9911796707
TMI Blog2000 (12) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... applied by the AO specially when the deduction of depreciation and interest claimed by the assessee having been considered by the AO while applying N.P. rate and powers of enhancement are available to the first appellate authority as per provisions of s. 251(1)(a) of the IT Act." 6. We have heard the arguments of both the sides on the petition of Departmental Representative for permission to raise the additional ground. The learned Departmental Representative of Revenue has contended that the permission to raise the above additional ground before the Tribunal be granted as the additional ground is relevant on the facts of the case, and it will be in the interest of justice. He has contended that this additional ground is necessitated because the learned CIT(A) disposed of the first appeal in mechanical way without going into the merits of the issue. He has contended that the AO had considered the deductions of depreciation and interest and then applied the net profit rate of 10 per cent in asst. yr. 1991-92 and 11 per cent in asst. yr. 1993-94, and the learned CIT(A) while allowing separate deduction for depreciation after applying the net profit rate, should have enhanced the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has cited CIT vs. Anand Prasad (1981) 128 ITR 388 (Del) in his support. He has also contended that the Tribunal cannot remand the case for enhancement and has cited Ramaswamy Iyengar vs. CIT (1960) 40 ITR 377 (Mad) in this regard. He has contended that the increase or decrease in rate of profit is within the discretion of AO and CIT(A). 7. We have considered the rival contentions, the material on record as also the cited decisions, copies of which have been furnished before us. In our view the contention of the learned authorised representative of assessee that the subject-matter of the additional ground is not connected with the matter involved in the appeals under consideration is without force inasmuch as the additional ground pertains to net profit rate, seeking enhancement thereof and the matter of net profit rate is very much involved in the Revenue's appeal for asst. yr. 1993-94 (ITA No. 508/Jp/1996) wherein relief being disputed is the result of reduction is net profit rate accorded by learned CIT(A) vide his impugned order; and no less in Revenue's appeal for asst. yr. 1991-92 (ITA No. 1864/Jp/1994) wherein the relief accorded by learned CIT(A) vide his impugned order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5 per cent was neither disputed nor challenged in that case before the Hon'ble High Court; and what was disputed/challenged before the Hon'ble High Court in that case was the allowing or non-allowing of separate deduction for depreciation, salary and interest to partners in view of the provisions of s. 40(b) and the CBDT's Circular dt. 31st Aug., 1965. Referring to the CBDT's circular the Hon'ble High Court has in para. 8 on p. 754 of the citation observed as under: "The Board, therefore, considered that where it is proposed to estimate the profit and the prescribed particulars have been furnished by the assessee, the depreciation allowance should be separately worked out. In all such cases, the gross profit should be estimated and the deductions and allowances including the depreciation allowance should be separately deducted from the gross profit so that the net profit can be arrived at." In the same para it has further been observed as under: "If it is considered that the net profit should be estimated, it should be estimated subject to the allowance of depreciation and the depreciation allowance should be deduction therefrom." Obvious as it is from the above, what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying this rate no deduction of depreciation is allowed." Thus, factually it appears that the AO seems to be applying the estimated profit rate with a conscious thinking that he will not allow any further deduction for depreciation out of his estimated profit amount, but the adoption of such a method is not legally permissible and the said deduction has further to be allowed separately out of the estimated profits as has been propounded by the Hon'ble jurisdictional High Court in the above referred judgment (22 TW 747). 10. As regards (1956) 40 ITR 377 (Mad) the same does not render any aid to the assessee inasmuch as the conclusion of the Hon'ble Madras High Court to the effect that the Tribunal cannot exercise the power of remand for the purpose of enhancing the tax was based on the fact-situation of that case wherein only the assessee had filed an appeal and the Revenue had not filed any appeal against the order of first appellate authority and so the Hon'ble High Court observed that the power to remand not having been expressly given to the Tribunal by s. 33(4) of the Indian IT Act, 1922, but the same being implied in the words "pass such orders thereon", the power of remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d so circumstance has to start from the scratch again. Such a situation cannot be said to fall within the postulation of the legislative intent. As that, we feel inclined to hold against the Revenue and so we reject the Department's petitions dt. 12th Sept., 2000, for both the asst. yrs. 1991-92 and 1993-94. 12. We now proceed to dispose of the appeals on their original grounds of appeals. We first take up asst. yr. 1993-94. Revenue's appeal for asst. yr. 1993-94 is ITA No. 508/Jp/1996 wherein the only ground raised by Revenue disputes the learned CIT(A)'s impugned order in allowing relief of Rs. 60,000 from the income from contract work by reducing the N.P. rate from 11 per cent to 10 per cent to be applied to the gross receipts. The assessee's appeal for asst. yr. 1993-94 is ITA No. 420/Jp/1996 wherein the assessee has raised one ground of appeal disputing the non-allowing of assessee's full claim for depreciation at Rs. 1,32,535 and allowing only Rs. 8,372 (Rs. 60,000 minus Rs. 51,628). The learned CIT(A) having reduced the applicable rate of N.P. from 11 per cent to 10 per cent accorded the relief Rs. 60,000 in round figure instead of Rs. 51,628 which would have been the exac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contractee (military) at cheaper/lower rates, and thus resulting in higher profits to the assessee. He has referred to two assessment orders for asst. yr. 1991-92 in the case of Kishan Lal, dt. 9th July, 1993 and in the case of M/s Ansari Builders (Air Force Work) Jodhpur, dt. 30th Dec, 1993 and contended that the net profit rate of 10 per cent has been applied therein by AO and are of MES contracts like that of present assessee. He has also contended that in the case of Ansari Builders (Air Force Work, Bhuj) for asst. yr. 1991-92 the Tribunal dismissed the Revenue's appeal and upheld the application of 10 per cent n.p. rate subject to depreciation, and has referred to p. 55 of paper book. He has contended that in assessee's case for asst. yr. 1992-93 this Bench decided the appeal wherein also the rate of net profit was 10 per cent, copy of order placed on p. 27 of paper book. He has contended that no purpose will be served by remanding the case back to AO for considering the application of n.p. rate. He has contended that the application of a particular n.p. rate is a matter of discretion. He has referred to item Nos. 11, 12, 13 and 14 of his index of the compilation of judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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