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TMI Blog2015 (10) TMI 2676X X X X Extracts X X X X X X X X Extracts X X X X ..... by considering the CBDT circular No. 29D(XIX) of 1965 dated 31/8/1965 wherein it has been provided that net profit rate is subject to allowance of depreciation and the depreciation allowance should be deducted therefrom. Therefore, we uphold the order of the ld CIT(A). Addition made U/s 40(a)(ia) and 40A(3) - Held that:- It is found that the various Hon'ble High Courts as well as ITAT has decided this issue against and in favour of the assessee. The Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court) has held that when two opinions has been formed by the Hon'ble High Court, the assessee's favourable opinion is to be applied. Therefore, we uphold the order of the ld CIT(A) as Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and providing space for advertisement. The assessee filed return on 30/09/2009 at loss of ₹ 23,72,020/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer observed that during the year under consideration, the contract was only for 1 months. The assessee had shown net loss of ₹ 1,97,57,400/- on total turnover of ₹ 1,03,58,467/- with N.P. rate of (-) 190.74% in comparison to N.P. rate of 23.38% shown in the preceding year i.e. 2008-09. The ld Assessing Officer gave reasonable opportunity of being heard on this issue, the assessee replied from time to time and justified the reasons for decline of net profit rate but the ld Assessing Officer observed that most of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as vehemently supported the order of the Assessing Officer and argued that this addition was not subject to any depreciation. Any income determined by the Assessing Officer is presumed to be allowed on expenses including statutory deductions i.e. depreciation. Therefore, the same is to be confirmed. 5. At the outset, the ld AR of the assessee has reiterated the arguments made before the ld CIT(A). The assessee firm claimed depreciation of ₹ 1,25,79,135/- in the return of income filed adopting the written down value of assets as per last assessment year. The ld Assessing Officer did not discuss this issue in assessment order nor allowed the depreciation as claimed. It is submitted that in A.Y. 2008-09 while NP rate as in this year w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The ld counsel's arguments are not substantiated with the copy of assessment filed by the AR for A.Y. 2008-09 where trading additions were made, ₹ 1,41,12,772/- no separate deduction on account of depreciation was allowed. The assessee already claimed the depreciation in returned income, therefore, the ld Assessing Officer had not allowed the separate deduction on account of depreciation separately. IN A.Y. 2009-10, the ld Assessing Officer allowed the depreciation separately from the estimated income U/s 43(3) of the Act. The case law relied upon by the assessee i.e. CIT Vs. Jain Construction (supra) is squarely applicable wherein it has been held that in case of rejection of books of account of the firm and income estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng NP rate, after rejecting the books of account. Since the books of account have been rejected and income has been estimated by applying NP rate, there does not appear to be any justification for further disallowance under these sections. These disallowances, therefore, appear to be uncalled for and are, accordingly, deleted. 9. Now the revenue is in appeal before us. The ld DR has argued that these additions are deeming additions and had no relation with the income estimated on the basis of net profit rate. The ld DR has drawn our attention on the decision of Hon'ble Agra Bench of ITAT dated 21/11/2011 in the case of ITO 1(3), Agra Vs. Shri Ravi Dubey in ITA No. 228/Agr/2010 for A.Y. 2006-07 wherein it has been held that CIT(A) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further relied on the decision in the case of CIT-1 Vs. G.S. Tiwari Co. (2014) 41 Taxmann.com 17 (All) wherein the Hon'ble High Court has held that the addition U/s 68 on account of unexplained cash creditor and business estimated by rejecting the books of account, separate addition can be made. Therefore, he prayed to confirm the order of the Assessing Officer. 10. At the outset, the ld AR of the assessee has submitted that though the assessee firm itself made this disallowance in return of income while preparing statement of assessable income as per books of accounts. But not when Ld. A.O. rejected books of accounts and completed assessment by applying N.P. rate no separate addition U/s 40(a)(ia) can be made. This legal view h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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