TMI Blog2011 (1) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... nds: 1. The CIT(A) erred in both law and facts 2. The CIT(A) erred reducing the estimation of gross receipts to 6% while in similar nature of work carried out by M/s Teja Constructions, the estimation on gross receipts @ 10% was confirmed. 3. The CIT(A) erred in appreciating the decision of Hon ble AP High Court in the case of M/s Indwell Constructions (232 ITR 776) in following the principle that no application of section 30 to 44D when books are rejected. 3. The CO filed by the assessee is in support of the order of the CIT(A). 4. Brief facts of the issue are that the assessee is a construction company located at Mancherial, Adilabad District, AP is engaged in the business of civil contracts. The assessee firm filed its ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account to be rejected as book result will not reflect the correct profit of the assessee. Therefore, the assessing officer has rightly rejected the books of account. After rejecting the books of account, reasonable estimation of income to be done. The profit ratio cannot be a constant factor for each contractor in this line of activity; it depends upon the place of execution of the work, availability of raw material, labour and assessee s own funds. Therefore for the purpose of estimating the profit, the lower authorities may take into consideration the profit ratio of similar cases in the same locality and various other factors which are bearing on the profit earning capacity of the assessee. The assessing authority shall keep th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /ss 30 to 38 shall be deemed to have been already given full effect and no further deduction under those sections shall be allowed. Depreciation is allowable u/s 32 of the IT Act. Therefore, as provided in section 44AD no further/separate deduction shall be allowed. In view of the above, in our opinion, the claim of depreciation on the estimated income is not justified. 7. Now coming to the payment of salary to the partner, Proviso to section 44AD(2) clearly says that salary and interest paid to the partner shall be deducted from the income computed under sub section (1) of S.44AD subject to limitation u/s 40(b) of the Act. As we have already observed though there were restrictions with regard to application of S.44AD wherever the total ..... X X X X Extracts X X X X X X X X Extracts X X X X
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