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2022 (1) TMI 682 - AT - Income TaxRevision u/s 263 - As per CIT action of the A.O. in granting depreciation and interest expenditure as deduction is not in accordance with provisions of section 44AD(2) - PCIT has also expressed the view that the dropping of penalty u/s 271A of the Act was clearly on a wrong appreciation - HELD THAT:- Assessee furnished a reply dated 27.8.2018 contending that the CBDT has not prescribed books of accounts required to be maintained for the purpose of section 44AA read with Rule 6F(1) for civil contract works. The assessee also placed reliance on case of Sammurai Techno Trading Company Pvt. Ltd.[2009 (11) TMI 938 - KERALA HIGH COURT] wherein it was held that even where books of accounts are not maintained, section 44AD percentage of 8 can be guideline for estimation of income from civil works though the section 44AD is not applicable A.O. again issued another notice dated 10.9.2018 u/s 142(1) of the Act, wherein he proposed to estimate income before interest and depreciation @ 10% of the turnover. Thereafter, the A.O. has completed the assessment estimating the gross income @ 10% of the turnover and allowed deduction of depreciation and interest. From the foregoing discussions, it can be noticed that the A.O. has applied his mind on the impugned issue and has taken a conscious decision to allow deduction of depreciation and interest after estimating gross income @ 10% of the gross receipts. We find merit in the contentions of the assessee that the AO has taken a plausible view in this matter and hence it cannot be considered to be prejudicial to the interest of the revenue. In the instant case, there are two views possible with regard to estimation of income from civil contract works and the assessing officer has taken a plausible view. Accordingly, we are of the view that the revision order passed by Ld. PCIT on this issue cannot be sustained. Accordingly, we set aside his order in directing the A.O. to do de-novo assessment. Dropping of penalty u/s 271A of the Act was on wrong appreciation of the judgement of the High Court - A.R. contended that the Ld. PCIT should have passed separate order on this issue. However, the Ld. A.R. did not cite any authority in support of his contentions. In any case we notice that the Ld. PCIT has given opportunity to the assessee in this regard. Accordingly, we do not find it necessary to interfere with observations made by Ld. PCIT on the second issue. Appeal of assessee partly allowed.
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