TaxTMI 
TaxTMI 
2015 (10) TMI 2676
X X X X Extracts X X X X
X X X X Extracts X X X X
.... erred in allowing the depreciation when the income was computed by the A.O. by applying net profit rate of 25%. (2) Whether on the facts and in the circumstances of the case and in law the ld CIT(A) has erred in deleting the addition U/s 40(a)(ia) and 40A(3) when the assessee had himself disallowed the same in the computation of income filed with the return of income." 2. The first ground of the revenue's appeal is against allowing the depreciation when the income was computed by the A.O. by applying net profit rate of 25%. The assessee was engaged in collection of toll tax on behalf of Municipal Corporation Delhi and providing space for advertisement. The assessee filed return on 30/09/2009 at loss of Rs. 23,72,020/-. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from it. 3. This addition was challenged before the ld CIT(A), who had confirmed the addition. However, he held that the ld Assessing Officer had not mentioned anything about claim of depreciation. As held by the Hon'ble Rajasthan High Court in the case of CIT Vs. Jain Construction Co. (2000) 245 ITR 527 (Raj) as well as in the CBDT circular, depreciation has to be worked out and allowed separately in case of rejection of books of account and estimation of net profit. Accordingly, the ld CIT(A) allowed the deprecation after confirming the net profit rate. 4. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer and argued that this addition was not subject to any depreciation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounts and estimate of net profit, depreciation is required to worked out and allowed separately. These judicial decisions have since been followed in various High court and ITAT decisions. In view of the above the assessee is entitled to the claimed depreciation of Rs. 1,25,79,130/- from income computed. Therefore, he prayed to allow the deduction from net profit estimated by the Assessing Officer. 6. We have heard the rival contentions of both the parties and perused the material available on record. The ld Assessing Officer applied net profit rate but not allowed depreciation during the year under consideration. The ld counsel's arguments are not substantiated with the copy of assessment filed by the AR for A.Y. 2008-09 where tradi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by observing as under:- "I have considered facts of the case. It is noted that the A.O. has determined income of the appellant by applying NP rate of 25%. The A.O. has further observed that : "Notwithstanding computation of assessee's income by applying NP rate, the cash payments made in violation of provisions of Section 40A(3) in the sum of Rs. 81,861/- and disallowance U/s 40(a)(ia) in the sum of Rs. 62,15,115/- are made separately." Nothing specific has been mentioned by the A.O. as to why these disallowances were being made when the income has been determined by applying NP rate, after rejecting the books of account. Since the books of account have been rejected and income has been estimated by applying N....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was confirmed by the Hon'ble Supreme Court under the income from other sources. He further relied on the decision in the case of Kale Khan Mohammad Hanif Vs. CIT (1963) 50 ITR 1 (SC) wherein similar issue on deeming addition on account of cash creditor was held to be income from other sources and not as business income. He further relied on the decision of Hon'ble ITAT of Hyderabad Bench in the case of ACIT Vs. Mir Mazharuddin (2013) 35 Tasxmann.com 541 (Hyd. Trib) wherein the addition made U/s 68 in number of years when income is estimated by Assessing Officer, addition U/s 68 is permissible. He further relied on the decision in the case of CIT-1 Vs. G.S. Tiwari & Co. (2014) 41 Taxmann.com 17 (All) wherein the Hon'ble High Cou....