2018 (3) TMI 143 - AT - Income Tax

Depreciation on estimated income - Held that - In this case the income was computed estimating the income @ 8% on total receipts. CIT(A) has directed the A.O. to make the addition of depreciation as per law after giving opportunity to the assessee. Therefore, the CIT(A) has followed the law laid down by the higher judicial forum allowed the appeal of the assessee. In the assessee s case for the assessment year 2008-09, the jurisdictional Tribunal has allowed the depreciation from the estimated income. In the case of Y. Ramachandra Reddy (2014 (9) TMI 205 - ANDHRA PRADESH HIGH COURT) held that the depreciation is required to be allowed from the estimated income. Therefore, the CIT(A) has followed the order of this Tribunal in assessee s own case, hence, we do not find any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. Addition towards unproved loan creditors - Held that - As per the information available from the CIT(A) s order, the assessee has submitted the complete information to the A.O. with regard to both the credits. Copies also submitted to the CIT(A) the Ld. CIT(A) after verifying the PAN card, bank account, IT return and all the relevant details held that the loans were not squared up and the assessee has established the identity of creditors, capacity and the genuineness of the transactions. Therefore, we do not see any reason to interfere with the detailed and well reasoned order of the Ld. CIT(A). Accordingly, the order of the Ld. CIT(A) is upheld and the appeal of the revenue is dismissed.

Summary

Issues:
1. Depreciation on estimated income
2. Addition towards unproved loan creditors

Depreciation on Estimated Income:
The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeals) related to the assessment year 2009-10. The Assessing Officer (A.O.) estimated the income at 8% on gross contract receipts, disallowing depreciation. The A.O. completed reassessment after a revision order under section 263 of the Income Tax Act. The CIT(A) allowed the appeal of the assessee, directing the A.O. to add depreciation as per law. The Tribunal held that the CIT(A) rightly invoked jurisdiction, following the legal precedents, and upheld the appeal of the assessee. The order of the CIT(A) was upheld, dismissing the revenue's appeal.

Addition Towards Unproved Loan Creditors:
During reassessment proceedings, the A.O. added unproved loans from two individuals to the assessee's income, citing lack of funds flow statement and unexplained sources. The CIT(A), after thorough verification, accepted the loans as genuine and deleted the addition. The revenue appealed against the CIT(A)'s decision. The Tribunal, after reviewing the details submitted by the assessee to both the A.O. and the CIT(A), upheld the CIT(A)'s order, stating that the loans were genuine and the assessee had provided sufficient evidence regarding the identity, capacity, and genuineness of the transactions. The revenue's appeal was dismissed, and the CIT(A)'s decision was upheld.

In conclusion, the Tribunal dismissed the revenue's appeal on both issues, upholding the CIT(A)'s decisions regarding depreciation on estimated income and addition towards unproved loan creditors.