TMI Blog2016 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... otton business would mean that the assessee’s Net Profit ratio is 77% (7,69,907 x 100 ÷10,00,000) which is totally illogical because such profit cannot be derived from cotton waste business. Therefore, we hereby confirm the order of the Ld. CIT (A) on this issue. - Decided against revenue Depreciation claim on windmill - CIT(A) granting 80% deposit on WDV method instead of 7.69% on straight line method in accordance with Section-32(1) Explanation-2 read with Rules 5 (1A) - Held that:- CIT (A) directed the Ld. Assessing Officer to grant depreciation to the assessee as claimed in his return of income filed on 25.05.2009 for the relevant assessment year by following the decision of the Chennai Bench of the Tribunal in the case of M/s.K.K.S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(3) r.w.s. 250 of the Act and order dated 29.10.2013 in Appeal No.57/12-13 passed under section 271(1)(c) r.w.s. 250 of the Income Tax Act,1961 for the assessment year 2009- 10. Since the quantum appeal and the penalty appeal are interlinked, they are disposed of by this common order for the sake of convenience. 2. The Revenue has raised eight elaborate grounds in its quantum appeal and four grounds it its penalty appeal, however the cruxes of the issues are concised herein below for adjudication:- Quantum appeal:- i) The Ld. CIT(A) has erred in directing the Ld. Assessing Officer to treat the income of ₹ 20 lakhs resulting from cash deposits as assessee s business turnover and balance ₹ 25,57,709/- as incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish the money deposited in his bank a/c from his cotton business. On perusing the statement of account for the assessment year 2008-09, it was revealed that the profit from waste cotton business was ₹ 1,69,000/- and the assessee s case was covered U/s.44AF of the Act since the annual turnover of the assessee was less than ₹ 40/- lakhs. It was further noticed that for the assessment years 2007-08 2009-10, the income from the same business was ₹ 50,000/- ₹ 1,25,380/- respectively. Since there was a huge deposit during the period 01.04.2008 to 31.03.2009 amounting to ₹ 45,57,709/-, the Ld. Assessing Officer opined that the entire cash deposits could not have resulted from the waste cotton business because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs turnover from the assessee s waste cotton business would mean that the assessee s Net Profit ratio is 77% (7,69,907 x 100 10,00,000) which is totally illogical because such profit cannot be derived from cotton waste business. Therefore, we hereby confirm the order of the Ld. CIT (A) on this issue. 5.1. Ground No.(ii) - granting 80% depricition on WDV method instead of 7.69% on straight line method in accordance with Section- 32(1) Explanation-2 read with Rules 5 (1A). The assessee had invested in windmill during the relevant previous year amount to ₹ 1.08 crores. Since the assessee had not exercised its option before the Ld. Assessing Officer for granting deprecation @80% the Ld. Assessing Officer allowed the depreciation at 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee as the sale proceeds from waste cotton business both of which is treated as not genuine. The Ld. Assessing Officer did not find merit in the credit worthiness of the assessee s father for having advanced ₹ 10/- lakhs loan to the assessee because he was a retired employee of a Cement factory during the year 2000 and did not have any source of income. Further the cash deposit of ₹ 35,57,709/- could not be convincingly explained by the assessee as sale proceeds from the waste cotton business of the assessee. On appeal, the Ld. CIT (A) confirmed the order levying penalty for the addition of ₹ 10 lakhs, however deleted the penalty with respect to cash deposits from waste cotton business by observing as under:- The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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