TMI Blog2002 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ess the finding is shown to be perverse or without any rationale - - - - - Dated:- 18-4-2002 - Judge(s) : RAJESH BALIA., D. N. JOSHI. JUDGMENT The judgment of the court was delivered by R. BALIA J.-Heard learned counsel for the parties. These two appeals filed by the Revenue relate to the assessment years 1994-95 and 1996-97. The core question raised before us, as is apparent from the question framed at the time of admission, whether the Income-tax Appellate Tribunal was justified in law allowing interest paid to third parties. Reference to CIT v. lain Construction Co. [2000] 245 ITR 527 (Raj), is primarily for the purpose of showing that whether on reaching this conclusion, reliance can be placed on that judgment laying down any such rate. Having perused the judgment under appeal and other material, which has been referred to by both learned counsel, we are of the opinion that in the facts and circumstances of the case, the decision of Jain Construction Co. [2000] 245 ITR 527 (Raj) referred to above which was rendered in an application under section 256 really does not call for any consideration in this case as the finding has been reached on appreciation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of levying tax, the Tribunal has found that the basic net profit rate fixed by the Income-tax Officer at 11 per cent. for each of the two years in question also does not call for any change so far as percentage is concerned. However, the Tribunal has further found by noticing the past record of the assessee both in the matter of declaration of income by him and assessment made on the estimated basis by the Assessing Officer as finally affirmed or modified by the appellate authorities that in determining the income of the assessee on estimated basis, past record and history of assessment is always relevant factor. That history we find up to the finding recorded by the Commissioner of Income-tax (Appeals) as noticed by the Tribunal in para. 16 of its order under appeal which reads as under: The factual position regarding the net profit rate applied by the Assessing Officer and confirmed/sustained by learned Commissioner of Income-tax (Appeals) for the assessment years can be better appreciated from the figures given in the following comparative chart: --------------------------------------------------------------------------- Assessment Net profit rate Net profit rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - interest to separate deduc- ies, sales tax, sub- third parties, tion) letting commission, sales tax, sub- salary and interest letting commis- to partners) sion, salary and interest to partners) 1995-96 10.01% 11% 11.0% (Subject to (Without any (Subject to depreciation, depreciation, further/ interest to third part- interest to separated deduct- ties, sales tax, salary third parties, ion) and interest to partners) sales tax, and interest to partners,comm- ission, salary and interest to partners) 1996-97 10.77% 11% 12% (Subject to (Without any (Subject to depreciation depreciation, further/sep- interest to third parties, interest to arate deduction) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax (Appeals) had been without the element of appropriation towards depreciation and interest to third parties which are otherwise allowable expenditure under the provisions of the Income-tax Act to be taken into account for determining the taxable income and were required to be so appropriated against the trading result obtained by applying the estimated net profit rate. It is on the aforesaid premise that the net profit rate to be applied to the assessee was devised by the Assessing Officer as well as by the Tribunal. However, in devising the net profit rate and estimating the income of the assessee in relation to the assessment years in question on the basis of the past record of practice the Income-tax Officer has, for the first time deviated from method of final estimate by not considering the element of later appropriation towards depreciation and interest as has been consistently followed in the case of the assessee in past years by the Revenue itself. The Tribunal while accepting the basic net profit rate on the basis of the history of case, has found no reason to deviate from the past history of estimating the income of the assessee. We are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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