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2016 (8) TMI 1409 - ITAT AMRITSARNet profit rate at 7% on the gross receipts - Held that:- The assessee is a civil contractor and the total receipts amounting to ₹ 9,96,62,747/- were shown during the year under consideration thereby showing the rate of profit @ 4.61%. AO took the net profit at ₹ 99,66,275/- after applying 10% rate to the total receipts. Against this the salary to partners was allowed and the net income was determined at ₹ 79,66,275/-. Against the said addition the assessee went in appeal before the ld. CIT(A) and the ld. CIT(A) applied a net profit at 7% on the gross receipts declared by the assessee. It was also held that the deprecation as claimed at ₹ 2,13,22,380/- may be allowed. While allowing the depreciation the CIT(A) relied upon the decision in the case of Lali Construction Co. vs. ACIT [2014 (9) TMI 500 - PUNJAB & HARYANA HIGH COURT] in which, it was observed that the depreciation allowable from net profit even if the total income is computed by applying net profit rate. Several other Courts have also held the same view. Provisions of section 40a(ia) are not applicable as this amount has been shown in the hands of the receipt ant and which has suffered tax. As such the disallowance is not called for and the department has got no justification for coming in appeal before the Tribunal.
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