) and 142 (1) of Act, 1961. Respondent no. 2 took the view that expenses incurred by Firm are not properly vouched, the disclosed turn over was not to be accepted and hence it calculated profit by following a flat rate of 8 per cent on the gross receipt of Rs. 12,68,14,480/- with the condition that no penal action shall be taken against petitioner and consequently passed order on 13.10.2011. It determined income from business of civil contracts at Rs. 1,01,45,158/-. After deduction of salary etc, it assessed f....

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....those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded. (5) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier assessment year, are lower than the profits and gains specified in sub-section (1), and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum payable by the assessee on the basis of assessment made under sub-section (3) of section 143. (6) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB. Explanation.--For the purposes of this section, the expres....

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....he provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded. (6) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier assessment year, are lower than the profits and gains specified in sub-sections (1) and (2), and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum payable by the assessee on the basis of assessment made under sub-section (3) of section 143. (7) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-sections (1) and (2), if he keeps and maintains such books of account and other documents as required under su....

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....l be excluded. (5) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB. (6) Nothing contained in this section shall apply to any assessment year beginning on or after the 1st day of April, 2011." 7. Counsel for petitioner, though relied on a Division Bench judgment of this Court in Commissioner of Income Tax, Kanpur Vs. Bishambhar Dayal and Company, Kanpur 1994 U.P.T.C. 215, but the aforesaid decision relates to Assessment year 1987-88 while the aforesaid provisions were inserted in 1994 and onwards. Moreover, in para 2 of the aforesaid judgment itself, the Court has said that there is no provision under the Income Tax Act brought to the notice of the Court which makes the claim of depreciation inadmissible where the income is computed by applying flat rate. Subsequently, the provisions have been inserted in the Act. I find no error in ....