M/S. BUILDERS SHREE,JAGATSINGHPUR vs. ACIT, CUTTACK

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.213/CTK/2015 Assessment Year : 2010-2011

M/s. Builder Shree, Qr. Vs. ACIT, Circle 1(2), Cuttack No.NB/237, Nuabazar, Paradeep. PAN/GIR No. (Appellant) .. ( Respondent)

Assessee by : Shri J.M.Patnaik, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 29/08/ 2017 Date of Pronouncement : 31 /08/ 2017

O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order of the

CIT(A)- Cuttack dated 27.2.2015 for the assessment year 2010-2011.

confirming the action of the Assessing Officer in not allowing depreciation

at Rs.9,24,287.26 out of the estimated profit.

that the assessee was engaged in the civil contract work. The assessee

had shown gross receipts of Rs.8,19,11,330/- under contract work. The

Assessing Officer required the assessee to produce cash book, bank book,

ledger, party ledger, bill register and bank statement. However, the

assessee could not produce cash book, bills and other details. Therefore,

2 ITA No. 213/CT K/ 2015 Asse ssment Year : 20 10- 201 1

the Assessing Officer rejected the book results u/s.145(3) of the Act and

estimated the profit @ 8% of the gross contract receipts of

Rs.8,19,11,330/-, which works out to Rs.65,52,906/-. The Assessing

Officer did not allow depreciation of Rs.9,24,287.26 as claimed by the

assessee from the estimated income.

depreciation from the gross contract bills of Rs.8,19,11,330/- and

estimate the net profit @ 8% on the net contract receipts.

allowed from the estimated profit and not gross contract bills. Ld A.R.

filed a copy of order of this Bench of the Tribunal in the case of

A.K.Mohapatra vs ITO in ITA Nos.601, 602 & 603CTK/2012 order dated

22.2.2013 wherein, the Tribunal has directed the Assessing Officer to

accept the returned income after depreciation as claimed by the assessee

in its audited financial statement. Ld A.R. submitted that the Assessing

Officer has allowed the depreciation for the assessment year 2009-10,

2010-11 and 2011-12 except for the assessment year 2010-2011 on the

basis of audited accounts.

authorities and materials available on record. In the instant case, we find

that the assessee had filed the return of income showing total income of

3 ITA No. 213/CT K/ 2015 Asse ssment Year : 20 10- 201 1

Rs.52,46,270/-. The Assessing Officer rejected the books of account and

determined the income at 8% of the total receipts of Rs.8,19,11,330/- at

Rs.65,52,906/-, without allowing depreciation of Rs.9,24,287/- from the

profit so determined.

receipts and directed the Assessing Officer to compute net profit @ 8% on

net contract receipts. Hence, this appeal before us.

Jhanwar Lal vs ITO, Income Tax Appeal No.10 of 2006 order dated 3rd

July, 2008, has held that where the Assessing Officer adopted net profit

rate in making assessment to the best of his judgment, allowance of

depreciation therefrom is required to be made. Hence, we set aside the

orders of lower authorities and direct the Assessing Officer to allow

depreciation from the net profit estimated by applying rate of 8% on the

gross receipts and not from the gross turnover and allow this ground of

appeal of the assessee.

Order pronounced in the open court on 31 /08/2017. Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 31 /08/2017 B.K.Parida, SPS

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Copy of the Order forwarded to : 1. The Appellant : M/s. Builder Shree, Qr. No.NB/237, Nuabazar, Paradeep 2. The Respondent. ACIT, Circle 1(2), Cuttack 3. The CIT(A)- Cuttack 4. Pr.CIT- Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack