In Cases of Divergent Views, The One Which is More Beneficial to the Assessee to be Adopted: ITAT

Clipped from: https://www.taxscan.in/in-cases-of-divergent-views-the-one-which-is-more-beneficial-to-the-assessee-to-be-adopted-itat/207597/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=In%20Cases%20of%20Divergent

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By Gayathri C.H – On September 27, 2022 4:41 pm

Assessee - ITAT - taxscan

The Income Tax Appellate Tribunal (ITAT), Visakhapatnam Bench, has recently in an appeal filed before it, held that in cases of divergent views, the which is more beneficial to the assessee is to be adopted.

The above said observation was made by the Tribunal when the assessee, a partnership firm engaged as a transport operator, filed an appeal before it as against the order of the Commissioner of Income Tax (Appeals)-9, Hyderabad (CIT(A)), in Order No.ITBA/APL/S/250/2019-20/1021309981(1), arising out of the order passed U/s. 143(3) 2 r.w.s 263 of the Income Tax Act, 1961, for the Assessment Year (AY) 2010-11.

The reason for the aggrieved assessee’s agony was the Assessing officer’s rejection of the books of accounts, his estimation of income @ 15% of the Gross Receipts, and his allowance of the depreciation of Rs. 1,93,47,466/-, subsequently followed by the Commissioner’s (CIT) setting aside of the assessment order and disallowance of depreciation of Rs. 1,93,47,466, the assessee filed an appeal before the ITAT.

However, on the dismissal of his appeal by the ITAT followed by the subsequent order of the CIT (A) u/s. 250, upholding the order of AO passed  u/s 143(3) r.w.s 263., that the assessee had come up with the present appeal.

The challenging ground for the present appeal is the question as to whether the CIT(A) was correct in sustaining the addition made by AO of the estimation of income @ 15% of total gross receipts net of all deductions including depreciation, the tribunal observed as follows:

“We find that the coordinate bench of this Tribunal in the case of ITO vs. Sri Gundapaneni Nageswara Rao, under a similar set of facts, has directed the AO to estimate a net profit of 3% of all deductions including depreciation. Though there is a divergent view from the appellate authorities, the view which is more beneficial to the assessee has to be adopted in view of the Supreme Court decision in the case of CIT vs. Vegetable Products Limited.

Therefore, we are of the considered view that since the assessee has not proved the ownership of assets to claim the depreciation and also that the facts of the present case are similar to the facts of the case considered by the ITAT in ITA No.1799/Hyd/2013 dated 29/04/2014, we deem it appropriate to direct the AO to estimate net profit of 3% on gross receipts net of all deductions including depreciation.

 Accordingly, we direct the AO to estimate net profit of 3% on gross contract receipts net of all deductions for the AY 2010-11, and in the result, appeal of the assessee is allowed.”To Read the full text of the Order CLICK HERE

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