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2016 (12) TMI 448 - AT - Income TaxEstimation of profit - profit element is to be determined from the gross profit - Held that:- It is not disputed by the revenue that in earlier year the Tribunal in assessee’s own case pertaining to A.Y. 2008-09 had restricted the disallowance to the extent of net profit rate at 8% subject to allowance of depreciation and interest. In the year under consideration we find that the AO has pointed out reduction of hire charges expenditure. This fact is not rebutted by the assessee, hence this reduction of expenditure would certainly increase the profit margin of the assessee. As per the AO, in the assessment year 2008-09 the assessee had incurred hire charges expenditure of ₹ 45,62,140/- whereas hire charges incurred in the present year is ₹ 80,000/-. The assessee has not brought on record any material suggesting that the hire charges were paid on account of non functioning of the assessee’s own machinery. Therefore, we deem it proper to restrict the disallowance @ 10% of the Net Profit subject to interest and depreciation keeping in view the fact in earlier year’s net profit as estimated by the Coordinate Bench @ 8% subject to allowance of depreciation and interest. Addition u/s 68 - Held that:- Once the book results are rejected by invoking provisions of section 145(3) of the Act, no separate additions could be made under section 68. As decided in CIT vs. G.K. Contractor [2009 (1) TMI 840 - RAJASTHAN HIGH COURT] even if the assessee has failed to discharge his onus of proof in explaining the cash credits shown in the books of account as "market outstanding", the AO having estimated the higher profit rate on total contract receipts after rejection of the books of account invoking the provisions of s. 145(3), no separate additions can be made on account of unexplained cash credit under s. 68 of the Act of 1961
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