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Issues:
1. Discrepancy in gross receipt amount in the Departmental appeal. 2. Admission of fresh evidence and deletion of asset value addition in the Departmental appeal. 3. Reduction of net profit rate and allowance of depreciation in the Departmental appeal. 4. Applicability of net profit rate on gross receipts in the Departmental appeal. 5. Reconsideration of net profit rate calculation in the Departmental appeal. Detailed Analysis: 1. The first issue in the Departmental appeal revolves around a discrepancy in the gross receipt amount. The AAC had initially taken the gross receipt at Rs. 3,61,500 without reconciling the difference of Rs. 6,000 in two certificates. The ITO and the assessee's counsel agreed that the correct figure of gross receipt was Rs. 4,01,428. The Department challenged this discrepancy but failed to provide a duly sworn affidavit as required by Rule 10 of the Income-tax Appellate Tribunal Rules. Consequently, the challenge was dismissed, and the appeal in this regard was rejected. 2. The second issue concerns the admission of fresh evidence and the deletion of an addition of Rs. 42,609 in asset value. The ITO added this amount as income from undisclosed sources as the source of investment was not proved. However, the AAC admitted fresh evidence showing that the assets were received from another firm where the assessee's partners were also partners. The Tribunal found that the fresh evidence should be verified by the ITO and directed a reevaluation of the source of the new machinery. The appeal in this regard was partly allowed. 3. The third issue involves the reduction of the net profit rate and the allowance of depreciation. The Department challenged the reduction of the net profit rate from 15% to 12% and the allowance of depreciation of Rs. 19,816. The Tribunal noted that the dispute mainly revolved around the application of the net profit rate on gross receipts. Rulings from various High Courts were considered, and it was determined that the net profit rate should be applied on net receipts after excluding the cost of materials. The appeal was partly allowed in this aspect. 4. The fourth issue addresses the applicability of the net profit rate on gross receipts. The Tribunal analyzed various court rulings and contract terms to conclude that the net profit rate should be applied on net receipts after deducting the cost of materials supplied by the Department. The decision was based on the specific terms of the contract and the treatment of material costs in the billing process. 5. The final issue concerns the reconsideration of the net profit rate calculation. The Tribunal found that the 15% net profit rate applied by the ITO was excessive, and the AAC's decision to apply a 12.5% rate on net receipts was deemed appropriate. Comparisons with other cases and the nature of the contract completion timeline supported the adjustment in the net profit rate calculation. The appeal was partly allowed in this regard, with specific directions for reassessment.
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