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2015 (10) TMI 2676 - AT - Income TaxAllowing the depreciation when the income was computed by the A.O. by applying net profit rate of 25% - Held that:- AO had not allowed the separate deduction on account of depreciation separately. IN A.Y. 2009-10, the ld Assessing Officer allowed the depreciation separately from the estimated income U/s 43(3) of the Act. The case law relied upon by the assessee i.e. CIT Vs. Jain Construction (1999 (9) TMI 26 - RAJASTHAN High Court) is squarely applicable wherein it has been held that in case of rejection of books of account of the firm and income estimated, the depreciation is allowable separately by considering the CBDT circular No. 29D(XIX) of 1965 dated 31/8/1965 wherein it has been provided that net profit rate is subject to allowance of depreciation and the depreciation allowance should be deducted therefrom. Therefore, we uphold the order of the ld CIT(A). Addition made U/s 40(a)(ia) and 40A(3) - Held that:- It is found that the various Hon'ble High Courts as well as ITAT has decided this issue against and in favour of the assessee. The Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court) has held that when two opinions has been formed by the Hon'ble High Court, the assessee's favourable opinion is to be applied. Therefore, we uphold the order of the ld CIT(A) as Assessing Officer had rejected the books of accounts and had applied net profit rate for purpose of computing income no disallowance could have been made u/s 40A(3). In view of the above judicial pronouncements, no disallowance could be made U/s 40(a)(ia) and 40A(3) of the Act when assessment is made computing income by application of NP rate
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