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TMI Blog2016 (4) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2007-08 and the appeal in ITA No.361/Jodh/2014 is filed by the assessee against the order of the learned CIT (A), Bikaner passed in appeal No.259/Bikaner/2012-13 dated 25-03- 2014 for assessment year 2010-11. 2. Revenue's Appeal ITA No.356/Jodh/2010 & Assessee's Appeal ITA No.361/Jodh/2010 (A. Y: 2007-08): Shri S. L. Mourya, learned D.R. appeared on behalf of the Revenue and S/Shri Suresh Ozha and Suffi Mohmmad appeared on behalf of the assessee. In the Revenue's appeal the Department has challenged the action of the learned CIT (A) in directing the Assessing Officer to apply net profit rate of 6% on the total receipt of Rs. 6,58,09,000/- instead of 7% applied by the Assessing Officer. In the assessee's appeal, the assessee has challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eversed. In reply, the learned A. R. submitted that the assessee was maintaining regular books of accounts which were duly audited. It was a submission that the learned CIT (A) on account of nonmaintenance of the details of work in progress as also detailed record of consumption of raw-materials and on account of improper maintenance of vouchers in respect of various expenses had upheld the rejection of assessee's books of account. It was a submission that however, in respect of the estimation of net profit, the learned CIT (A) had considering that the cost of cement had increased from Rs. 138/- to Rs. 206/- per bag and so also cost of steel had increased substantially. It was a submission that the learned CIT (A) had also taken into consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in so far as the assessee has not pressed the ground challenging the action of the learned CIT (A) in directing the Assessing Officer to estimate net profit rate at 6%. 7. Coming to the issue of interest paid to third parties which has been claimed as deduction by the assessee and has been disallowed by the Assessing Officer, it is noticed that what has been estimated is not the gross profit but net profit. When computing the net profit, the expenditure incurred by the assessee in respect of earning of income under the head "business" is rightly to be allowed. Here, the books of account of the assessee has been rejected, the interest paid to third parties falls under the head "business expenditure" which is liable to be deducted while com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the estimation of net profit rate at 8% as against 6.48% declared by the assessee and in regard to grounds No.4 to 6 against the action of the learned CIT (A) in confirming the addition representing interest paid to third parties after application of net profit rate. Both the sides reiterated their submissions as identical in the assessment year 2007-08 (supra). We have considered the rival submissions. The learned A. R. of the assessee has not been able to point out any major reasons for drop in the rate of net profit during the assessment year 2010-11 especially when in the immediately preceding assessment year the assessee has declared 8.95% net profit. This being so, we are of the view that the findings of the learned CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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