Itta/22/2001 Of M/S Maqsod And Co Hyderabad v. The Commner Of Income Tax Hyd

HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.Nos.3 and 22 of 2001 Between:M/s Maqsood Date: 27.06.2013 .....Appellant AND Commissioner of Income Tax, A.P.-I,Hyderabad. .....Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.Nos.3 and 22 of 2001 COMMON JUDGMENT:(per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) These two appeals arise out of the common judgment andorder dated 19.07.2000 of the Income Tax Appellate Tribunal,Hyderabad, in I.T.A.Nos.1777 and 1778/Hyd/94 respectively. Both the appeals were admitted on the following substantialquestion of law: “Whether, on the facts and in the circumstances ofthe case, the Tribunal is correct in law in its decision thatwhere the profits are estimated by rejecting the books ofaccounts under Section 145 (2), deduction ofdepreciation allowance is not permissible?” We have gone through the impugned order of the learnedTribunal. It appears that the learned Tribunal has slightly modifiedthe order of the Commissioner of Income Tax (Appeals), whosimply confirmed the fixation of profit at 12.5%. It has beenobserved by the learned Tribunal that the same is without anyevidence and material. It is true that in the case of estimate ofprofit, some reasonable degree of guesswork is required. Suchguesswork must not be based without any material, and it must bebased on the past transaction or comparable instances. Thecomparable instances are the best material to come to anestimation. In this case, the learned Tribunal thought that theestimated net profit would be at 9.5%. Learned Counsel for the appellant submits that in this caseafter arriving at the estimated net profit at 9.5%, depreciation allowance should have been allowed as it is a statutory allowanceand it has to be given even if profits are estimated after rejectionof the books of accounts. We are unable to accept the aforesaid contention of thelearned Counsel for the appellant. We are of the view that thisdepreciation is based on the gross receipts, which are found outfrom the books of accounts. It has been decided by the learnedTribunal that the first appellate authority rightly held that since theprofit had been estimated under Section 145, no separatedepreciation needs to be allowed. Net income, in our view, is afterdeducting depreciation. Therefore, we do not find any reason tointerfere with the order of the learned Tribunal. Accordingly, both the appeals are dismissed. No order asto costs. Miscellaneous petitions, if any, pending shall also standclosed. ___________________ K.J. SENGUPTA, CJ _______________ G.ROHINI, J 27.6.2013 Gsn.