TaxTMI 
TaxTMI 
2016 (2) TMI 1237
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....O u/s 143(3) of the Act. 4. In ITA No.195(Asr)/2014, the assessee has raised the following grounds of appeal: "1. That the ld. CIT(A) has erred in law and on facts, in holding that proceedings u/s 154 were rightly initiated by AO. 2. That the ld. CIT(A) has erred in law and on facts, in holding that netting of interest income of Rs. 4,02,038/- against interest payment was rightly rectified by AO u/s 154 and by separately assessing the same as income from other sources." 5. In ITA No.196(Asr)/2014, the assessee has raised the following grounds of appeal: "1. That the ld. CIT(A) has erred in law and on facts, in holding that depreciation on fixed assets is not allowable as deduction after the application of net profit of 8% on gross contract receipts on the rejection of books of account. 2. That the ld. CIT(A) has erred in law and on facts, in holding that salary and interest paid to partners is not allowable as deduction after the application of net profit rate of 8% on gross contract receipts on the rejection of books of account." 6. The brief facts as noted in the assessment order are that in the AY 2004-05, the assessment was completed....
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....ct, reliance was placed on the following case laws: i) CIT vs. Hero Cycles Pvt. Ltd. 228 ITR 463 (SC) ii) CIT vs. Alankar Bottling Co. 189 ITR 799 (All.) iii) Ved Parkash Madan Lal vs. CIT, 102 ITR 213 (P&H) iv) CIT vs. Prem Raj Ganpatraj & Co., 95 ITR 447 (Guj.) 10. The ld. counsel for the assessee submitted that the Hon'ble Supreme Court in the case of CIT vs. Hero Cycles Pvt. Limited, has held that rectification is not possible if the question is debatable and has further held that the point which was not examined on fact during assessment proceedings cannot be treated as a mistake apparent from the record. The ld. counsel for the assessee submitted that the case law relied on by the authorities below in the case of CIT vs. Dr. V.P. Gopinathan (supra) is totally misplaced, as the assessee in this case was not carrying out any business and interest earned by him was assessable u/s 56 of the Act, as income from 'other sources', as FDRs were not taken for any business purposes, whereas in the present case, FDRs were got made for business purposes. The Ld. counsel further submitted that income from interest on FDR is taxable as business income ....
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....nterest accrued in the profit and loss account which was based on the books of account ,maintained by the assessee. We, therefore, considering the totality of the facts as discussed above, are of the view that the AO was not justified in making separate addition on account of interest on FDR's when he had applied a net profit rate of 8% on the gross receipts for the full year by invoking the provisions of section 145 of the Income Tax Act, 1961. We, therefore, set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer not to include the interest accrued on the FDR's amounting to Rs. 2,94,700/- in the income of the assessee." 13. From the facts and circumstances of the present case, we find that the assessee had reflected interest income on FDRs in its profit & loss account and this interest was earned on fixed deposits, which were made for providing Bank guarantee to Govt. departments and, therefore, the interest income had a direct nexus with the business of the assessee and therefore, was reflected in the profit & loss account. Relying upon the case law of Daljit Singh & Brothers ( supra), that once the books of account were rejected, no separate addi....
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....A No.203 of 2001 dated 04.08.2014 and submitted that the Hon'ble Punjab & Haryana High Court in similar facts and circumstances had decided that the depreciation on fixed assets was allowable deduction if the assessee made a specific claim for depreciation. It was further submitted that in assessee's own case for the assessment year 2004-05, under similar facts and circumstances, the claim of depreciation had been allowed. 18. As regards the claim of interest on partners capital and salary to partners, the ld. counsel for the assessee submitted that the Amritsar Bench of the Tribunal in ITA No.361(Asr)/2013 & ITA No.344(Asr)/2013, dated 26/03/2014, in the case of Walia Construction Company s. DCIT, Cir.IV, Pathankot has decided similar issue in favour of the assessee. The assessee's counsel also invited our attention to para 10.1 of the said order. 19. The ld. DR, on the other hand, heavily relied on the orders of the authorities below. 20. We have heard the rival contentions and have gone through the material available on record. As regards the claim of depreciation, we find that the Hon'ble Punjab & Haryana High Court in the case of Lali Construction Co. (supra) vide its....