This document is a summary of a tax appeal case in India. [1] The assessee (taxpayer) appealed a decision rejecting their books of accounts and applying a 10% net profit rate. [2] The tribunal confirmed rejecting the books but allowed a deduction for interest paid to third parties that was consistent with a previous tribunal ruling. [3] The tribunal partly allowed the assessee's appeal by modifying the order to allow the interest deduction in line with the previous ruling.

1. IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH :
JODHPUR
BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND
SHRI N.K. SAINI, ACCOUNTANT MEMBER.
ITA No.651/JU/2006
(A.Y. 2004-05)
M/s. Aditya Traders, Vs. The ITO, Ward-1,
Hanumangarh, Hanumangarh.
Udaipur.
PAN No. AAKFA 8602 Q
(Appellant) (Respondent)
Assessee by : Shri Suresh Ojha
Department By : Shri N.A. Joshi - D.R.
Date of hearing : 12/06/2014.
Date of pronouncement : 15/07/2014.
O R D E R
PER HARI OM MARATHA, J.M
This is an appeal by the assessee directed against the order dated
13/11/2006 of ld. CIT(A), Bikaner.
2. The following grounds have been raised by the assessee in this
appeal:
“1. That CIT(A) erred in law & in facts in confirming AO's
rejection of books under section 145(3), more so, receipts
were verifiable and expenses were supported by vouchers

2. 2
where self made or independent bills as concerned
departments made payments after verifying execution of
respective work on sites.
2. That CIT(A) was not justified in facts in upholding
application of NP rate of 10% subject to depreciation &
deduction of section 40(business) on total contract receipts
of Rs. 10655342/-
3. That CIT(A) was not justified in not allowing deduction
from profit determined by applying a NP rate for interest
paid on business loans from third parties.
4. That charging of interest u/s 234B was against law and
facts.”
3. Briefly stated, the facts of the case are that the assessee is a
partnership firm deriving its income from execution of contract work
undertaken from Government department. The books of account were
rejected u/s 145(3) of the Income-tax Act, 1961 ['the Act', for short]
and net profit rate was applied. The Tribunal has also confirmed the
application of provisions of section 145(3) of the Act but the assessee
had claimed interest paid to third parties while estimating profit under
this section. This issue was stated to be covered by the decision of
this very Bench rendered in the case of M/s Ganesh Garhia
Construction Co. Vs. ACIT for A.Y. 2004-05 in ITA No.
430/Jodhpur/2008 which was also corrected/rectified vide MA No.
04/JU/2013 vide order dated 02.05.2014. Accordingly, the order
passed by the Tribunal on 31.12.2008 in this case was recalled and only

3. 3
to that extent the appeal was heard. The issue of payment of interest
to third parties being clearly covered by the Tribunal order and their
consistent view, we modify the order accordingly by making
observation that after invoking provisions of section 145(3) of the Act
in this case, interest paid to third parties is also allowable.
Accordingly, result of the appeal shall remain same i.e. appeal shall be
partly allowed.
4. In the result, appeal of the assessee is partly allowed.
(Order Pronounced in the Court on 15th
July, 2014).
Sd/- Sd/-
(N.K.SAINI) (HARI OM MARATHA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 15th
July, 2014.
VL/
Copy to:
1. The Appellant
2. The Respondent
3. The ld.CIT
4. The CIT(A)
5. The D.R
Assistant Registrar,
ITAT, Jodhpur.