ITA No. 65 of 2002 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 65 of 2002 Date of Decision: 12.8.2010 Commissioner of Income Tax ....Appellant. Versus Shri Som Dutt Gargi ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Savita Saxena, Advocate for the appellant. None for the respondent. AJAY KUMAR MITTAL, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 12.9.2001 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 103 (ASR)/1993 for the assessment year 1991-92 proposing to raise the following substantial question of law:- “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in dismissing the appeal of the revenue and allowing interest when net profit rate was applied?” 2. The facts necessary for adjudication of the present appeal ITA No. 65 of 2002 -2- may be noticed. The assessee is an individual and his source of income was from contract with MES authorities. He filed his return on 28.10.1991 declaring an income of Rs.5,99,820/- and thereafter filed revised return on 28.11.1991 declaring an income of Rs.4,53,860/-. During the course of assessment proceedings, the Assessing Officer found that the assessee had not maintained day to day records of work- in-progress viz stock register of the material purchased and used. Signatures on the muster rolls were not verifiable and the payments made were not subject to verification. The assessee did not furnish month-wise details of payments received and volume of material supplied by the Government departments and month-wise expenditure under different heads. The Assessing Officer invoked proviso to Section 145 (1) of the Act and applied net profit rate of 10% on the receipts and disallowed the interest and depreciation. The assessee took the matter in appeal and the CIT (A) while allowing the appeal held that the assessee was entitled to deduction on account of interest and depreciation. Feeling aggrieved, the revenue filed an appeal before the Tribunal who upheld the view of the CIT (A) and dismissed the appeal. Hence, the present appeal by the revenue. 3. We have heard learned counsel for the revenue. None appears on behalf of the assessee. 4. The solitary issue raised by the revenue in this appeal is – whether an assessee is entitled to deduction on account of interest paid on loans when net profit rate has been applied by the Assessing Officer for determining the taxable income of the assessee. 5. The matter is no longer res integra. The similar issue came ITA No. 65 of 2002 -3- up for consideration before this Court in Girdhari Lal v. Commissioner of Income-tax, Jalandhar and another, [2002] 256 ITR 318 and no separate deduction was held admissible to the assessee on account of payment of interest where net profit rate was applied by the Assessing Officer. That being so, the Tribunal was in error in allowing the claim of interest to the assessee-respondent. 6. Accordingly, the appeal is allowed and the question is answered in favour of the revenue and against the assessee. (AJAY KUMAR MITTAL) JUDGE August 12, 2010 (ADARSH KUMAR GOEL) gbs JUDGE