Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (4) TMI 1115 - ITAT VISAKHAPATNAM

2015 (4) TMI 1115 - ITAT VISAKHAPATNAM - TMI - Revision u/s 263 - deduction towards depreciation and interest - Held that:- If an assessee is entitled to claim deduction of interest, be it under Section 36(1)(iii) of the Act or any other relevant provision and of depreciation under Section 37 of the Act, in the ordinary course of assessment, there is no reason why the same facilities be not extended to him, merely because the profit is determined on the basis of estimation as was done in the ins .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

estimation of profit on contract business, deduction towards depreciation and interest is allowable as there is no provision under the Act restricting such allowance. The Hon’ble jurisdictional High Court in case of CIT Vs. Sri Venkateswara Swamy Lorry Service (2013 (6) TMI 780 - ANDHRA PRADESH HIGH COURT) while dismissing the appeal of the revenue again held that in case of estimation of income after rejecting the books of account further deduction towards depreciation and interest and remunera .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vocate For the Revenue: Shri Lucas Peter/ D. Manoj Kumar ORDER Per Saktijit Dey, Judicial Member:- These two appeals by assessee are directed against similar, but, separate orders, both dated 19/03/2014, of ld. CIT, Vijayawada passed u/s 263 of the Act, pertaining to AYs 2009-10 and 2010-11. 2. As the facts and issues involved in both the appeals are common and identical, for the sake of convenience we propose to refer to the facts as involved in AY 2009-10. 3. Briefly the facts are, assessee a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e could not be relied upon and have to be rejected . After rejecting the books of account, AO proceeded to estimate the profit by applying the rate of 12.5% on main contract work and 8% on sub-contract work. Further, AO also noticed that during the year, assessee has also sub-contracted a portion of the work to third parties. AO, therefore, estimated income on such sub-contracted work at 3% of the turnover. In this process, income was determined on estimate basis at ₹ 3,26,30,512. After es .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee for concerned AY and after examining them was of the view that assessment order passed is erroneous and prejudicial to the interests of revenue as AO after estimating the profit has allowed further deduction towards depreciation, interest on partners capital and remuneration to partners which is contrary to the view expressed by the Hon ble AP High Court in case of M/s Indwell Constructions, 232 ITR 776 and the ITAT, Hyderabad in case of M/s KNR Constructions Ltd. Accordingly, he issued .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y him for the AY 2009-10. Similar direction was also issued by ld. CIT to add an amount of ₹ 1,17,72,890 being the depreciation allowed by AO for the AY 2010-11. Being aggrieved of such directions of ld. CIT, assessee is before us. 5. Ld. AR submitted before us, AO having allowed depreciation claimed by assessee after making necessary enquiry and proper application of mind, ld. CIT was not justified in revising such assessment order by invoking his power u/s 263 of the Act. Ld. AR submitte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

supporting the impugned order of ld. CIT submitted that once profit is estimated after rejection of books of account, no further deduction as envisaged u/s 28 to 38 can be allowed. In support of such contention, he relied upon the decision of the Hon ble AP high Court in case of M/s Indwell Constructions Vs. CIT (supra). 7. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. We have also applied our mind to the de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bserved that once income is estimated all related expenses and other eligible deductions is deemed to have been taken care of and there is no scope for allowing further deductions. However, as can be seen, in the present case, the provisions of section 44AD are not applicable as receipts from contract business is much more than the prescribed limit. Moreover, AO while estimating the profit from contract business has applied a much higher rate than the rate prescribed u/s 44AD. In these circumsta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

llowing manner: For example, Section 44AD of the Act provides for determination of the income of an assessee from the business at 8% of the total turnover or the gross receipts of the previous year under certain circumstances. Sub-Section (2) is to the effect that if any deduction allowable under Sections 30 to 38, which takes in its fold the deduction such as depreciation and interest, shall be deemed to have been effected. The procedure under that section, however, applies only when the turnov .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the depreciation and interest. On the other hand, the facility created under the Act is so firm and strong that if for any reason it becomes impermissible or unnecessary for an assessee to seek the allowance of depreciation for a particular Assessment Year, he is entitled to carry it forward, for the subsequent years. In such an event, it assumes the character of unabsorbed depreciation. In this very case, the Assessing Officer permitted the allowance of unabsorbed depreciation to the respondent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

4-95. If an assessee is entitled to claim deduction of interest, be it under Section 36(1)(iii) of the Act or any other relevant provision and of depreciation under Section 37 of the Act, in the ordinary course of assessment, there is no reason why the same facilities be not extended to him, merely because the profit is determined on the basis of estimation as was done in the instant case. We are of the view that depreciation and interest, which are otherwise deductable in the ordinary course of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version