- (1.) This appeal has been preferred by the appellant-assessee under Section 260A, of the Income-tax Act, 1961 (in short, "the Act") against the order dated 18.8.2000, passed by Income Tax Appellate Tribunal, Chandigarh Bench (in short, "the Tribunal") in ITA No. 732/CHD/93, for the assessment year 1990-91. On 22.4.2003, the appeal was admitted to consider following substantial questions of law:-- "(i) Whether on the facts and in the circumstances of the case, the learned I TAT is justified not to allow the depreciation and interest from the flat rate of net profit applied by him, in view of Circular No. 29 DCXLX7F No. 47/239/65 ITC dated 31.3.1965? (ii) Whether the depreciation and interest are allowable deductions from the net profits even if total income is calculated by applying net profit rate? (iii) Whether on the facts and in the circumstances of the case, there are any reasonable basis for applying a net profit rate of 10% of gross receipts by the Tribunal?" A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee is a partnership firm doing its business at Patiala in Punjab State. It is engaged in the business of civil construction work relating to telecom authorities. For the assessment year 1990-91, the appellant firm filed its return of income showing total income at Rs. 4,72,000/-. The case was taken up for scrutiny and assessment was framed vide order dated 18.10.1991, Annexure P. 1. The Assistant Commissioner of Income-Tax-cum-Assessing Officer assessed the assessee to a total income of Rs. 6,00,861/-. The Assessing officer rejected the books of account on certain grounds by applying section 145(2) of the Act. The Assessing officer applied net profit rate of 12.596 on the gross receipts of the assessee making an addition of about Rs. 1,20,000/- in the total income. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income-tax (Appeals) [CIT(A)]. Vide order dated 17.2.1993, Annexure P. 3, the CIT(A) partly allowed the appeal, allowing rate of 10% net profit without permitting depreciation and interest. The assessee filed further appeal before the Tribunal. Vide order dated 18.8.2000, impugned herein, the Tribunal dismissed the appeal. Hence the instant appeal by the appellant-assessee.
(2.) We have heard learned counsel for the appellant and perused the record.
(3.) The matter is no longer res integra. This Court while dealing with similar issues in ITA No. 126 of 2001, Lali Construction Co. v. Asstt. CIT-cum-Assessing Officer decided on 20.11.2007, recorded as under:-- "The points raised in this appeal may be categorized into following three issues: (a) Whether, while applying net profit rate to the gross receipts, the assessee is entitled for deduction on account of depreciation allowance from such receipts? (b) Whether interest paid on the borrowed capital is to be deducted from gross receipts while applying net profit rate? (c) Whether the net profit rate of 10% applied by the ITAT in the present case is just and reasonable? Taking up the first point, the matter is no longer res integra. The Division Benches of this Court in Commissioner of Income-tax v. Chopra Bros. India (P) Limited,2001 252 ITR 412 and Girdhari Lal v. Commissioner of Income-tax,2002 256 ITR 318 while considering the aforesaid issue, in view of the circular issued by the Board, had held in a case where the assessee makes a specific claim for depreciation and gives the information as required under section 32 of the Act, the Assessing Officer is bound to take the claim of the assessee into consideration. Following the aforesaid judgments, it is held that the assessee is entitled to deduction on account of depreciation from receipts while applying net profit rate on the gross receipts. Now adverting to second issue, the claim of the assessee for deduction on account of interest paid on borrowed capital cannot be accepted in view of decision of this Court in ITR No. 72 of 1995 (Commissioner of Income-tax, Patiala v. Gian Chand Labour Con tractors Khanauri District Sangrur) decided on 6.11.2007 wherein it has been held that application of net profit rate takes into consideration all factors and the deductions which are referred to under Section 29 of the Act are deemed to have been taken into consideration while making such estimate. Accordingly, the said issue is decided against the assessee. Referring to the third point it deserves to be mentioned that the Assessing Officer had applied net profit rate of 12.5%. On appeal, the CIT(A) having regard to the fact that there were certain defects in the wages registers maintained by the appellant, estimated the net profit at 9% of the receipts i.e. of Rs. 1,75,98,134/-. However, the ITAT estimated the net profit rate of 10% of the receipts and further noticed that the said appellate Tribunal in similar cases had been adopting the net profit rate of 10%. No illegality or perversity could be pointed out warranting interference by this Court. The net profit rate of 10% adopted by the ITAT in the facts and circumstances of the instant case appears to be just and reasonable. Accordingly, the third issue is decided against the assessee." In view of the above, the appeal is disposed of in the same terms as in Lali Construction Co.'s case .;