Subodh Parkash, Yamunanagar V. DCIT, Yamunanagar

ITA 939/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63974 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: MANOHAR LAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, J M ITA NO. 939/CHD/2011 ASSESSMENT YEAR : 2008-09 SUBODH PARKASH V D.C.I.T. PROP. AASTHA TRADING CO. YAMUNANAGAR O-3, INDUSTRIAL AREA YAMUNANAGAR ABBPP 0664 K (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI MANOHAR LAL & MAHESH KUMAR RESPONDENT BY SMT. JYOTI KUMARI DATE OF HEARING 18.09.2012 DATE OF PRONOUNCEMENT 26.09.2012 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), PANCHKULA DATED 16.8.2011. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1 THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION M ADE OF RS. 3,84,63,980/- AS A DISALLOWANCE U/S 40(A)(IA) I GNORING THE FACT THAT THE INCOME HAS BEEN ESTIMATED BY AO. 2 THE LD. CIT(A) ERRED IN UPHOLDING THAT THE PROVIS IONS OF SECTION 40(A)(IA) ARE APPLICABLE TO PAYMENTS WHICH ARE PAID INSTEAD OF PAYABLE. 3 THE LD. CIT(A) ERRED IN UPHOLDING THE NP RATE OF 4.5% ESTIMATED BY THE AO IGNORING THAT CORRECT FACTS. 3 IN ADDITION TO THAT THE ASSESSEE HAS RAISED THE A DDITIONAL GROUND VIDE LETTER DATED 5.12.11. THE ADDITIONAL G ROUND READS AS UNDER:- THE AO ERRED IN NOT ALLOWING DEPRECIATION AND PAYM ENT OF BANK INTEREST ON THE LOANS TAKEN AFTER ESTIMATING T HE APPELLANTS INCOME AFTER REJECTING THE BOOKS OF ACC OUNT AND BY APPLYING SECTION 145. 2 4. OUT OF WHICH GROUND NO. 1 WAS NOT PRESSED BEFORE US, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 5. GROUND NO. 2 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT T HE ASSESSEE HAS SHOWN TOTAL FREIGHT PAYMENT OF RS. 5,6 4,29,283/-. IT WAS CLAIMED THAT FREIGHT AMOUNTING TO RS. 19,599 /- WAS NOT LIABLE TO TDS BEING LESS THAN RS. 20,000/- AND FURT HER TDS AMOUNTING TO RS. 1,94,628/- WAS DEDUCTED ON FREIGHT PAYMENT OF RS. 1,79,45,703/-. IN RESPECT OF BALANCE FREIGH T AMOUNTING TO RS. 3,84,63,63,980/-, IT WAS CLAIMED THAT FORM 1 5-I WAS FURNISHED BY THE TRUCK OWNER FOR NON DEDUCTION OF T AX. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE COPIES OF FORM 15-I. ONLY A FEW COPIES WERE SUBMITTED WHICH WERE FOUND TO BE NOT RELIABLE. THE AO WAS OF THE OPINION THAT ON TH IS BALANCE AMOUNTING TO RS. 3,84,63,980/-, THE TAX WAS DEDUCTI BLE U/S 194C. SINCE THE ASSESSEE HAD NOT DEDUCTED THE TAX, THEREFORE, THE AMOUNT WAS ADDED U/S 40(A)(IA) OF THE ACT TO TH E INCOME OF THE ASSESSEE. 6 ON APPEAL THE ACTION OF THE AO WAS CONFIRMED BY T HE LD. CIT(A). 7 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN SPECIA L BENCH OF THE TRIBUNAL, VISAKHAPATNAM IN CASE OF ACIT V. MERILYN SHIPPING & TRANSPORT REPORTED IN 140 TTJ 1 (SB) (VISHAKHAPATNA M) WHEREIN IT HAS BEEN HELD THAT IF THE AMOUNT IS ALREADY PAID TH EN THE PROVISION OF SECTION 40(A)(IA) IS NOT APPLICABLE. 8 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RE LIED ON THE ORDER OF THE LD. CIT(A). 9 AFTER HEARING BOTH THE PARTIES WE FIND THAT SPECI AL BENCH OF THE TRIBUNAL IN CASE OF ACIT V. MERILYN SHIPPING & TRANSPORT (SUPRA) HAS HELD THAT THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT ARE APPLICABLE ONLY IN RESPECT OF THE PAYMENTS WHI CH ARE PAYABLE AT THE END OF THE YEAR. IT WAS FURTHER OBSERVED THAT THIS PROVISION IS NOT APPLICABLE IN CASES WHERE THE PAYMENTS HAVE ALR EADY BEEN MADE DURING THE YEAR. THIS INTERPRETATION WAS MADE BECAUSE SECTION 40(A)(IA) EMPLOYS THE EXPRESSION PAYABLE . IN OUR OPINION, 3 THIS DECISION IS SQUARELY APPLICABLE IN CASE OF ASS ESSEES APPEAL. HOWEVER, IT IS NOT CLEAR HOW MUCH AMOUNT HAS ALREAD Y BEEN PAID AS FREIGHT AND HOW MUCH REMAINS PAYABLE. THEREFORE, IN THE INTEREST OF JUSTICE WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION THAT THE ISSUE BE DECIDED IN THE LIGHT OF THE ABOVE DECISION OF SPECI AL BENCH OF THE TRIBUNAL IN CASE OF ACIT V. MERILYN SHIPPING & TRAN SPORT (SUPRA). 10. GROUND NO. 3 WOULD BE TAKEN UP ALONG WITH ADDITIONAL GROUND WHICH HAS BEEN REPRODUCED ABOVE. THE LD. CO UNSEL OF THE ASSESSEE ADMITTED THAT THIS GROUND WAS NEVER TAKEN UP BEFORE THE AO OR THE CIT(A). HE SUBMITTED THAT HE WAS NOT PRES SING THE ISSUE REGARDING INTEREST IN THE ADDITIONAL GROUND BUT TH E ISSUE REGARDING ALLOWANCE OF DEPRECIATION IS BEING A LEGAL ISSUE AN D IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF NTPV V CIT. 229 ITR 383, THE SAME SHOULD BE ADMITTED. 11. THE LD. DR FOR THE REVENUE OBJECTED TO THE ADMI SSION OF THE ADDITIONAL GROUND BECAUSE HAD THIS GROUND BEEN RAIS ED BEFORE THE CIT(A), PROFIT COULD HAVE BEEN SUITABLY ESTIMATED S O AS TO TAKE INTO AMOUNT THE ELEMENT OF DEPRECIATION. 12. AFTER CONSIDERING THE SUBMISSIONS WE HAVE ADMIT TED THE ADDITIONAL GROUND BECAUSE THIS IS A MERELY LEGAL IS SUE AND ALL THE FACTS ARE ON RECORD. FACTS REGARDING THIS GROUND A RE THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THERE WE RE VARIOUS DEFECTS IN BOOKS OF ACCOUNT LIKE NON MAINTENANCE OF LOG BOOKS AS REQUIRED UNDER THE MOTOR VEHICLE ACT, NON MAINTENAN CE OF PROPER VOUCHERS FOR FREIGHT AND COMMISSION AMOUNTING TO RS . 9.93 CRORES, NON AVAILABILITY OF VOUCHERS FOR VARIOUS EXPENSES. BECAUSE OF THESE DEFECTS THE BOOKS OF ACCOUNT WERE REJECTED AND A SH OW CAUSE NOTICE DATED 27.12.2010 WAS ISSUED WHY NET PROFIT @ 4.51% SHOULD NOT BE ESTIMATED IN RESPECT OF FREIGHT AND CARRIAGE RECEI PTS. IN REPLY TO THE SHOW CAUSE NOTICE IT WAS SUBMITTED THAT FREIGHT AND CARRIAGE RECEIPTS ALSO INCLUDE INCOME FROM TRUCKS OWNED BY T HE ASSESSEE. THE TRUCKS OWNED BY THE ASSESSEE ARE DESIGNED AND H AVE BEEN FABRICATED IN SUCH A MANNER THAT SAME CAN ONLY LIFT MOLASSES AND THESE TRUCKS CAN NOT BE UTILIZED FOR ANY OTHER PURP OSES. IT WAS ALSO STATED THAT DURING THE YEAR THE ASSESSEE HAD PURCHA SED 32 NEW TRUCKS AND VERY HIGH DEPRECIATION WAS CHARGED. THE REFORE, THE PROFIT DECLARED BY THE ASSESSEE WAS JUSTIFIED. THE AO DID NOT FIND 4 FORCE IN THE SUBMISSIONS AND ESTIMATED THE PROFIT A T 4.51% BY FOLLOWING PARA:- THE ARGUMENT OF THE ASSESSEE TO APPLYING NP RATE O F 0.97% AS DECLARED BY HIM IS ALSO NOT ACCEPTABLE. FOR THE AY 2007-08, THE TOTAL INCOME FROM M/S CITIZEN ROADLINES WAS COMPUTE D AT RS. 13,64,613/- AGAINST TOTAL CARRIAGE AND HANDLING REC EIPTS ART RS. 2,93,03,160/- GIVING A NP RATE OF 4.51%. SIMILARLY FOR THE AY 2006-07 THE TOTAL INCOME FROM M/S CITIZEN ROADLINES WAS COMPUTED AT RS. 10,45,956/- AGAINST TOTAL CARRIAGE AND HANDL ING RECEIPTS AT RS. 2,14,26,436/- GIVING A NP RATE OF 4.88% . THER EFORE, IT WOULD BE IN THE FITNESS OF THINGS TO APPLY THE NP RATE AP PLIED FOR THE IMMEDIATE PRECEDING AY. ACCORDINGLY AVERAGE NP RAT E OF 4.51% IS CONSIDERED REASONABLE IN THIS CASE AND IS APPLIED ON THE GROSS FREIGHT RECEIPTS OF RS. 11,96,53,945/- OF M/S CITIZ EN ROADLINES AFTER ALLOWING ALL EXPENSES WHICH WORKS OUT RS. 53,96,392 /-. 13. ON APPEAL THE ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A) BECAUSE IN AY 2007-08 SAME RATE OF 4.51% WAS APPLIED BY HIS PREDECESSOR IN THE LIGHT OF ASSESSEES OWN HIST ORY FOR AY 2005- 06 AND 2006-07. 14 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT TURNOVER IN THIS YEAR HAS INCREASED FROM RS. 2.91 C RORES TO RS. 11.96 CRORES AND INCREASE OF TURNOVER ITSELF WOULD GO TO REDUCE THE PROFITS. HE ALSO CONTENDED THAT DURING THE YEAR THE ASSESSEE HAS PURCHASED 32 NEW TRUCKS WHICH HAD LED TO THE SPECIF IC INCREASE IN DEPRECIATION WHICH HAS ALSO REDUCED THE PROFITS. I N ANY CASE IF THE AO WANTED TO ESTIMATE THE PROFITS THEN HE SHOULD HA VE ALLOWED THE DEPRECIATION SEPARATELY AS MANDATED BY CIRCULAR NO. 29-D DATED 31.8.1965. IN THIS REGARD HE STRONGLY RELIED ON TH E DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. CHOPRA BROTHERS INDIA (P) LTD., 252 ITR 412 AND SHAM BIHAR I V. CIT, 345 ITR 283 (PAT). 15 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S UBMITTED THAT THEORY OF REDUCTION IN PROFIT IS GENERALLY APPLICAB LE IN CASES OF SMALL RETAIL TRADERS AND CAN NOT BE APPLIED IN CASE OF A TRANSPORTER. AS FAR AS THE ISSUE REGARDING DEPRECIATION IS CONCERNED, S HE CONTENDED THAT THIS ISSUE WAS NEVER TAKEN BEFORE THE AO OR TH E CIT(A). HAD THIS ISSUE BEEN TAKEN BEFORE THEM THEY COULD HAVE E ASILY ADJUSTED THE PROFITS BY INCREASING THE PROFIT AND REDUCING T HE DEPRECIATION TO REACH THE SAME RESULT. FURTHER THE AO HAS CATEGORI CALLY STATED IN THE ASSESSMENT ORDER THAT THIS PROFIT IS BEING ESTI MATED AFTER ALLOWING ALL EXPENSES WHICH WOULD INCLUDE DEPRECIAT ION. THIS MEANS THE AO HAD TAKEN CARE OF THE DEPRECIATION. FURTHER THIS ESTIMATION HAS BEEN DONE AS OBSERVED BY THE CIT(A) ON THE BASI S OF 5 ASSESSEES OWN HISTORY FOR EARLIER YEARS. IN FACT IN ASSESSEES OWN CASE IN AY 2007-08 THE TRIBUNAL HAS ALREADY CONFIRM ED THE ESTIMATION OF NET PROFIT WHICH WAS REDUCED FROM 4 .51% TO 4.25%. IT HAS BEEN SPECIFICALLY OBSERVED BY THE TRIBUNAL THAT THIS RATE WAS ACCEPTED BY THE ASSESSEE IN EARLIER YEARS. THEREFO RE, THIS CASE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL FO R THE EARLIER YEARS. IN ANY CASE IF FURTHER ALLOWANCE IS GIVEN A T THIS STAGE THEN THE PROFIT ESTIMATED BY THE AO AMOUNTING TO RS. 53, 96,392/- WOULD BECOME LOSS OF RS. 60.00 LAKHS BECAUSE THE CLAIM FO R DEPRECIATION IS RS. 1,14,93,358/-. 16 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. WE ARE UNABLE TO AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. FIRST OF ALL IT WAS ADMITTED BY THE LD. COUNSEL OF THE ASSESSEE THAT AS SOME DEFECTS WERE THERE IN THE BOOKS OF ACCOUNT, TH EREFORE, REJECTION OF BOOKS WAS NOT CHALLENGED BEFORE THE TR IBUNAL. ONCE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED THEN THE AO WOU LD HAVE A RIGHT TO ESTIMATE THE PROFITS. WE ARE NOT INCLINED TO ACC EPT THE ARGUMENT THAT THE PROFIT HAS DECLINED BECAUSE OF INCREASE IN TURNOVER FROM RS. 2.9 CRORES TO RS. 11.69 CORES. FIRSTLY THE REDUCTI ON IN PROFIT DOES NOT HAPPEN PROPORTIONATELY TO THE INCREASE IN TURNO VER. IN FACT THIS THEORY IS APPLICABLE IN CASE OF SMALL RETAIL TRADER S WHERE IT IS POSSIBLE TO INCREASE THE PROFITS BY REDUCING THE MA RGIN. IN A LARGE BUSINESS THIS DOES NOT HAPPEN AND IN FACT INCREASE IN TURNOVER RESULTS INTO BETTER PROFITS BECAUSE FIXED OVERHEADS GET DISTRIBUTED OVER LARGE AMOUNT OF TURNOVER. AS FAR AS THE CONTEN TION THAT WHEN THE HIGHER DEPRECIATION WAS CHARGED, HAS NO FORCE B ECAUSE IT IS A COMMON KNOWLEDGE THAT IN CASE OF NEW TRUCKS THE REP AIR AND MAINTENANCE IS NEGLIGIBLE AND HIGHER DEPRECIATION I S ALWAYS COMPENSATED BY VERY LOW REPAIRS. 17 WE HAVE PERUSED THE PROFIT AND LOSS ACCOUNT BUT THE SAME SEEMS TO BE TOTALLY FABRICATED AND NOT RELIABLE AT ALL. IT WAS STATED THAT IN EARLIER YEARS THERE WERE 11 TRUCKS WHEREAS IN THIS YEAR 32 TRUCKS HAVE BEEN ADDED. HOWEVER, THE REPAIR AND FU EL EXPENSES HAVE GONE UP FROM RS. 2,44,651/- TO RS. 5,95,520/-. IF THE ASSESSEE IS HAVING MORE THAN 40 TRUCKS, THIS WOULD SHOW THAT FUEL EXPENSES PER TRUCK ON AN AVERAGE WOULD COME TO LESS THAN RS. 15,000/- PER YEAR WHICH IS HIGHLY IMPROBABLE. SO THEREFORE, TH E FIGURES OF REPAIR AND MAINTENANCE CANNOT BE RELIED. THE OTHER STRONG CIRCUMSTANCES AGAINST THE ASSESSEE IS THAT IN THE EARLIER YEARS, THE PROFIT HAS BEEN 6 EITHER DECLARED AT MUCH HIGHER RATE OR THE ASSESSEE HAS ACCEPTED THE ADDITION BECAUSE THE LD. CIT(A) HAS CLEARLY OBS ERVED THAT THE ADDITION WAS ON THE BASIS OF EARLIER YEARS. WE FUR THER FIND THAT THIS ISSUE CAME UP BEFORE THE TRIBUNAL IN AY 2007-08 IN ITA NO. 373/CHD/2011 AND THIS ISSUE WAS ADJUDICATED VIDE PA RA 6 WHICH IS AS UNDER:- WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, R IVAL SUBMISSIONS AND RELEVANT RECORD. THE ASSESSEE APPELLANT CHALLE NGED THE NP RATE ARGUING THAT THE NET PROFIT FROM TRANSPORTATI ON BUSINESS RANGES BETWEEN 2 TO 3%. HOWEVER, AO HAD APPLIED NE T PROFIT AT 4.51% WHICH IS ON HIGHER SIDE. IT WAS FURTHER CONT ENDED BY THE ASSESSEE THAT TRUCKS/TANKERS OWNED BY THE APPELLANT ARE DESIGNED AND FABRICATED IN THE MANNER THAT THESE CAN BE UTIL IZED FOR THE PURPOSE OF TRANSPORTING MOLASSES. THESE TRUCKS HAV E BEEN FABRICATED FOR THE SPECIFIED PURPOSE AND HENCE, THE SAME CANNOT BE UTILIZED F OR ANY OTHER PURPOSE. THE LD. AR FOR TH E ASSESSEE CONTENDED THAT THE NET PROFIT OF 4.5% IS ON THE HIG HER SIDE. IT WAS FURTHER ARGUED BY THE LD. AR FOR THE ASSESSEE THAT IN TERMS OF SECTION 44AE OF THE ACT, MAXIMUM INCOME PER TRUCK I S RS. 3500/- PER MONTH. ACCORDINGLY THE ESTIMATE MADE BY THE AO IS ON THE HIGHER SIDE. THE LD. CIT(A) REJECTED THIS LINE OF CONTENTION RAISED BY THE ASSESSEE. CA OBSERVED THAT THE ESTIMATE MAY BE BASED ON THE TRADING RESULTS OF THE COMPARABLE CASES OR IT M AY BE BASED ON THE ASSESSEES OWN HISTORY. THE AO HAD COMPUTED TH E INCOME OF THE ASSESSEE BY APPLYING AVERAGE NP RATE WHICH WAS ACCEPTED BY THE ASSESSEE IN THE EARLIER TWO YEARS. ACCORDINGLY THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO. HOWEVER, KEEPING IN VIEW THE SPECIFIC FACTUAL SUBMISSION MADE BYTHE ASSESSEE, WE A RE OF THE CONSIDERED OPINION THAT NP RATE AT 4.25% IS FAIR AN D REASONABLE. ACCORDINGLY WITH A VIEW TO MEET THE ENDS OF JUSTIC E, THE AO IS DIRECTED TO COMPUTE THE INCOME OF THE ASSESSEE AT N P RATE OF 4.25%. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE PARA CLEARLY SHOWS THAT HIGH PROFITS WERE DECLARED OR ACCEPTED IN THE EARLIER YEARS. 18 THOUGH WE HAVE ADMITTED THE ADDITIONAL GROUND RE GARDING DEPRECIATION BUT IT HAS TO BE SEEN IN THE BACKGROUN D THAT THIS GROUND WAS NEVER RAISED BEFORE THE CIT(A) OR THE ISSUE REG ARDING DEPRECIATION COULD HAVE BEEN AGITATED BEFORE THE AO WHO COULD HAVE EASILY ESTIMATED THE PROFIT AT MUCH HIGHER FIG URE AND REACH THE PRESENT FIGURE OF THE PROFIT AFTER REDUCING THE DEP RECIATION. THE AO CATEGORICALLY STATED AT PAGE 6 AS UNDER: THE ARGUMENT OF THE ASSESSEE TO APPLYING NP RATE O F 0.97% AS DECLARED BY HIM IS ALSO NOT ACCEPTABLE. FOR THE AY 2007-08, THE TOTAL INCOME FROM M/S CITIZEN ROADLINES WAS COMPUTE D AT RS. 13,64,613/- AGAINST TOTAL CARRIAGE AND HANDLING REC EIPTS ART RS. 2,93,03,160/- GIVING A NP RATE OF 4.51%. SIMILARLY FOR THE AY 2006-07 THE TOTAL INCOME FROM M/S CITIZEN ROADLINES WAS COMPUTED AT RS. 10,45,956/- AGAINST TOTAL CARRIAGE AND HANDL ING RECEIPTS AT RS. 2,14,26,436/- GIVING A NP RATE OF 4.88% . THER EFORE, IT WOULD BE IN THE FITNESS OF THINGS TO APPLY THE NP RATE AP PLIED FOR THE IMMEDIATE PRECEDING AY. ACCORDINGLY AVERAGE NP RAT E OF 4.51% IS 7 CONSIDERED REASONABLE IN THIS CASE AND IS APPLIED ON THE GROSS FREIGHT RECEIPTS OF RS. 11,96,53,945/- OF M/S CITIZ EN ROADLINES AFTER ALLOWING ALL EXPENSES WHICH WORKS OUT RS. 53,96,392 /-. THE ABOVE CLEARLY SHOWS THAT THE AO HAS ALREADY TAK EN CARE OF ALL THE EXPENSES INCLUDING DEPRECIATION. WE FURTHER FI ND THAT HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. CHOPR A BROS. INDIA (P) LTD. (SUPRA) MADE THE FOLLOWING OBSERVATIONS:- U/S 29 OF THE INCOME-TAX ACT, 1961 THE TAXABLE INC OME HAS TO BE COMPUTED AFTER TAKING INTO CONSIDERATION THE PROVIS IONS CONTAINED IN SECTIONS 30 TO 43. U/S 32, THE ASSESSEE IS ENTI TLED TO CLAIM DEPRECIATION. U/S 144, THE AO IS BOUND TO TAKE INT O CONSIDERATION THE ENTIRE MATERIAL ON THE RECORD. THUS, IN A CASE WHERE THE ASSESSEE MAKES A SPECIFIC CLAIM FOR DEPRECIATION AN D GIVES THE INFORMATION AS REQUIRED U/S 32, THE AO IS BOUND TO TAKE THE CLAIM OF THE ASSESSEE INTO CONSIDERATION. THIS CON SIDERATION OF THE MATERIAL SHOULD BE APPARENT FROM THE ORDER. TH ERE IS NO ROOM FOR ANY ASSUMPTION. 19 THUS IT IS CLEAR FROM ABOVE THAT WHAT IS REQUIRE D IS THAT THE AO MUST TAKE CLAIM OF DEPRECIATION INTO CONSIDERATION. IN CASE BEFORE US, THE AO HAS VERY CLEARLY HELD THAT THE PROFIT IS BEING ESTIMATED AFTER ALL CLAIMS WHICH CLEARLY SHOW THAT THE AO HAS TAKEN THE FIGURE OF DEPRECIATION INTO CONSIDERATION. ASSUMING THAT THIS IS NOT CORRECT THEN AS POINTED OUT BY THE LD. DR FOR THE REVENUE T HE FIGURE OF PROFIT ESTIMATED BY THE AO AT RS. 53,96,392/- WOULD TURN T O A FIGURE OF LOSS OF RS. 60,96,966/- AFTER THE CLAIM OF DEPRECIATION AMOUNTING TO RS. 1,14,93,358/-. THIS CANNOT BE CORRECT POSITION BEC AUSE THE ASSESSEE HAD HIMSELF DECLARED PROFIT ON THE TRANSPO RT BUSINESS WHICH CLEARLY SHOWS THAT IF THE ASSESSEE HAS ITSELF CONSIDERED THE CLAIM OF DEPRECIATION. IN ANY CASE AS OBSERVED EAR LIER, THE TRIBUNAL HAS ALREADY CONFIRMED THE NP RATE OF 4.25% IN AY 20 07-08, WE FOLLOWING THAT ORDER, ESTIMATE THE NP RATE EVEN FOR THIS YEAR AT 4.25%. THEREFORE, THE ORDER OF LD. CIT(A) IS SET ASIDE AND THE AO IS DIRECTED TO APPLY NP RATE OF 4.25%. 20 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 26.09.2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 26.09. 2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 8 9