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2005 (5) TMI 273 - ITAT JODHPUREstimation of the trading results - AO has wrongly applied provisions of sec. 145 - defects in the books of the account - non-genuine purchases of papers - GP rate - disallowances of depreciation on freeze - Ownership of the vehicle - Addition made on account of suppression of paper sales - Claim of assessee u/s 54F - service charges and retention of fraction of rupee. HELD THAT:- As is clearly evident from the narration as well as details in p. 2 of the assessment order, the GP rate in this year is better than the immediately preceding year in the concern M/s Kamdhenu Enterprises. In this year, the GP rate is declared as 15.48 per cent whereas, in the last year it was 14.34 per cent. In this regard, the position of law is well-settled by now by catena of decision including that of the Hon'ble jurisdictional High Court. The best guide for estimation of the trading results after rejecting the books is either the past history of the assessee or any other comparable case. The past history, of the assessee takes preference over a comparable case. In this case, the past history of the assessee is available. In comparison to this year's declared GP rate, the last year's GP rate is less. Meaning thereby, the results declared in this year are better than the last year. There are no very other specific reasons, which can impel a prudent man from taking a different and separate path. In the result, the trading results are accepted and the trading addition of Rs. 65.461 is ordered to be deleted. Ground NO.2 of the appeal is accepted. In view of this finding, ground NO.3 does not survive and hence dismissed. Disallowances of depreciation on freeze - No dispute regarding the ownership of the vehicle, but the dispute hinges the user part of allowability of the vehicle under this Act. In a way, the insurance of the vehicle being dt. 29th March, 2001 supports the case of the assessee because it happens in day to day dealings that a purchaser intends to purchase a special type of vehicle from a dealer and conveys his intention in this regard, by any means of communication available in these days, and he directs the dealer to get the insurance cover in his favour, which is invariably done by the dealer itself to facilitate the sales of the vehicles and naturally the bills of purchase are given only on the date when the money is handed over either by way of cheque or draft or even cash for that matter. We are afraid that this is not a case of putting a cart before the horse and so far as the user part of it is concerned when the vehicle is purchased and taken to the business premises, it can safely be stated to be used for the business of the assessee and nothing more nothing less. Thus, the depreciation is allowable on this vehicle. We order to allow the depreciation on this Maruti van and set aside the findings of the authorities below. This ground of appeal is accepted. Addition made on account of suppression of paper sales - The assessee has furnished a detailed chart (to show that) supply of free rim as standard accessory cannot be stated to be an abnormal practice. The Department has not specified as to what are the other mechanical accessories, which have been provided along with the copier machines. The assessee has not claimed any other expenses for standard accessories. Thus, the argument of the learned Departmental Representative does not have any substance. Insofar as the sale bill dt. 7th June, 2000 placed at the paper book is concerned, the perusal of the same clearly reveals that the assessee had supplied five rims along with the machine. Otherwise, also the paper account is a part of the trading account and since the AO has rejected the books of account and estimated the trading income, in our considered opinion, no separate addition can be made. the assessee succeeds, the ground of appeal is allowed and the impugned addition is ordered to be deleted. Claim of assessee u/s 54F - sale proceed - We are of the considered opinion that when the assessee had invested this sale proceed within the stipulated time, and admittedly much more investment was needed in the construction of the house, It would be unjustified to hold that the assessee has not carried out the intention of the legislature. So, in our considered opinion the assessee is entitled to the relief as claimed for. Needless to say that we draw support from the abovesaid decision, which is relied on by learned counsel. This ground of appeal is allowed and the addition is ordered to be deleted. Service charges and retention of fraction of rupee - There seems to be some error in the calculation of the AO. Learned AO has not provided any analysis as claimed in the assessment order and learned DR has also not provided any reasonable basis in his written submissions. So, in the interest of justice, we may at best restore this issue to the file of the learned AO with a direction to decide this issue afresh after hearing the assessee. This issue may be treated as allowed for statistical purpose. In the result, the appeal is partly allowed.
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