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2015 (3) TMI 675 - ITAT HYDERABADAdoption of net profit rate for estimating the income from transport business - CIT(A) restricted the estimation of income made by the AO by adopting the net profit rate of 5% instead of 10% applied by the Assessing Officer - Held that:- The assessee firm is not having vehicles of its own and thus, there is no question of claiming any depreciation allowance. The entire business of transportation is carried on by the assessee by engaging the vehicles of third parties, and as rightly contended on behalf of the assessee the net profit margin of the assessee is bound to be lower since the assessee is required to share some profit with the owners of the vehicles. Thus the net profit rate of 5% applied by the learned CIT(A) to estimate the income of the assessee from transport business is quite fair and reasonable, and upholding the impugned order of the CIT(A) on this issue - Decided against Revenue. Inclusion of incentive and bonus in the gross transport receipts for the purpose of applying the net profit rate by CIT(A) - AO adding the said amounts separately to the total income of the assessee - Held that:- the income by way of incentive and bonus is directly linked to the transport business of the assessee, and since the same, forms an integral part of the gross receipts of the assessee’s transport business, it cannot be added separately for the purpose of computing the income of the assessee by applying a net profit rate. Moreover, once the books of account are rejected and the income of the assessee is estimated by applying a net profit rate, the net profit rate so adopted is required to be applied to the gross receipts of the transport business and as held in the case of Maddi Sudarshanam Oil Mills Co. (1959 (2) TMI 27 - ANDHRA PRADESH HIGH COURT), the business receipts relating to the same business, such as incentive and bonus cannot be added separately.- Decided against Revenue.
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