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2017 (3) TMI 1034 - ITAT MUMBAIClaim of depreciation - Held that:- Depreciation is a general principle represents the diminution in the value of a capital asset, when apply to the purpose. Thus, the term depreciation is to be understood in commercial sense then it can be said that it is a normal wear and tear, which required to be replaced at a point of time in future - See CIT vs Anand Theaters (2000 (5) TMI 4 - SUPREME Court ) When two views are possible, which favour the assessee, has to be followed, further favours the case of the assessee. Further, it is not the case of the Department that the machinery was never put to use by the assessee for its manufacturing activity as it is an admitted position in earlier year, the claimed depreciation was allowed to the assessee. During the relevant period, due to lull in the business, the manufacturing activity was not carried out. It is not the case that the manufacturing activity was permanently stopped rather due to temporary lull in the business, in a hope of improvement in the market condition, the machinery was kept ready for use. Since, the depreciation is statutory allowance and the manufacturing activity was temporarily stopped, therefore, it has to be allowed. Thus, this ground of the assessee is allowed. Ad-hoc addition to the gross profit and further making enhancement in the gross profit percentage to 1.89% by rejecting the books of account of the assessee - Held that:- We find that the assessee duly produced the party-wise details of purchase and sales with the help of register maintained for this purpose and also confirmation from the concerned parties. Ld. Assessing Officer issued notices u/s 133(6) of the Act to all the creditors to which all the parties attended/submitted their replies as is evident from para 5.3 of the impugned order. As is evident from the assessment order itself (para-7) that certain discrepancies were noticed in the audit report, meaning thereby, the audit report was duly filed by the assessee. In the assessment order itself (para-7-II), there is a mention that during assessment proceedings itself, the assessee filed audit report on 13/10/2009. It means the audit report was filed by the assessee, which was ignored by the ld. Assessing Officer. It is also noted that for Assessment Year 2009-10, the same GP was accepted by the Department, while framing the assessment u/s 143(3) of the Act, therefore, there is no reasons to increase the same by 1.89% of the turnover. Therefore, the ld. Assessing Officer is directed to delete the ad-hoc enhancement to the tune of 1.89% and accept the gross profit accepted for Assessment Year 2009-10 as there is no reason to increase the gross profit, without bringing contrary facts on record, thus, this ground of the assessee is allowed and disposed off in terms indicated hereinabove.
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