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2019 (12) TMI 1035 - AT - Income TaxRevision u/s 263 - estimation of profit @ 5% of gross business receipt - HELD THAT:- The assessee having failed to produce the books of accounts, bills, vouchers etc. during the second round of assessment proceedings; the AO had valid reasons to not be fully satisfied about the correctness and completeness of the accounts of the assessee; and therefore, the AO was justified in invoking the provisions of Section 145(3) of I.T. Act. Moreover, the Ld. Counsel for assessee has failed to bring any materials for our consideration to establish that the estimation of profit @ 5% of the gross business receipt is excessive, unreasonable, high pitched or contrary to law having regard to the facts and circumstances of the case. In view of the foregoing, we confirm the order of the lower authorities invoking provision of Section 145(3) of I.T. Act for the purpose of estimating business profits and we further confirm the estimation of business profits @ 5% of gross business receipts. Loss on sale of machinery - addition amounts to double addition of the same amount - HELD THAT:- Aforesaid amount was part of the business loss claimed by the assessee and once that loss is disallowed, and estimated net profit is assessed as income; the aforesaid amount stands disallowed automatically. Therefore, assessee correctly submitted that there was no justification for once again making repeated addition on the aforesaid amount in the Assessment Order. DR agreed that the repeated addition made by the AO in respect of the aforesaid amount amounts to double addition of the same amount and he left it to the discretion of the Bench to give appropriate direction to the AO for deleting the double addition. As both sides are in agreement that repeated addition made by the AO amounts to double addition of the same amount; we accordingly direct the AO to delete the repeated addition. Claim of depreciation - estimation of net profit - HELD THAT:- Both sides were in agreement that the assessee was eligible for depreciation of Income Tax Act, 1961 and Income Tax Rules, 1962. As the AO has estimated net profit and not gross profit of business, both sides were also in agreement that the depreciation as claimed by the assessee in the books stands already allowed in the estimation of net profit; and therefore, depreciation to be allowed to the assessee as per Income Tax Act, 1961 and Income Tax Rules, 1962 needs to be reduced by the amount of depreciation claimed by the assessee in the books of accounts. In view of the foregoing, and as both sides have agreed to this at the time of hearing before us, we direct the AO to allow depreciation as per Income Tax Act, 1961 and Income Tax Rules, 1962 as reduced by the amount of depreciation claimed by the assessee in the books of account. Claim for interest expenses on business borrowing of the assessee and does not relate to interest paid / payable to the partner of partnership firm - HELD THAT:- We agree with the contention of the Ld. DR that in a case where the determination of income of the assessee is based on estimation of net profit (and not gross profit) interest expenses on commercial borrowing of the assessee are deem to have already been allowed to the assessee. Therefore, this ground of appeal by the assessee is dismissed.
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