TMI Blog2019 (1) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... rk vary from contract to contract as also the profitability changes depending upon such conditions. Moreover, depreciation and interest charges debited in the accounts never been considered by the Assessing Officer. It is undisputed fact that the working in the state of J&K is not congenial and all the time depends upon the natural calamities as well as terrorist activities, hence in the aforesaid circumstances, in our considered opinion the estimation of net profit rate @6% on the gross receipt would be quite reasonable and would meet the ends of the justice. Induction of capital from partners - rectification of mistake - Held that:-CIT(A) while deleting the addition of ₹ 3,00,000/- and ₹ 5,00,000/- relied upon the enquiry i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.27(Asr)./2013 filed by the Revenue Department. 2. The appeal of the assessee has been taken for adjudication first. The briefly stated the facts of the case are that the Assessing Officer while relying upon the judgment passed by the Jurisdictional ITAT, Amritsar Bench in the case of Assessing Officer v. Pooja Construction Co. in ITA No. 750(Asr)/1992 (69 ITD 147) applied the gross profit rate @ 10%, considering the case of the assessee being a Civil Contractor. Further the Assessing Officer also made an addition u/s 40A(3) for ₹ 4,77,187/- as well as u/s 40(a)(ia) for ₹ 13,30,500/- respectively. Further, the Assessing Officer also made an addition of ₹ 3,00,000/- and ₹ 5,00,000/- on account of unsecured loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of profit. Further, again, the assessee as the person undertaking the work would, both in theory and in practice, be entitled to a larger share of the profit, i.e., even if the same is to be considered as in the range of 7% to 8%. Considering these facts, we modify the estimation of the assessee s net profit rate to, even as conceded to by the Id. AR, the assessee s counsel, during hearing, 5% of the turnover. The disallowance on account of depreciation (u/s. 32(1)) and interest (u s. 361 (iii)) shall not survive in view of the estimation of the net profit rate. That leaves us with the addition u/s. 68 qua a secured loan s. Though the same could be made in principal, and we do not agree with the Id. CIT(A) that the same could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract work vary from contract to contract as also the profitability changes depending upon such conditions. Moreover, depreciation and interest charges debited in the accounts never been considered by the Assessing Officer. It is undisputed fact that the working in the state of J K is not congenial and all the time depends upon the natural calamities as well as terrorist activities, hence in the aforesaid circumstances, in our considered opinion the estimation of net profit rate @6% on the gross receipt would be quite reasonable and would meet the ends of the justice. 4. Now coming to the confirmation of the addition of ₹ 13,30,500/- qua non-deduction of TDS u/s 40(a)(ia) and ₹ 4,77,187/- qua payment made in cash in violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed generally under other sections. The computation under Section 29 is to be made under section 145 on the basis of the books regularly maintained by the asses-see. If those books are not correct or complete, the Income-tax Officer may reject those books and estimate the income to the best of his judgment. When such an estimate is made it is in substitution of the income that is to be computed under Section 29. In other words, all the deductions which are referred to under Section 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in Section 40 is also taken into account. 5. No doubt there is a big difference between profit earned with own capital and profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no further scope for any further disallowance including u/s 40(a)(ia) and 40A(3) of the Act as made in the instant case. Hence, we do not have any hesitation to delete the additions mentioned above as affirmed by the ld. CIT(A). 5. Now coming to the appeal in ITA No.27(Asr)/2013 filed by the Revenue Department. The ground No.1 2 relates to the estimation of Net Profit rate @ 8% by the ld. CIT(A). In view of the observation and conclusion drawn in the appeal of the assessee, grounds Nos.1 and 2 stands dismissed. Now coming to the ground Nos.3 to 6, all are connected with each other and we have gone through the order of the ld. CIT(A) again, whereby, the ld. CIT(A) while deleting the addition of ₹ 3,00,000/- and S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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