ORDER
Joginder Pall, A.M.
1. By this order, we shall dispose of this appeal filed by the Revenue against the order of CIT(A), Jodhpur, for the asst. yr. 1995-96.
2. The first issue raised in this appeal is that the CIT(A) was not justified in directing the AO to compute the income by applying a profit rate of 5 per cent as against net profit rate of 8 per cent applied by the AO and further directing the AO to allow deduction of interest paid to 3rd parties. The facts of the case are that the assessee was a civil contractor and had shown profit of Rs. 2,11,561 on contract receipts of Rs. 1,31,21,000. After claiming deduction of depreciation of Rs. 48,264, the assessee had declared net profit slightly over 1 per cent. In response to. show-cause notice issued by the AO, the assessee replied that Tribunal, Jaipur Bench, has itself decided in the case of the assessee that profit rate of 5 per cent should be applied, subject to depreciation, and interest to 3rd parties. However, the AO applied net profit rate of 8 per cent without allowing any further deduction of interest and depreciation and made the addition accordingly. Aggrieved, the assessee impugned the addition in appeal before the CIT(A). The CIT(A), by relying on the decisions of Tribunal, Jaipur Bench, in assessee’s own case for the asst. yrs. 1990-91 and 1993-94 held that the income should be computed by applying a rate of 5 per cent subject to deduction of interest and depreciation. The Revenue is aggrieved by the order of CIT(A). Hence, this appeal before us.
3. The learned Departmental Representative relied on the order of AO.
4. The learned counsel for the assessee heavily relied on the order of CIT(A). He also relied on the decision of Tribunal, Jaipur Bench, in assessee’s own case in ITA Nos. 2151 and 2046/Jp/1995 for the. asst. yrs. 1990-91 and 1992-93, and ITA No. 918/Jp/1996 for the asst. yr. 1993-94, where it has been held that income should be computed by applying net profit rate of 5 per cent, subject to deduction of depreciation and interest paid to 3rd parties. A copy of the aforesaid consolidated order of Tribunal was also placed at pp. 1 to 7 of the paper book. He also submitted that even reference applications filed by the Revenue for the asst. yrs. 1990-91 and 1993-94 have been dismissed by the Tribunal. A copy of this order was also placed at pp. 8 to 10 of the paper book. He also referred to the decision of Tribunal, Jodhpur Bench, in assessee’s own case in ITA No. 216/Jdpr/1998 for the asst. yr. 1994-95 and in ITA No. 461/Jdpr/1999 for the asst. yr. 1995-96 where, by relying on earlier orders of the Tribunal, it has been held that income should be computed by applying net profit rate of 5 per cent of gross receipts and further to allow depreciation and interest paid to 3rd parties. Thus, he contended that the order of CIT(A) does not merit any interference.
5. We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. From the facts discussed above, it is obvious that the order of CIT(A) is in conformity with the aforesaid orders of the Tribunal in assessee’s own case for the abovementioned assessment years. Respectfully following the same, we are of the view that the order of CIT(A) in directing the AO to compute the income by applying profit rate of 5 per cent does not merit any interference. As regards the claim of the assessee for deduction of depreciation and interest to 3rd parties, the same is also covered by the aforesaid decisions of Tribunal and two judgments of the Hon’ble Rajasthan High Court in the cases of CIT v. Jain Construction Co. (2000) 245 ITR 527 (Raj) and CIT v. Bhawan Va Path Nirman (Bohra) and Co. (2002) 258 ITR 431 (Raj). Thus, the order of the CIT(A) is upheld and the ground of appeal of the Revenue is dismissed.
6. The next ground of appeal relates to deletion of an addition of Rs. 1,35,562 made under Section 40A(3). Briefly stated, the facts of the case are that the AO made an addition on the ground that the assessee had made cash payments exceeding prescribed limit in violation of provisions of Section 40A(3). Aggrieved, the assessee carried the matter in appeal before the CIT(A). it was submitted before the CIT(A) that since the income in this case has been computed by applying net profit rate and by rejecting the book results, no addition under Section 40A(3) of the Act could be made. Reliance was also placed on the judgment of Hon’ble Andhra Pradesh High Court in the case of Indwell Constructions v. CIT (1998) 232 ITR 776 (AP), the judgment of the Hon’ble Allahabad High Court in the case of CIT v. Banwarilal Banshidhar (1998) 229 ITR 229 (All) and the order of Tribunal, Jaipur Bench, in the case of Mohta Construction 21 Tax World 257 (Jp). Accepting the contentions of the assessee and by relying on the aforesaid judgments, the learned CIT(A) deleted the addition. The Revenue is aggrieved by the order of CIT(A). Hence, this appeal before us.
7. The learned Departmental Representative relied on the order of the AO.
8. The learned counsel for the assessee, on the other hand, relied on the order of CIT(A) and also relied on the two judgments of the Hon’ble Andhra Pradesh High Court and Hon’ble Allahabad High Court cited by the CIT(A) in para 5 of his order and as mentioned above.
9. We have heard both the parties and carefully considered the rival submissions. From the facts discussed above, it is obvious that the income has been computed by rejecting the book results and by applying the net profit rate. Therefore, no addition under Section 40A(3) could be made because no deduction for various expenses incurred as such has been allowed. Reliance in this regard is placed on the judgment of the Hon’ble Andhra Pradesh High Court in the case of Indwell Construction v. CIT (supra) and Allahabad High Court in the case of CIT v. Banwarilal Banshidhar (supra). Thus, we do not find any infirmity in the order of CIT(A). The same is upheld and this ground of appeal is also dismissed.
10. In the result, the appeal is dismissed.