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TMI Blog2016 (11) TMI 1641X X X X Extracts X X X X X X X X Extracts X X X X ..... .5% and not 10%, in our opinion the net profit rate has to be assessed at 10%. No other expenses are allowed. - Income Tax Appeal No. 10/2002 - - - Dated:- 8-11-2016 - K. S. Jhaveri And Goverdhan Bardhar, JJ. Mr. Prakul Khurana, for the appellant Mr. Anuroop Singhi, for the respondents ORDER 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed both the appeals i.e. preferred by the assessee and the appeal preferred by the department. 2. This Court while admitting the appeal on 15.05.2002, framed following substantial questions of law for consideration: (i) Whether on the facts and in the circumstances of the case, the the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits are arrived after applying the net profit rate, the interest and depreciation paid to third parties or salary and interest paid to partners are not allowable. Provisions of Section 44AD are also very clear which says that in case of firm the salary paid to the partners and interest are allowable deductions where the profits rate. This bench of the Tribunal is of the consistent view that where the profits are arrived after applying the net profit rate then the deduction on account of depreciation, interest paid to third parties and salary and interest paid to partners are allowable deductions. Accordingly we direct the AO to allow the depreciation as claimed. However, after verification of the applicability that the asset was av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that assessee has stated that some of the persons were produced. It means all the persons to whom the expenses were paid were not produced. Of course, the confirmation from those persons are on record buy they could not be verified because those persons were not produced. The number of truck/tractors which were given also not verifiable with the records of RTO. The vehicle number given by the assessee were found to be three wheeler scooters and the assessee could not prove there facts even at the stage of Tribunal. Therefore, they remained unverifiable. We have confirmed the application of n.p. Rate of 10% for A.Y. 1990-91, supra. However, we find that during this year the expenses claimed are on neither side which are also not properl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. 10. The Tribunal has considered the application of net profit rate as 11.5% and not 10%, in our opinion the net profit rate has to be assessed at 10%. No other expenses are allowed. Learned counsel for the respondents has placed reliance on the decision of this Court in the case of Malpani House of Stones vs. CIT, DB Income Tax Appeal No.35/2003 decided on 04.10.2016, wherein it has been held as under: In view of the well settled principle of law that when income is estimated and while assessing the same and rejecting the books of accounts, it would not be appropriate to rely on the books of accounts for any addition other than estimate made by A.O. In that view of the matter, the contention raised by the appellant deserv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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