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2015 (4) TMI 1115 - ITAT VISAKHAPATNAMRevision u/s 263 - deduction towards depreciation and interest - Held that:- If an assessee is entitled to claim deduction of interest, be it under Section 36(1)(iii) of the Act or any other relevant provision and of depreciation under Section 37 of the Act, in the ordinary course of assessment, there is no reason why the same facilities be not extended to him, merely because the profit is determined on the basis of estimation as was done in the instant case. We are of the view that depreciation and interest, which are otherwise deductable in the ordinary course of assessment, remain the same legal character, even where the profit of assessee is determined on percentage basis. The conclusions arrived at by us, get support from the Circular dated 31.08.1965 issued by the Central Board of Direct Taxes. Though the Circular was with reference to the 1922 Act, it holds good for the analogous provisions under the 1961 Act. in case of estimation of profit on contract business, deduction towards depreciation and interest is allowable as there is no provision under the Act restricting such allowance. The Hon’ble jurisdictional High Court in case of CIT Vs. Sri Venkateswara Swamy Lorry Service (2013 (6) TMI 780 - ANDHRA PRADESH HIGH COURT) while dismissing the appeal of the revenue again held that in case of estimation of income after rejecting the books of account further deduction towards depreciation and interest and remuneration payment to partners is still allowable. Therefore, respectfully following the view expressed by Hon’ble jurisdictional High Court as aforesaid, we hold that exercise of power u/s 263 of the Act and the consequent order passed by ld. CIT directing AO to disallow depreciation is not valid. - Decided in favour of assessee
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