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TMI Blog2017 (12) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be made on account of depreciation, hence, we are of the opinion that assessee is entitled for depreciation from the estimated income, since ld. CIT(A) while allowing the appeal, followed the order of this tribunal on similar facts and no material is placed to controvert the findings of the ld. CIT(A). Therefore, we uphold the order of the ld. CIT(A) and dismis the appeal of the revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... e-2(1), Vijayawada in ITA No. 370/Viz/2011 order dated 13.12.2013 held that A.O. should not disallow interest and remuneration payment to partners. Relevant excerpt of the order is reproduced below: 5. We have considered submissions of Id. Representatives of parties and orders of authorities below. It is a fact on record that the income of the assessee was estimated @ 8% by rejecting books of account. The dispute is only with regard to the fact that as to whether after estimating the income further deduction can be allowed towards remuneration and interest payment to the partners. The CIT in exercise of his power u/s.263 of the Act has directed the AO to disallow the expenditure claimed by following the decision of Hon'ble Jurisdictional High Court in the case of Indwell Constructions (supra). However, it is to be noted that the Visakhapatnam Bench as well as the Hyderabad Benches of this Tribunal in a number of decision after taking into consideration the ratio laid down in Indwell constructions (supra) have held that even in case of estimation of income, further deduction towards interest and remuneration payment to partners is allowable. The ITAT, Hyderabad Bench in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. The capital expenditure incurred is not allowed deduction, but the deterioration in their value is allowed as deduction with the name 'depreciation'. Hence, it is called non-cash expenditure and also callsed statutory deduction. While estimating the income, in ITA Nos.79 to 851Viz/2013 l.T.A.Nos.89 to 95/Viz/2013 Assessment Year 2004-05 to 2010-2011 Srivalli Shipping Transport results only are estimated on the basis of sales/gross receipts, meaning thereby, what is estimated is only the net profit before allowing any non-cash expenditure / statutory deductions. Further, the quantum of depreciation would also depend upon the value of assets. For example, a business man having lower version of Car or Air Conditioner would be entitled to claim lower amount of depreciation, since the cost of the lower version of car and Air Conditioner will be less. Whereas another business man having higher version of Car and Air Conditioner would get higher amount of depreciation, since the cost of those assets shall be higher. Hence, even if the level of operations and other things are equal between the two, the depreciation amount will be different due to the difference in the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperly audited by the qualified Accountant and the Assessing Officer has verified the books of accounts and vouchers, but did not find any defect, except the nature of non-verification of certain expenses. Therefore, he argued that depreciation and remuneration paid to the partners are required to be allowed from the estimated income and no interference is called for in the order of the ld. CIT(A). 7. We have heard both the parties and perused the material placed on record. 8. The assessee is in the business of civil contract works and has maintained books of account, which were duly audited by the qualified Accountant. During the assessment year under consideration, the assessee received the total contract receipts of ₹ 26,66,70,613/-, out of which he has given sub-contract works of ₹ 5,42,90,048/- and received the commission of ₹ 5,42,901/-. From the balance amount of contract receipts of ₹ 21,34,00,565/-, an amount of ₹ 12,68,58,376/- was received on sub-contract work given by M/s. Mahalakshmi Construction Corporation Ltd., Pune. Thus, the main contract works executed by the assessee was of ₹ 8,65,42,189/-. The Assessing Officer found that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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