TMI Blog2018 (12) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... not - Held that:- Depreciation shall have to be allowed separately, even if in case of estimation of net profit. Hence, in assessee`s case under consideration the assessable income is to the tune of ₹ 2,39,34,837/- which would be further reduced by depreciation. It has been held in the case of Lali Construction Co. vs. Asstt. CIT [2014 (9) TMI 500 - PUNJAB & HARYANA HIGH COURT]that depreciation is allowable from net profits, even if total income is computed by applying net profit rate. Thus we consider it fair and direct the A.O. to apply the rate of 4% to disclosed turnover and depreciation should be allowed separately from the profit so arrived by applying rate of 4% to disclosed turnover. - Decided against revenue. - ITA No.57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 showing total income of ₹ 41,59,705/-. The assessee is engaged in the business of road transportation. The assessee s return was selected for scrutiny u/s 143(2) of the Act and assessment was completed by the Assessing Officer u/s 145(3) and 144 of the Act. During the assessment year 2012-13, the assessee has shown a turnover of ₹ 59,83,70,923/- in its Profit and Loss account and net profit has been shown at ₹ 99,36,932/-. In the return for the year, the assessee has shown income of ₹ 41,59,705/-. The director of the assessee company, Mr. Lalan Kumar Todi was intercepted at Mumbai Airport on 03.02.2012 with cash of ₹ 76,00,000/- which was seized by the DDIT, Inv. Mumbai. Subsequently on such information, a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The Assessing Officer, on perusal of books of accounts, noted that the assessee has not made any such payment to the said concern, and indeed in its books of accounts the said amount was reflected as advance to others at ₹ 67,51,816/-. The assessee also shown party by name, Shere Punjabi, to whom the payment was purported to be made as per the statement u/s 131 of the Act. The ld AO noted that such party was at Bangalore only therefore, assessee`s explanation that amount was carried to Mumbai, cannot be accepted. Similar other discrepancy had been observed in respect of other party as well, therefore, the ld AO had not accepted the assessee`s explanation that the said cash seized at Mumbai airport was for some purported payment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver. This way, the Assessing Officer made the addition to the tune of ₹ 4,78,69,674/-. 6. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has reduced the estimated net profit rate on turnover from 8% to 4%. Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. 7. The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and is not being repeated for the sake of brevity. 8. On the other hand, the ld. Counsel for the assessee submitted before us, a comparative chart determining net profit from Assessment Year 2008-09 to Assessment Year 2012-13, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue assessable income as has been held by the Hon lble Rajasthan High Court in the case of Rajasthan Cables Conductor P. Ltd. (2013) (91 DTR 047-Rajasthan). We, therefore, of the opinion that the Ld A.O. has rightly and correctly rejected the books of accounts and made assessment u/s 144 r.w.s. 145(3) of the Act. 10. Coming to the A.O.'s action of estimating profit at the rate of 8% and referring to section 44AD of the Act, we note that when assessee's past assessment records were with the A.O. and immediately preceding assessment year's assessment having been made u/s.143(3) of the Act, the ld AO ought to have also considered those and gave an opportunity to assessee to cite some cases where income was assessed on basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ediately preceding year's percentage is considered, it is 3.90%. On that basis estimated net profit @ 4% of turnover of ₹ 59,83,70,923/- will be ₹ 2,39,34,837/-. This net profit would be before depreciation, and depreciation allowance should be provided separately. 11. Whether depreciation allowance should be provided separately or not. In this regard we note that in a recent decision of the coordinate bench of ITAT Amritsar in the case of ACIT vs. J. S. Grover Construction (181 TTJ 23), it has been held that depreciation shall have to be allowed separately, even if in case of estimation of net profit. Hence, in assessee`s case under consideration the assessable income is to the tune of ₹ 2,39,34,837/- which would b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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