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TMI Blog2015 (8) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised the following common grounds of appeal in IT(SS) Nos.01,02 &03/Jab/2013 for the A.Ys 2007-08,'08-09 and '09-10 respectively:- 1. That the ld.CIT(Appeals) is not justified in sustaining the assessed income estimated at 5% of gross contractual receipts without giving separate further deduction of depreciation claimed vide circular no.29-D(XIX-14) f No.45/239/65-ITJ) dated 31.08.1965, and interest and salary paid to the partners u/s.40(b) of the I.Tax Act, 1961, without adjudicating that the same does not amount to double taxation. 2. That the ld.CIT(Appeals) erred in law on facts and circumstances of the case in sustaining the estimated assessed income at 5% of gross contract receipts without looking to the past history ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e query no.7 of the notice issued u/s. 142(1) dated 23-11-10 the assessee was asked to explain as to why N.P@5% should not be adopted for arriving at the net income from business and accordingly addition of Rs. 1,15,80,676/- should not be made in the total income declared. The assessee replied vide para 5 of the assessment order. After considering the reply of the assessee the A.O. was of the view that the assessee could not file full details of voucher regarding the labour payment, royalty to PWD and labour welfare expenses. There was some defects. Therefore, the A.O. has rejected the book result and applied the N.P @5% after depreciation on the gross contractual receipts for each assessment year under consideration to arrive at the net in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has accepted the N.P rate of 5%. The ld.AR submitted that looking to the past records for the a.ys '04-05, '05-06 and '06-07 the A.O. has applied the N.P at 5% without allowing depreciation, salary and interest payment to partners for the a.ys under consideration. Therefore, the assessee is in appeal before the Tribunal. The A.O. has not considered the CBDT Circular no.029D(XIX-14) dt. 31st Aug 1965. Separate depreciation and also deduction of interest and remuneration to partners' were not allowed by the A.O. in estimating the net profit/ income of the assessee. The ld.AR also submitted that the assessee has submitted the audited financial statement in which the assessee has specifically claimed depreciation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Hon'ble Rajasthan H.C has held in the case of M/s. Jain Construction Co. reported in 245 ITR 0527(Raj) , wherein it has been held as under:- "In case of working partners, payments of salary, bonus, commission or remuneration by whatever name it called in terms of the partnership deed is allowable as deduction to the extent of limit provided under s.40(b). In this group of cases, the Tribunal after examining the partnership deed in all individual cases found that the claim of assessee for interest on capital contribution by partners and salary to working partners was allowable deductions to the extent of limit provided under s.40(b). The Tribunal was justified in doing so.The finding of fact does not give rise to question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the another contention of Revenue that giving effect to the order o the Tribunal will tantamount to same deductions twice. The premises of the contention appears to be the presumption that depreciation must have been considered to have been allowed in arriving at the net profit. It is not permissible to draw such presumption. An A.O. is expected to be conscious of the claim of the assessee for allowance of depreciation and that he has to deal with it in computing the income, by applying net profit. Thus, the assessee is entitled to depreciation as admissible under the rules on the assets used in the business as claimed in the return. In a case of rejection of accounts and estimate of net profit, depreciation is required to be worked out s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Hon'ble Rajasthan H.C in the cases (supra) has held that if the assessee is in civil construction business and if all the books of account were produced before the A.O. and A.O. is not satisfied with the books result of the assessee and if he estimated the N.P rate still assessee is entitled to deduction towards payment of salary/interest to the partners to the extet limit provided by amended in section 40(b). The Hon'ble High Court has further held that the depreciation is to be allowed separately as per said CBDT Circular No. 029D(XIX-14) Dt. 31st August 1965. In the instant case, we find that the assessee has submitted the audited financial statements in which assessee has basically claimed depreciation and also details of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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