Sh Vidya Sagar Saini, Pathankot V. The Asstt. Commissioner of Income-tax, Pathankot

ITA 62/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8880 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 29-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: SUMIT LAL CHA NDANI ADVS
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER [ I.T.A NO.61 & 62(ASR)/2015 ASSESSMENT YEAR: 2010-11 & 2011-12 VIDYA SAGAR SAINI GOVERNMENT CONTRACTOR, 24/8, PREM NAGAR, SAINGARH, PATHANKOT. PAN:AILPS5183K VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE VI, PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SALIL KAPOOR, SMT. ANANYA K APOOR & SUMIT LAL CHA NDANI. (ADVS.) RESPONDENT BY: SH. S.S.KANWAL (DR.) DATE OF HEARING: 22.12. 2015 DATE OF PRONOU NCEMENT: 21.01.2016 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE COMMON AND CONSOLIDATED ORDER OF LEARNED CIT(A) DATED 16.1 2.2014 FOR THE ASST. YEARS 2010-11 & 2011-12. COMMON ISSUES ARE INVOLVE D IN THESE APPEALS AND THESE APPEALS WERE HEARD TOGETHER. THEREFORE, F OR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEIN G PASSED. FOR THE SAKE OF CONVENIENCE GROUNDS OF APPEAL RAISED BY ASS ESSEE IN ASST. YEAR 2010-11 ARE REPRODUCED BELOW. ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 2 1. THAT THE FACTS AND CIRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE REJECTION OF B OOKS OF ACCOUNT AND APPLICATION OF NET PROFIT RATE OF 10% FOR ASSES SING INCOME OF THE APPELLANT ON CONTRACT RECEIPTS OF RS. 14,89,06,672/ - WITHOUT ALLOWING ANY DEPRECIATION. 2. THAT THE OBSERVATIONS MADE ARE AGAINST FACTS AND ARE ALSO BASED ON SURMISES & CONJECTURES AND DO NOT PROVIDE ANY LEGAL JUSTIFICATION TO THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF NET PROFIT RATE OF 10% OF THE GROSS RECEIPTS. EVEN CLAIM OF DEPRECIATION HAS BEEN WRONGLY DISALLOWED. 3. THAT THE DETAILS FILED, EXPLANATIONS GIVEN AND THE EVIDENCE PLACED ON RECORD HAVE NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE BOOKS OF ACCOUNTS REGULARLY MAI NTAINED AND DULY AUDITED HAVE BEEN WRONGLY REJECTED. 4. THAT IN ANY CASE, THE LD. C.I.T.(APPEALS ) HAS GROSSLY ERRED IN LAW AND ON FACTS IN ESTIMATING THE NET PROFIT @10% OF THE GROSS RECEIPTS AND ALSO IN REJECTING THE CLAIM OF DEPRECI ATION. THE NET PROFIT RATE APPLIED BY THE LOWER AUTHORITIES IS EXO RBITANTLY EXCESSIVE AGAINST THE ACCEPTED PAST HISTORY AND THE ADDITIONS MADE BY APPLICATION OF THAT RATE AND BY DISALLOWANCE OF DEP RECIATION ARE UNJUST, UNLAWFUL, ARBITRARY AND UNCALLED FOR. 5. THAT THE LD. C.I.T.(APPEALS) HAS FAILED TO F OLLOW THE PAST HISTORY OF THE CASE, WHICH WAS EXPRESSLY BROUGHT ON RECORD. THE PAST HISTORY HAS BEEN ARBITRARILY IGNORED AND THE N ET PROFIT RATE OF 10% HAS BEEN WRONGLY APPLIED. THE NET PROFIT RATE O F 8% SUBJECT TO ALLOWANCE OF DEPRECIATION, WHICH WAS APPLIED BY THE ITAT, AMRITSAR FOR ASST.YEAR 2006-07 WAS ALSO UPHELD BY THE HONBL E PUNJAB & HARYANA HIGH COURT, CHANDIGARH. THE APPEAL FILED BY THE DEPARTMENT WAS DISMISSED. THE LOWER AUTHORITIES HAV E GROSSLY ERRED IN LAW AND ON FACTS IN IGNORING THIS FACT. 6. THAT AGAIN, UNDER THE SIMILAR CIRCUMSTANCES AND FOR THE SAME NATURE OF BUSINESS, THE DEPARTMENT ITSELF HAD APPLI ED NET PROFIT RATE OF 8% SUBJECT TO ALLOWANCE OF DEPRECIATION SUCCESSI VELY FOR A.YS. 2007-08 AND 2008-09 AND THE SAME WAS APPLIED BY THE LD. C.I.T.(A) FOR A.Y.2009-10 FOR WHICH THE APPEALS FIL ED BY THE DEPARTMENT BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT WERE DISMISSED. ANY ARBITRARY DEVIATION FROM THE SAME IS UNJUST, UNLAWFUL AND HIGHLY INCONSISTENT WITH THE PAST HIST ORY OF THE APPELLANT. 7. THAT THE ORDER PASSED BY THE LEARNED C.I.T.(A PPEALS) BY QUOTING CASES OF STRANGERS AND BY IGNORING THE PAST HISTORY OF THE APPELLANT HIMSELF IS ILLEGAL, UNJUST AND UNLAWFUL AND IS LIAB LE TO BE QUASHED. ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 3 2. THE BRIEF FACTS OF THE CASE AS NOTED IN THE A SSESSMENT ORDER ARE THAT THE ASSESSEE IS A GOVERNMENT CONTRACTOR. DURING THE YEAR UNDER CONSIDERATION THE CASES OF THE ASSESSEE WERE SELECT ED FOR SCRUTINY. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R OBSERVED VARIOUS DISCREPANCIES IN THE BOOKS OF ACCOUNT AND MOREOVER HE OBSERVED THAT THERE WERE VARIOUS EXPENSES WHICH WERE NOT VOUCHED AND THEREFORE, BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED AND ASSESSING OFFICER APPLIED A NET PROFIT RATE OF 10% OF GROSS RECEIPTS TO DETERMINE THE TAXABLE PROFITS. THE ASSESSING OFFICER AFTER ESTIMATION OF 10% OF GROSS RECEIPTS AS TAXABLE PROFIT DID NOT ALLOW THE ASSESSEE THE BENEF IT OF DEPRECIATION. 3. AGGRIEVED THE ASSESSEE FILED APPEALS BEFORE L EARNED CIT(A) AND LEARNED CIT CONFIRMED THE REJECTION OF BOOKS OF ACC OUNT AND ALSO UPHELD THE NET PROFIT RATE OF 10% AND ALSO DID NOT ALLOW D EPRECIATION. THE ARGUMENT OF ASSESSEE THAT IN ASSESSMENT YEAR 2006-0 7, THE HONBLE ITAT HAD REDUCED THE RATE OF 10% TO 8% AND HAD ALSO ALLO WED DEPRECIATION AND WHICH ORDER WAS CONFIRMED BY PUNJAB & HARYANA H IGH COURT WAS NOT ACCEPTED BY ASSESSING OFFICER AND LD. CIT(A). S IMILARLY THE CONTENTION OF ASSESSEE THAT IN ASST. YEARS 2007-08 AND 2008-09 THE DEPARTMENT ITSELF HAD APPLIED 8% RATE OF PROFIT SUB JECT TO ALLOWANCE OF DEPRECIATION WAS ALSO NOT ACCEPTED BY THE AUTHORITI ES BELOW. THE LEARNED CIT(A) HAS HELD THAT THE FACTS OF THE PRESENT CASES WERE DISTINGUISHABLE FROM THE FACTS OF THE EARLIER YEARS AND HE FURTHER HELD THAT THOUGH ASSESSEE WAS STATING THAT CIRCUMSTANCES AND NATURE OF BUSINESS WAS ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 4 SIMILAR TO PREVIOUS YEAR BUT SAME WAS NOT PROVED BY ASSESSEE BY PRODUCING EVIDENCE IN THIS REGARD. THE LEARNED CIT( A) HELD THAT PROFIT FROM ALL CIVIL CONSTRUCTION WORKS CANNOT BE SAME AS THE CIVIL CONSTRUCTION WORK CAN BE EARTH WORK, CONCRETE WORK, REINFORCED C ONCRETE WORK, ROAD CONSTRUCTION, CULVERT/BRIDGE CONSTRUCTION, ETC. HE HELD THAT PROFITS FROM THESE DIFFERENT CATEGORIES OF ACTIVITIES THOUGH FAL LING UNDER THE BROAD HEAD OF CIVIL CONSTRUCTION WILL VARY FROM ACTIVITY TO ACTIVITY. QUOTING FROM THE FIGURES IN A BID PRICE OF A TENDER SUBMITTED BY ASSESSEE, THE LEARNED CIT(A) HELD THAT ASSESSEE MUST HAVE BEEN ABLE TO AC HIEVE PROFITS @ 13.8% AND THEREFORE, KEEPING IN VIEW ALL THE FACTS AND CI RCUMSTANCES AND KEEPING IN VIEW THE UNVERIFIABLE EXPENSES THE LEA RNED CIT(A) UPHELD THE ADDITION @ 10% AND ALSO DID NOT ALLOW THE CLAIM OF DEPRECIATION. 4. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE OUTSET, THE LEANED AR SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE CONSTRUCTION WORK RELATING TO ROADS AND HE HAD UNDERTAKEN ACTIVITIES OF ROAD CONSTRUCTION IN THE S TATE OF PUNJAB AND HIMACHAL PRADESH. HE SUBMITTED THAT IN THE PRESENT YEAR THE NATURE OF WORK DONE BY ASSESSEE WAS ROAD CONSTRUCTION AND THE DETAILS OF VARIOUS CONTRACTS FOR ROAD WORKS WERE SUBMITTED TO ASSESSIN G OFFICER AND LEARNED CIT(A). HE SUBMITTED THAT ASSESSEE HAS BEEN CARRYIN G OUT THE SAME ACTIVITIES CONTINUOUSLY AND SUBMITTED THAT IN ASSES SMENT YEAR 2009-10, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS NOTED I N ITS ORDER THAT ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 5 ASSESSEE WAS ENGAGED IN THE CONSTRUCTION OF ROADS I N THE DISTRICTS OF PUNJAB AND HIMACHAL PRADESH FOR THE LAST SO MANY YE ARS AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PARA 2 OF THE ORDER PLACED AT PAPER BOOK PAGE 9. THE LEARNED AR INVITED OUR ATTENTION TO A CHART RUNNING INTO THREE PAGES PLACED ON THE FILE AND SUBMITTED T HAT ALL THE CONTRACTS EXECUTED BY ASSESSEE WAS RELATING TO ROAD WORK ONLY IN THESE TWO YEARS AND SUBMITTED THAT THIS CHART WAS ALSO FILED BEFORE THE AUTHORITIES BELOW, BUT THE AUTHORITIES BELOW WITHOUT TAKING INTO CONSI DERATION THE PAST HISTORY APPLIED NET PROFIT RATE OF 10% WHICH IS AGA INST THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASES. HE FURTHER SUBM ITTED THAT IN ASST. YEARS 2007-08 AND 2008-09 THE DEPARTMENT ITSELF HAD APPLIED NET PROFIT RATE OF 8% SUBJECT TO ALLOWANCE OF DEPRECIATION. IN VIEW OF THE FACTS AND CIRCUMSTANCES, HE SUBMITTED THAT APPEALS OF THE ASS ESSEE NEEDS TO BE ALLOWED. 6. THE LEARNED DR, ON THE OTHER HAND, HEAVILY RELIE D UPON THE ORDER OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE IS A GOVERNMENT CONTRACTOR AND ADMITTEDLY WAS ENGAGED IN THE ROAD C ONSTRUCTION WORK AS IS NOTED BY HONBLE PUNJAB & HARYANA HIGH COURT IN ITS ORDER FOR ASST. YEAR 2009-10. THE ASSESSEE HAD ALSO FILED A CHART S HOWING THEREIN THE NATURE OF VARIOUS CONTRACTS IN THESE YEARS TO BE RE LATING TO ROAD WORK ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 6 ONLY. THE LEARNED CIT(A) HAS TRIED TO DISTINGUISH T HE PRESENT YEARS WITH EARLIER YEARS BY HOLDING THAT ROAD CONSTRUCTION WAS ONE OF THE MANY WORKS FALLING UNDER THE CIVIL CONSTRUCTION WORK AND ASSESSEE HAD NOT FILED ANY EVIDENCE TO PROVE THAT NATURE OF BUSINESS WAS SIMILAR AS IN PREVIOUS YEARS. HOWEVER, WE OBSERVE THAT ASSESSEE H AS BEEN MAINTAINING BEFORE THE ASSESSING OFFICER THAT HE WAS ENGAGED IN THE CONSTRUCTION OF ROADS AS IS EVIDENT FROM A LETTER DATED 20.2.2013 P LACED AT PAPER BOOK PAGE 38. WE FURTHER OBSERVE THAT VIDE LETTER DATED 23.04.2014 PLACED AT PAPER BOOK 49 TO 51 AND VIDE LETTER DATED 24.11.201 3 PLACED AT PAPER BOOK PAGE 52, THE ASSESSEE HAD FILED CHART SHOWING GROSS RECEIPTS FROM ASST. YEAR 2007-08 TO ASST. YEAR 2010-11 WHERE GROS S RECEIPTS FROM SAME GOVERNMENT AUTHORITIES HAVE BEEN SHOWN TO HAVE BEEN RECEIVED IN ALL THESE FOUR YEARS. THEREFORE, IT MEANS THAT THE NATURE OF ACTIVITIES IN ALL THESE YEARS REMAINS SAME. THE HONBLE PUNJAB & HARY ANA HIGH COURT FOR ASST YEAR 2009-10 VIDE PARA 2 HAS NOTED THAT ASSESS EE WAS A GOVT. CONTRACTOR AND WAS ENGAGED IN THE WORK OF CONSTRUCT ION OF ROADS IN THE BOARDER AREA OF PUNJAB AND HIMACHAL PRADESH FOR THE LAST MANY YEARS. WE FIND THAT THE HONBLE PUNJAB & HARYANA HIGH COUR T IN THE CASE IN ASST. YEAR 2006-07 PLACED AT PAPER BOOK PAGE 5 TO 7 AND IN ASST. YEAR 2009-10 PLACED AT PAPER BOOK PAGE 8 TO 11 HAS UPHEL D THE TRIBUNAL ORDER RESTRICTING THE NET PROFIT RATE TO 8%. FOR TH E SAKE OF COMPLETENESS THE FINDINGS RECORDED BY HONBLE COURT IN ITS ORDER DATE 15.09.2014 FOR ASST. YEAR 2009-10 ARE REPRODUCED BELOW. ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 7 2. A FEW FACTS RELEVANT FOR THE DECISION OF THE CON TROVERSY INVOLVED AS NARRATED IN THE APPEAL MAY BE NOTICED. THE ASSESSEE IS A GOVERNMENT CONTRACTOR AND HAS BEEN UNDERTAKING WO RK OF CONSTRUCTION OF ROADS IN THE BORDER DISTRICTS OF PU NJAB AND HIMACHAL PRADESH FOR THE LAST MANY YEARS. RETURN OF INCOME W AS FILED ON 19.01.2010 IN THE STATUS OF INDIVIDUAL SHOWING INCO ME OF RS.38,70,532/- WHICH WAS PROCESSED UNDER SECTION 14 3(1) OF THE ACT ON 31.3.2011. THE CASE WAS SELECTED FOR SCRUTIN Y. ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS MADE VIDE ORDER DATED 21.12.2011, ANNEXURE A.L AT AN INCOME OF RS.1,17,27 ,839/- BY APPLYING 12% RATE ON GROSS RECEIPT AFTER EXCLUDING COST OF MATERIAL SUPPLIED BY THE DEPARTMENT. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)]. VIDE ORDER DATED 12.6.2012, ANNEXURE A.2, THE CIT(A) PARTLY ALLOWED THE APPEAL AND DIRECTED THE ASSESSIN G OFFICER TO APPLY NET PROFIT RATE OF 8% AS AGAINST THE TIME OF ASSESSMENT ON THE CONTRACT RECEIPT AND TO ALLOW THE DEPRECIATION. THE RELIEF ALLOWED BY THE CIT(A) WAS AT RS.66,11,532/-. AGGRIEVED BY THE ORDER, THE DEPARTMENT FILED APPEAL BEFORE THE TRIBUNAL. VIDE O RDER DATED 31.10.2013, ANNEXURE A.3, THE TRIBUNAL DISMISSED TH E APPEAL. HENCE THE INSTANT APPEAL BY THE REVENUE. 3. WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLA NT REVENUE AND PERUSED THE RECORD. 4. LEARNED COUNSEL FOR THE APPELLANT-REVENUE SU BMITTED THAT THE CASE OF THE ASSESSEE FOR THE CURRENT ASSESSMENT YEA R 2009-10 WAS DIFFERENT FROM THE ASSESSMENT YEAR 2006-07 AND THER EFORE, THE GROSS PROFIT RATE OF 8% APPLIED FOR THE ASSESSMENT YEAR 2006-07 OUGHT NOT TO HAVE BEEN APPLIED FOR THE ASSESSMENT Y EAR 2009-10 AS WELL. 5. WE ARE UNABLE TO ACCEPT THE CONTENTION OF LEA RNED COUNSEL FOR THE APPELLANT-REVENUE. THE TRIBUNAL WHILE REJECTING THE CONTENTION OF THE REVENUE RECORDED AS UNDER: - 6.1 AS REGARDS THE ESTIMATION OF INCOME, THE AO APPLIED A NET PROFIT RATE OF 12% RELYING UPON THE DECISIONS OF ITAT AND HON'BLE PUNJAB AND HARYANA HIGH COURT IN CERTAIN CASES. BUT IT HAS NOT BEEN BROUGHT ON RECORD, WHETHER THE FACTS IN THOSE CASES ARE IDENTICAL OR SIMILAR TO THE FACTS I N THE PRESENT CASE. IN SUCH CIRCUMSTANCES, THE FACTS IN ASSESSEE'S OWN CASE HAVE TO BE PERUSED. INFACT, FOR MAKING AN ESTIMATION, THE CIRCUMSTANCES AND FACTS IN ASSESSEE'S OWN CASE DURING THE IMPUGNED YEAR AND IN PAST YEARS ARE THE BEST GUIDE, AS ALSO ARGUED BY LEARNED COUNSEL FOR THE ASSESSEE, MR. SALIL KAPOOR, ADVOCATE. IN PAST THE HISTORY OF THE ASSESSEE HAS BEEN ACCEPTED, AS NET PROFIT RATE OF 8% ON GROSS TURNOVER. FOR THE ASSESSMENT YEAR ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 8 2006-07, IN ASSESSEE'S OWN CASE, THE ITAT AMRITSAR BENCH HAS UPHELD NET PROFIT RATE OF 8% WHICH DECISION HAS BEEN CONFIRMED BY THE HON'BE JURISDICTIONAL HIGH COURT, AS MENTIONED HEREINABOVE. WE ARE AWARE THAT EACH YEAR IS INDEPENDENT YEAR IN INCOME TAX PROCEEDINGS BUT WHEN THERE IS NO DEVIATION OF FACTS BROUGHT ON RECORD BY THE REVENUE WITH REFERENCE TO PRECEDING YEARS, WE HAVE NO ALTERNATIVE BUT TO ACCEPT THE PAST HISTORY OF NET PROFIT RATE OF 8% AND ALSO WITH A VIEW OF CIRCUMSTANCES AND FACTS OF IMPUGNED YEAR. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF T HE LEARNED CIT(A). THUS, ALL THE GROUNDS OF REVENUE ARE DISMISSED. 6. THE TRIBUNAL HAD CATEGORICALLY RECORDED THAT TH ERE WAS NO DEVIATION OF FACTS BROUGHT ON RECORD BY THE REVENUE WITH REFE RENCE TO THE CURRENT ASSESSMENT YEAR AND IN SUCH A SITUATION, ON THE BAS IS OF THE PAST HISTORY, NET PROFIT RATE OF 8% WAS APPLIED. FURTHER , THIS COURT WHILE DEALING WITH SIMILAR ISSUE IN ITA NO.80 OF 2012, THE COMMISSIONER OF INCOME TAX II, AMRITSAR VS. VIDYA SAGAR SAINI, IN THE CASE OF THE ASSESSEE ITSELF, DECIDED ON 13.2.2013, UPHELD NET P ROFIT RATE OF 8%. LEARNED COUNSEL FOR THE APPELLANT HAS NOT BEEN ABLE TO DEMONSTRATE THAT THERE WAS ANY CHANGE IN CIRCUMSTANCES. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTA NCES FOLLOWING THE ABOVE ORDER OF PUNJAB & HARYANA HIGH COURT, WE HOLD THAT ASSESSING OFFICER SHOULD APPLY 8% OF GROSS RECEIPTS TO DETERM INE THE PROFIT OF THE ASSESSEE AND WE ORDER ACCORDINGLY. 8. WE FURTHER FIND THAT HONBLE PUNJAB & HARYANA HI GH COURT IN THE CASE OF CIT VS. EARTH TECH ENGINEERS 46 TAXMAN 287 ON THE ISSUE OF DEPRECIATION VIDE PARA 7 HAS HELD THAT WHERE THE PR OFITS ARE ESTIMATED THE DEPRECIATION HAS ALSO TO BE ALLOWED. FOR THE SAKE O F COMPLETENESS THE PARA 7 OF THE JUDGMENT IS REPRODUCED BELOW. 7. THE ISSUE BEFORE THIS COURT IN CIT VS. CHOPRA B ROS. INDIA (P.) LTD. [2001] 252 ITR 412/119 TAXMAN 866 AND GIRDHARI LAL V. CIT [2002]256 ITR 318/[2001]119 TAXMAN 863 WAS WITH REGARD TO DEDUCTI ON TO BE MADE ON ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 9 ACCOUNT OF DEPRECIATION FROM THE GROSS RECEIPTS WHI LE APPLYING NET PROFIT RATE. IT WAS HELD ON THE BASIS OF A CIRCULAR ISSUED BY THE BOARD, WHICH WAS BINDING ON THE REVENUE THAT THE GROSS RECEIPTS TO W HICH NET PROFIT RATE IS TO BE APPLIED SHALL BE DETERMINED AFTER GIVING ALLOWAN CE ON ACCOUNT OF DEPRECIATION. 8. THE JUDGMENT RELIED UPON BY THE LEARNED COU NSEL FOR THE REVENUE IN GIAN CHAND LABOUR CONTRATROS CASE (SUPRA) WAS RELA TING TO CLAIM OF DEDUCTION ON ACCOUNT OF FREIGHT CHARGES PAID BY THE ASSESSEE TO THE TRUCK OPERATORS UNION WHERE NET PROFIT RATE WAS APPLIED. IN SOM DUTTA GARGIS CASE (SUPRA), THE ASSESSEE CLAIMED DEDUCTION OF INT EREST PAID FROM INCOME ON APPLICATION OF NET PROFIT RATE. IN BOTH THE CASE S, IT WAS HELD THAT THE SAME COULD NOT BE REDUCED FROM THE NET PROFIT RATE APPLIED FOR CALCULATING THE INCOME OF THE ASSESSEE. THAT IS NOT THE POSITIO N IN THE PRESENT CASE AND THESE JUDGMENT ARE, THUS, DISTINGUISHABLE. WE FURTHER FIND THAT THE HONBLE PUNJAB & HARYANA H IGH COURT IN THE CASE OF ASSESSEE ITSELF UNDER SIMILAR FACTS AND CIR CUMSTANCES HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT, THEREFORE, KEEPI NG IN VIEW THE ABOVE JUDICIAL PRECEDENTS IN THE CASE OF ASSESSEE ITSELF WE UPHOLD THE REJECTION OF BOOKS OF ACCOUNT, HOWEVER, WE HOLD THAT THE RATE OF 8% BE APPLIED TO GROSS RECEIPTS OF THE ASSESSEE FOR DETERMINATION OF PROFITS AND FURTHER DEPRECIATION SHOULD BE ALLOWED TO BE REDUCED FROM T HE PROFITS CALCULATED AS ABOVE. 9. IN VIEW OF THE ABOVE, THE APPEALS FILED BY TH E ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:21.01.2016. /PK/ PS. ITA NOS.61 & 62 (ASR)/2015 ASST. YEARS 2010-11 & 2011-12 10 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.