9911796707
TMI Blog2000 (7) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... e of additions out of depreciation on vehicle and marginal additions in the profit of contracting business. He, therefore, restricted his contention on the remaining issue relating to partners' salary and submitted that the payment of salary to partners is specifically provided in clause No. 7 of the deed of partnership of the assessee-firm. He, therefore, contended that salary to the extent provided and authorised by the partnership deed is an admissible expenditure as per s. 40(b) amended by the Finance Act, 1992, w.e.f. asst. yr. 1993-94. He also furnished a copy of relevant partnership deed in his paper book on page Nos. 5 to 9. He further submitted that this issue is also covered in favour of the assessee by the decision of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 55,974. While deciding this appeal, the learned Dy. CIT(A) entirely changed the basis of computation adopted by the AO and made certain adjustments which finally resulted-into an enhancement of total income by Rs. 3,49,595. The details of the adjustments made by the Dy. CIT(A) and resulted effects on the total income assessed by the AO are given below: ------------------------------------------------------------------ S. Adjustments made by Dy. CIT(A) Effect on income No. assessed by AO ------------------------------------------------------------------ 1. 11 per cent rate applied for estimating NP on contract receipts instead of 12 per cent adopted by the AO. (-) Rs. 55,305 2. Profit on transportation receipt is taken at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied to the contract receipts, the other deductions are allowed, whereas if the low net profit is applied, the other deductions on account of depreciation, interest etc. are not allowed. He also submitted that this Bench has accepted a net profit rate of 8 per cent on contract receipts in a number of cases without any further deduction and furnished the copies of relevant orders in support thereof. He, therefore, contended that the Dy. CIT(A) was very reasonable in reading the net profit to 8 per cent and in not allowing any further deduction on account of depreciation, interest, etc. separately. He, therefore, contended that the impugned order of the Dy. CIT(A) may be upheld. 11. Regarding the deduction on account of interest to third par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO proposes to estimate the profit, depreciation should be separately worked out. As observed hereinabove, the controversy regarding the admissibility of interest as well as remuneration to partners has been settled by the said judgment in view of the amended provisions of s. 40(b) w.e.f 1st April, 1993. 13. As far as the issue of interest to third parties is concerned, it is observed that the case of Jain Construction Co. came before the Hon'ble jurisdictional High Court for consideration in two separate rounds. In the first round, the Revenue preferred an application under s. 256(2) being No. 12/1998 against the order of the Tribunal Jaipur Bench dt. 30th Aug., 1996, in ITA No. 707/Jp/96 whereby the Tribunal had set aside the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appear any specific discussion about the same, as it also appears from the judgment of the Hon'ble jurisdictional High Court delivered on 24th Sept., 1999. However, it is observed that when the same matter came up for consideration before the Hon'ble High Court in the second round in an application under s. 256 moved by the Revenue, being DB ITRA No. 106/1999 in respect of the very same assessment the Hon'ble jurisdictional High Court in its decision dt. 15th March, 2000, has clearly mentioned the aspect of interest to third parties on page No. 2 para No. 1 of its judgment while summarising the facts of the case to show as to how the said reference application arose. The learned counsel of the assessee has referred to the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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