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TMI Blog2016 (9) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... are, therefore, of the view that the net profit shown by the assessee at ₹ 2,49,82,620.84 to be accepted as total income of the assessee for assessment year 2010-11. Accordingly, the addition sustained by the ld CIT(A) is deleted and appeal of the assessee is allowed. - ITA No. 979/JP/2013, ITA No. 996/JP/2013 - - - Dated:- 8-7-2016 - Shri Kul Bharat, JM And Shri Manish Borad, AM Assessee by : Shri Anil Sharma ( CA ) Revenue by : Shri Rajendra Singh ( Addl.CIT ) ORDER Per Manish Borad, A. M. These cross appeals pertaining to A.Y. 2010-11 are directed against the order of ld CIT(Appeals)-1, Jaipur dated 31/10/2013 vide ITA No. 229/12-13. Assessment U/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act) was framed on 27/11/2012 by the ld DCIT, Circle-2, Jaipur. 2. Briefly stated facts as culled out from the records are that the assessee is a partnership firm engaged as a contractor for erection and fabrication. Return of income for A.Y. 2010-11 was e-filed on 09/02/2012 declaring income of ₹ 2,50,48,510/-. The assessee s case was picked up for scrutiny assessment under CASS and notices U/s 143(2) of the Act dated 24/8/2011 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h illegible initials were made. The AO also noted that the Chartered Accountant had not certified the correctness of the value of closing stock in Form 3CD. It was also observed that the NP rate of the contract business, after excluding the interest receipts, was only 3.34%. The AO, accordingly, rejected the books of account and determined the income by applying the NP rate of 8%. 4.1 A perusal of the appellant s submission on this issue shows that no specific rebuttal to the points raised by the AO has been given. The appellant himself has accepted that the defects mentioned by the AO in the assessment order were unavoidable in nature, meaning thereby that the defects noted by the AO were correct. No specific grounds have been given to show that the AO s action in rejecting the books of account was not correct. The action of the AO in rejecting the books of account is, therefore, upheld. 4.2 So far as the application of NP rate of 8% is concerned it is seen that in the immediately preceding year my predecessor had confirmed the NP rate of 5.12% on the total receipts, after allowing deduction by way of depreciation, interest and remuneration to the partners. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le ITAT Jaipur. Therefore the depreciation of ₹ 7611318/-, bank interest of ₹ 16089158/- and partners remuneration of ₹ 480000/-(Total of ₹ 24180476/-) as appearing in the audited books of accounts and relevant profit and loss account, is allowable out of the Net profit estimated by the AO. 3. The ld. CIT(A) following his order passed for the preceding year instead of specifically allowing the depreciation, bank interest and partners remuneration as claimed by the appellant, applied the NP rate of 4.75% holding the same after allowing depreciation, bank interest and partners remuneration. Thereby an addition of ₹ 6604948/- (4.75% of ₹ 470013786/- i.e. ₹ 22325654/- less declared profit of ₹ 15720706/-.) has been sustained and balance of ₹ 18377672/- has been deleted. 4. The assessee has preferred this appeal against the application of NP rate of 4.75% applied by ld. CIT(A), considering the same after allowing depreciation, bank interest and partners remuneration instead of actual allowance of the same out of Net profit estimated by application of NP are of 8%. Whereas the department has preferred appeal against the reductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above it is humbly requested that the Net profit of the assessee may kindly be estimated by application of NP rate of 8% subject to allowance of depreciation Bank interest and partners remuneration and thus addition confirmed by Id. CIT(A) may kindly be deleted and departmental appeal may kindly be dismissed. 6. On the other hand, the ld Sr. DR has supported the order of the ld Assessing Officer. 7. We have heard the rival contentions of both the parties, perused the material available on the record and gone through the orders passed by the Coordinate Bench, Jaipur relied on by the ld AR. Solitary grievance raised by the assessee in this appeal is against the action of the ld CIT(A) sustaining the addition by calculating 4.75% as net profit on gross contract receipts of ₹ 47.00 crores. 7.1 We observe that similar issue in assessee s own case has come up before the Coordinate Bench, Jaipur. Vide ITA No. 949/JP/2009 for A.Y. 2006-07 pronounced on 09/07/2010, ITA No. 1412 965/JP/2010 and ITA No. 903/JP/2010 for A.Y. 2003-04 2007-08 pronounced on 04/04/2011, ITA No. 839/JP/2011 for A.Y. 208-09 pronounced on 15/3/2012 and ITA No. 699 647/JP/2012 for A.Y. 2009-10 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to depreciation, interest paid to partners and remuneration paid to partners. The ld. CIT(A) has taken the same view, which deserves to be confirmed. But after holding as above, the ld. CIT(A) instead of estimating the net profit rate by applying the rate of 8% and making it further subject to depreciation, interest and remuneration paid to partners, he has made calculations and after totaling the depreciation, interest and remuneration paid to partners he has reduced it from the net profit and he has arrived at net profit rate of 5.12%. There is no difference in the quantification of the relief to the assessee. However, the objection of the assessee is that consecutively in assessment years as discussed above, year after the year, a net profit rate of 8% further subject to depreciation, interest and remuneration paid to partners have been held to be justified in assessee's own case and by adopting net profit rate only and not mentioning further deduction on account of depreciation, interest and remuneration paid to partners. It is likely to set a wrong precedent in assessee's own case which may lead to complexities sometimes in future. Since there is no difference betw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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