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TMI Blog2022 (4) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of the case rightly estimated the net profit at 8% on gross contract receipts. CIT(A) has erred in allowing further deduction such as interest / remuneration to partners and depreciation. Respectfully following the decision of Indwell Constructions [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] and the decision laid down in G.Raja Gopala Rao[ 2017 (1) TMI 1194 - ITAT VISAKHAPATNAM] we are inclined to set aside the directions of the Ld.CIT(A) w.r.t allowing further deduction such as interest / remuneration to partners and depreciation from the estimated income, and allow the appeal of the revenue. - I.T.A.No.501/Viz/2019 CO No.153/Viz/2019 (Arising out of ITA No.501/Viz/2019) - - - Dated:- 7-4-2022 - Shri Duvvuru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions of Sec.44Ab were not in existence in the AY 1994-95, which stipulates only allowance of remuneration, interest paid to partners from the income estimated from such provisions and no other deduction including depreciation. 4. The CIT(A) while directing the AO to estimate the net profit at 8% prescribed under the provisions of Sec,44AD, ought not to have allowed depreciation from such profits. 5. The CIT(A) erred in not following the decision of Hon bIe ITAT, Visakhapatnam in the case of S Raja Gopal Rao Vs. DCIT 4(1) Vsp (163 ITD 46), wherein it was held that once net profit is estimated at 8% of the gross receipts, the assessee is not eligible for separate deduction towards depreciation. 6. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insurance claim. He also stated that construction of Palemvagu project near Bhadrachalam, Khammam District was completely collapsed due to heavy floods in the month of August. The books of accounts were submitted to the insurance surveyor as called upon by the United India Insurance. Based on the submissions before the AO, the AO observed that the assessee produced some self made vouchers with respect to salary payments and labour payments. The AO also noticed that the assessee has failed to comply with the provisions of section 194C of the Act and concluded that the expenditure vouchers produced by the assessee cannot be relied upon. The AO also observed that in the audit report furnished by the assessee, it was mentioned that the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is given by section 29 which states that the income from profits and gains of business shall be computed in accordance with the provisions contained in sections 30 and 43D. Section 40 provides for certain disallowances in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under section 29 is to be made under section 145 on the basis of the books regularly maintained by the assessee. If these books are not correct or complete, the Income-tax Officer may reject those books and estimate the income to the best of his judgement. When such an estimate is made it is in substitution of the income that is to be computed under section 29. In other words, all the deductions which are referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t profit at 8% on gross contract receipts. However we are of the view that the Ld.CIT(A) has erred in allowing further deduction such as interest / remuneration to partners and depreciation. Respectfully following the decision of the Jurisdictional High Court decision in Indwell Constructions Vs. Commissioner of Income Tax (1998) 232 ITR 776 (Andhra Pradesh) and the decision laid down in G.Raja Gopala Rao Vs. Deputy Commissioner of Income Tax, Circle-4(1) [163 ITD 46], Visakhapatnam Bench we are inclined to set aside the directions of the Ld.CIT(A) w.r.t allowing further deduction such as interest / remuneration to partners and depreciation from the estimated income, and allow the appeal of the revenue. 7. The assessee filed cross object ..... X X X X Extracts X X X X X X X X Extracts X X X X
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