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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM
order of the coordinate bench of the Tribunal in the case of Shri Jagdeep Bansal Vs. ACIT, MA No.60/CTK/2017 arising out of order dated 20.08.2019, wherein the depreciation has been directed to be allowed separately. On perusal of the assessment order, we find that the AO estimated the net profit @6% after considering the business expenses of the assessee along with the depreciation and interest, respectively, to which the CIT(A) has accepted the findings of AO. However, we on perusal of the Form 3CD filed along with the audit report by the assessee during the course of hearing, find that the gross contract receipts shown by the assessee is at Rs.22,06,89,088/-, which definitely exceeds Rs.40 lakhs, therefore, provisions of Section 44AD of the Act in the present case of the assessee would not be applicable. For completeness the order, we would like to reproduce the observations of the AO made in the assessment order at paras 6 & 7 as under :-
6 Considering the nature of business carried out by the assessee, the net profit disclosed @ 2.76% is extremely low. There are other assessees assessed in this very circle who do contract work of similar nature but declare much higher percentage of profit. After considering the facts Id. CIT(A), Cuttack and Hon'ble ITAT, Cuttack bench, I deem it fair and reasonable to estimate the net profit (after all business expenses, depreciation and interest) at 6% of turnover.
In view of discussion in para 5 and para 6 above, the total income of the assessee is computed as under :- Gross contract receipts : Rs.22,06,89,088/- Net profit estimated @6% of gross receipts Rs.1,32,41,345/- Less: Interest on capital Rs.21,45,477/- Salary to partners Rs.36,62,578/- Rs.58,08,055/- Rs,73,33,290/- Add: income from other sources : Rs.20,18,030/- Total Assessed Income Rs.94,51,320/- It is clear from the above findings of the AO that the AO has calculated the net profit after considering all business expenses, depreciation and interest but it is not clear as to how much depreciation has been allowed by the AO. Therefore, this matter is sent back to the file of AO for proper calculation of depreciation allowed by him as per the provisions of Income Tax Act, 1961 after providing reasonable opportunity of hearing to the assessee. The assessee is directed to cooperate with the AO for early disposal of the case. We order accordingly.
In the result, appeal of the assessee is allowed for statistical purposes.