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TMI Blog2021 (10) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts of income estimated at the rate of 12.5% on main contractual receipts is a debatable question of law and fact. Since the issue is not a palpable mistake on record but involves interpretation of the ratio laid down in KNR Constructions [ 2012 (10) TMI 1046 - ITAT HYDERABAD] in the light of the law declared in Y.Ramachandra Reddy (supra), we are of the opinion that the invocation of jurisdiction under Section 154 of the Act was not justified. Hence, no case to admit the appeal on the proposed questions of law. - I.T.T.A.No. 4 of 2021 - - - Dated:- 23-9-2021 - Hon ble Sri Justice Joymalya Bagchi And Hon ble Smt. Justice Kongara Vijaya Lakshmi For the Petitioner : M Kiranmayee(Sc For Income Tax For the Respondent : E V V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding counsel appearing on behalf of the Department, argued that the Assessing Officer had incorrectly misapplied the ratio in KNR Constructions (supra) to the facts of the case and allowed depreciation after calculating gross income on the basis of estimation. In KNR Constructions (supra), it was interalia held once profits are estimated as a percentage of turnover of contractual receipts, no disallowance of any expenditure may be entertained on the basis of the profit and loss account on the ground no reliance can be placed on the financial statements prepared on the basis of books of account which have already been rejected. Hence, there was a mistake apparent on the face of record which required rectification. She submits once books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order, vide T.S.Balaram, Income Tax Officer, Company Circle IV, Bombay v. M/s. Volkart Brothers, Bombay (1971) 2 SCC 526 . Mrs. M. Kiranmayee, learned standing counsel contends that the Assessing Officer in palpable contradiction to the ratio in KNR Constructions (supra), allowed deduction on the ground of depreciation after gross income was estimated at 12.5% on the main contractual receipts upon rejection of the books of accounts. Reliance is also placed on Indwell Constructions (supra) and it is argued in the event books of accounts are rejected, the same cannot be used to allow deduction on gross income. On the other hand, on behalf of the assessee, referring to the decision in Y. Ramachandra Reddy (supra) it is contended that dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the appellant relied on a judgment of this Court in Indwell Constructions v Commissioner of Income Tax. That was a case in which this Court took the view that once the books of account are disbelieved for a particular purpose, they cannot be relied upon in the context of interest. In the instant case, we are concerned with the depreciation. The occasion to deny the deduction of depreciation or interest would arise if only the material placed before the Assessing Authority in proof of purchase of machinery and other items and payment of interest is disbelieved. No finding of that nature was recorded by the Assessing Officer. In view of the ratio laid down in Y.Ramachandra Reddy (supra), we are of the opinion deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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