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TMI Blog2023 (8) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... f account, however, we are of the opinion that the assessee is entitled for depreciation at the prescribed rate in the provisions. Accordingly, we direct the A.O. to estimate the income of the assessee at 10% and grant the applicable rate of depreciation on fixed assets and re-compute the income of the assessee. Appeal of the assessee is partly allowed for statistical purpose. - Shri Shamim Yahya, Accountant Member And Shri Yogesh Kumar U.S., Judicial Member For the Assessee : Shri Madhur Bansal, CA For the Department : Ms. Beenu, Sr. DR ORDER PER YOGESH KUMAR U.S., JM This appeal is filed by the Revenue against the order dated 27/11/2017 passed by the ld. Commissioner of Income Tax (Appeals)-38, (hereinafter referred to CIT (Appeals ) for assessment year 2013-14. 2. The grounds of Appeal are as under:- On the facts and under the circumstances of the case, the Ld.CIT(A) has erred in law and facts in deleting the addition of Rs. 6,05,99,475/- made by the AO by way of rejection of books of account u/s 145(3) of the Income Tax Act, 1961 as the assessee has failed to produce its books of accounts, bills and vouchers and relevant documents in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting and not on cash basis which have been verified by the Chartered Accountant in Schedule S , Accounting Policies and notes on accounts which have already been submitted. Further submitted that the reference to Section 44 BBB is not appropriate as the said Section applicable to a foreign Company and not to an Indian Company. Further submitted that the books of accounts of the assessee are duly audited and the auditor has given his remarks confirming that of foreign transactions are recorded in Indian rupees and the Ld. A.O. has taken up previous year for scrutiny, but not made any disallowance in the previous year. Therefore submitted that, the order of the CIT(A) requires no interference. 6. We have heard both the parties and perused the material available on record. The Ld. A.O. during the course of assessment proceedings directed the assessee to file foreign project wise profits and loss account, bills and vouchers related to expenditure claimed in respect of foreign projects and books of accounts along with bills and vouchers were also sought. The Representative of the assessee appeared and filed part information and the A.R has been once again asked by the A.O. for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the light of evidence furnished by assessee. Nowhere in the assessment order has the assessing officer pointed out any defects in the books of accounts and the same have not been rejected u/s 145(3) of the L.T. Act. The Ld. AR of appellant has relied on the decision of Hon'ble Delhi High Court in B.K. Khanna Co. Pvt. Ltd. vs. CIT (2001) 247 ITR 705,709 Delhi. In the light of principles laid down by Hon'ble Delhi High Court in B.K. Khanna Co. Pvt. Ltd. vs. CIT (2001) 247 ITR 705,709 Delhi, I hold that the addition of Rs. 6,05,99,475/- by applying estimated GP rate of 10% without rejecting the trading results u/s 145(3) is not warranted. The assessing officer is directed to delete the same. Accordingly, these grounds are allowed. 4.5 Income Tax Act, 1961 allows depreciation on computers and computer software@ 60% at Note 7 to Part B to Appendix 1, Rule 5 of IT Rules. As per Note 7 computer software means any computer program recorded on any disc, tape, perforates media or other information storage device. The instruments on which appellant has claimed depreciation @ 60% are clearly covered by this definition as they store data and software to make numerous calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;145. (1) Income chargeable under the head Profits and gains of business or profession or Income from other sources shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time accounting standards to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144.'. The Section 44AA of the Act deals with maintenance of accounts by certain persons carrying on profession or business which reads as under:- Maintenance of accounts by certain persons carrying on profession or business 44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness or profession amed on by any class of persons, prescribe , by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contaiend therein and the form and the manner in which and the place at which they shall be kept and maintained. Without prejudice to the provisions of sub-section (3), the Board may prescribe, by rules, the period for which the books of account and other documents to be kept and maintained under sub-section (1) or sub-section (2) shall be retained.] 10. On combined reading of the above Sections, the assessee is duty bound to maintain books of account and same shall be produced before the A.O. so as to deduce the result of the assessee business, irrespective of the business made in foreign country or otherwise. 11. The observation of the CIT(A) contrary to the above provisions of the Act i.e. Section 44AA and Section 145 of the Act. Hence, in our opinion, the CIT(A) is not justified in deleting the addition. The Ld. A.O. had made addition in view of non maintenance of books of account, however, we are of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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