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2014 (5) TMI 285 - AT - Income TaxGross receipts to be estimated @5% instead of 3% - Rejection of books of accounts Held that:- Following CIT v. Jain Construction Co. & Others [1999 (9) TMI 26 - RAJASTHAN High Court] - the estimation of income of the assessee made by the assessing officer adopting a rate of 5% is on higher side, and it would meet the ends of justice if the income is estimated applying a rate of 3% - the assessee does not own trucks used in the business and is incurring huge incidental expenditure - From such income estimated applying rate of 3%, deduction towards interest and remuneration to partners in terms of S. 40(b) of the Act may be allowed - the assessee produced the books of account and vouchers - On examination of the books of account with reference to the voucher produced, the AO found that the voucher does not tally with the cashbook - When the voucher does not tally with cashbook, the assessee has not maintained the books of account properly - the book result will not reflect the correct profit of the assessee - the AO has rightly rejected the books of account thus, there was no infirmity in the order in rejecting the books of account and estimating the profit Decided against Assessee. Claim of seigniorage charges Held that:- The material supplied by the Government/contractor will not have any element of profit - it shall be reduced from the contract receipts - the seigniorage charges shall be reduced from the total contract receipts for the purpose of estimating the profit thus, the AO is directed that while computing the total contract receipts the seigniorage charges shall be reduced from the total contract receipts for the purpose of estimating the profit. Estimation of income @5% - Grant of depreciation - Held that:- Following Indwell Constructions Versus Commissioner Of Income-Tax [1998 (3) TMI 121 - ANDHRA PRADESH High Court] - the deduction available u/ss. 30 to 38 shall be deemed to have been already given full effect and no further deduction under those sections shall be allowed - Depreciation is allowable u/s. 32 of the Income-tax Act - as provided in section 44AD no further/separate deduction shall be allowed - the claim of depreciation on the estimated income is not justified. Payment of interest and salary to the partner Held that:- The provision of section 44AD as it is applicable for the assessment year under consideration and the amendment made with effect from1.4.2011 it is obvious that the Legislature intended to allow the interest and salary separately from the estimated income the AO is directed to allow the salary and interest paid to the partner subject to the limitation provided in section 40(b) of the Act Decided against Revenue.
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