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2018 (7) TMI 572 - ITAT KOLKATAEstimation of income - Held that:- During the course of examination on oath of the Directors of M/s. Safeco Projects, it was recorded that commission paid in such transactions was 1% of gross receipts inclusive of TDS. This gives the percentage of commission that the assessee charges. When the Assessing Officer relies on these statements to reject the contentions of the assessee, then the entire statements have to be considered as evidence. The estimation of commission at 5% of the turnover, in our view is excessive and has not basis. It is an arbitrary figure. The assessee had shown income of 2.4%, in this case inclusive of TDS. This is reasonable. Hence no further addition on this account needs to be made. Thus, the addition of ₹ 50,96,291/-, as sustained by the ld. CIT(A) is hereby deleted. Write off of bad debts u/s 36(1)(vii) - Held that:- The assessee has written off debts receivable from M/s. Vivek Steels, Pawan Jhunjhunwala, in this bank account. It had also written off advance TDS deposit u/s 194C and u/s 194J of the Act. The entire amount was claimed as a deduction. Apparently, the write off of advance TDS deposit cannot be allowed u/s 36(1)(vii) of the Act. As regards write off of loans from Vivek Steels and Pawan Jhunjhunwala, in view of the judgement of the Hon’ble Supreme Court in the case of T.R.F. Ltd vs Commissioner of Income Tax (2010 (2) TMI 211 - SUPREME COURT) the deduction should be allowed. Accordingly, this ground of the assessee is allowed in part. Income from lease of factory premises is to be assessed under the head “income from property” or under the head “income from other sources - Held that:- The factory building, is a part of the plant and building of the assessee. This is let out for commercial use. When the assessee earns income from utilization of this factory building, the income from the same is assessable under the head “income from business”. This entitles the assessee to claim depreciation on the factory building. Even otherwise, the block of assets concept was brought into the statute by the Finance Act, 1998. After the introduction of this block of assets concept, depreciation on written down value has to be allowed irrespective of the fact whether individual items of machinery has been introduced or not. We uphold this contention of the assessee. Hence this ground of the assessee is allowed. Disallowance of commission payment - Held that:- Assessing Officer has without any basis estimated the expenditure incurred by the assessee at 50% and disallowed 50%. If the payment is not genuine then the entire expenditure claimed has to be disallowed. In this case, the assessee has produced evidence and discharged the burden of proof that lay on it and whereas the revenue has not controverted this evidence. Under these circumstances, such estimated disallowance cannot be sustained as the same is arbitrary. Hence this ground of the assessee is allowed.
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