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Depreciation allowance - Depreciation after estimation of income
November, 28th 2006

CIT vs Bhullar Builders
Citation 194 Taxation 482, 286 ITR 686

The allowance of depreciation from the assessees income estimated by the AO by applying eight percent net profit rate was appropriate, as all relevant details pertaining to assets had been filed.

S.32 and s.145 of the Income Tax Act 1961 

High Court of Punjab and Haryana

CIT vs Bhullar Builders

I.T. Appeal No. 275/2004

Mr. D.K. Jain, C.J and Mr. Hemant Gupta, J

6 December 2005

Mr. D.S. Patwalia, Adv. for the Appellant
None for the Respondent


D.K. Jain, C.J.

This appeal by the revenue under section 260-A of the Income-tax Act, 1961 (hereinafter referred to as the 'Act') is directed against order, dated 17.5.2004, passed by the Income-tax Appellate Tribunal, Chandigarh Bench-A (for short the Tribunal') in ITA No. 562/Chandi/2003 pertaining to the assessment year 1994-95. According to the revenue, the impugned order gives rise to the following substantial question of law:

"Whether the Hon'ble ITAT is right in law in separately allowing depreciation to the assessee for the assessment year 1994-95 when the net profit rate at 8% was adopted thereby deeming that the deductions under Sections 30 to 38 have already been given full effect?"

2. Since, in our opinion, in so far as this Court is concerned, the issue sought to be raised by the revenue is no more res Integra, we deem it unnecessary to state the facts, giving rise to the present appeal. Suffice it to note that the only issue before the Tribunal was that when a net profit rate is applied because of non-maintenance of proper books of accounts, the assessee is still entitled to claim other business expenses, like salary, interest and depreciation etc.?

3. A similar issue came up for consideration of this Court in CIT vs. Chopra Bros. (India) P. Ltd., 252 ITR 412 (PandH). The question for consideration in that case was whether an assessee was entitled to the claim of depreciation on machinery, when a net profit rate on contract receipts had been applied? Answering the question in favour of the assessee, this Court opined that such a claim had to be separately taken into account, provided the requisite particulars had been furnished by the assessee.

4. In an attempt to distinguish the said decision, Mr. Patwalia, learned counsel for the revenue has submitted that the ratio of the decision is not applicable on the facts of the instant case in as much as in the present case necessary particulars in support of the claims had not been furnished by the assessee.

5. Having perused the documents placed on record, we are of the opinion that the contention is devoid of any substance. In the order of the Commissioner of Income-tax (Appeals) it has been specifically noted that the audited accounts alongwith audit report, balance-sheet, PandL accounts, fixed assets and depreciation chart, as prescribed, had been filed with the Department. Learned counsel for the Revenue is unable to controvert the said observation by the Commissioner.

6. Thus, in view of the pronouncement of this Court in the case of Chopra Bros, (supra), no question of law, much less a substantial question of law, survives for our consideration.

7. Consequently, we decline to entertain the appeal. Dismissed.

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