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2013 (4) TMI 309 - ITAT CUTTACKTaxing the Net Profit at 8% or 9% of gross receipts on estimation - Held that:- The issue raised by the assessee is partly covered by the decision of the Tribunal in assessee's own case for the Assessment Year 2003-04 which was followed by the AO in the Assessment Year 2004-05. Thus the contention of the assessee has to be interpreted on the basis of financial statements duly submitted along with the return and were considered for estimation after rejecting the book result. The bifurcation between the contract receipts and the hiring out receipts was considered for computation of correct income by the assessing authorities when the same rate has been applied to both the nature of receipts. The assessee has submitted that the interest is part and parcel of the assessee's expenditure when the secured loans are against the assets held by the assessee amounting to more than Rs.5 Crores. Similarly the interest earned by the assessee has no bearing to the expenditure of interest along with the depreciation claimed when the CIT(A) has considered taxation of the contract receipts at 8% net of depreciation. That means the bulk of the secured loans against which assets are held requires claim of interest and depreciation in accordance with the law and not because the assessing authorities have tried to tax 8% of the gross receipts when the direct expenditure being interest and depreciation on account of hire receipts would lead to loss in the business of hiring out would be paid for by the assessee from the contract receipts leading the net income of 6.45% only. The assessee has returned more than 8% as per the benchmark of Section 44AD provisions which the authorities have applied clinches the issue in favour of the assessee that the estimation has to be in accordance with the provisions of law as was also considered by the Tribunal in assessee's own case for the Assessment Year 2003-04 when the assessment having been made by the AO in the impugned AY u/s.144 required consideration of the computation of the correct income as rendered to tax by the assessee. The depreciation and interest being indirectly paid could not be segregated required by the assessee being integral part of the consolidated business of the assessee being a Private Limited Company was to be considered insofar as the contention of the CIT-DR that the service tax percentage income at 0.8% could also be retained by the assessee has been explained by the assessee in the form of the ratio of Net Profit being 6.45% will be below the estimation as well. In this view of the matter, set aside the impugned order of the CIT(A) and direct the AO to tax 8% of the gross receipts net of service tax and allow interest and depreciation thereafter insofar as the income should not be rendered less than as returned by the assessee in the first place - in favour of assessee.
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