JUDGMENT judgment of court was delivered by L. Narasimha Reddy J.- order dated April 8, 2003, passed by Visakhapatnam Bench of Income-tax Appellate Tribunal (for short, Tribunal) in I. T. No. 921/H/97 referable to assessment year 1994-95 is under challenge in this appeal filed by Revenue under section 260A of Income-tax Act, 1961 (for short, "the Act"). following questions are raised: "(a) Whether, on facts and in circumstances of case, Appellate Tribunal is justified in estimating net profit at 11.5 per cent. as against 12.5 per cent. as determined by Assessing Officer and whether such deduction is based on material on record? (b) Whether Appellate Tribunal is justified in directing grant of deduction on account of partners capital and salary to partners and also interest and financial charges?" respondent is civil contractor. In its returns for assessment year 1994-95, it has shown receipts of Rs. 96,81,456 from contracts and sum of Rs. 2,63,680 in form of lorry hire charges. Assessing Officer did not believe figures, particularly those in relation to civil contracts. He has chosen to invoke section 145 of Act and estimated net profit at 12.5 per cent. on net contract receipts. Depreciation was allowed from estimated net profit but deduction of interest on capital and salary paid to partners was disallowed. respondent carried matter in appeal to Commissioner of Income-tax (Appeals), Visakhapatnam. Commissioner of Income-tax (Appeals) directed Assessing Officer to take estimated net profit at 11.5 per cent. as against 12.5 per cent. He has also allowed deduction of interest on capital arranged by partners and amount paid as salaries to partners. Deduction of interest on loans was disallowed. Therefore, respondent carried matter in further appeal to Tribunal. Following order passed by Hyderabad Bench in I. T. No. 1057/Hyd/1988, Tribunal allowed deduction of interest on other loans also. Hence, this appeal by Revenue. Sri S. R. Ashok, learned senior standing counsel for Revenue, submits that once assessment is shown under section 145 of Act, it is deemed to be comprehensive and no other deductions are permissible. He submits that section 145 of Act is typical provision which can be pressed into service, where Assessing Officer is not satisfied about facts and figures furnished by assessee and figure that emerges out of such exercise is so comprehensive that it does not permit of any other and usual deductions. He contends that exercise is akin to one under section 44AD of Act, under which separate deductions provided for under sections 30 to 38 of Act are impermissible and in fact, are deemed to have been effected. Sri Ch. Pushyam Kiran, learned counsel for respondent, on other hand, submits that section 145 of Act provides option to assessee in cash or mercantile system of accounting and gives option to Assessing Officer to take recourse to best judgment assessment under section 144 of Act and beyond that, it does not prohibit ordinary exercise to be undertaken vis-a-vis return directly or indirectly. He submits that Tribunal has taken correct view of matter and order does not warrant interference. factual background of case has already been furnished in preceding paragraphs. respondent posted two items of income, one in form of receipt from civil contracts and other in form of hire of vehicles. Assessing Officer did not believe figures pertaining to first item of income. Obviously, by taking recourse to section 145 of Act and thereby to section 144 of Act, he assessed income at 12.5 per cent. on total receipts from that source. It is important to note that he allowed depreciation from estimated net profit but disallowed deduction of interest on capital and salaries paid to partners. In appeal preferred by respondent, Commissioner of Income-tax (Appeals) granted relief to extent of reducing estimated net profit by 1 per cent. and allowed deduction of (a) interest on capital arranged by partners, and (b) salaries paid to partners. He disallowed interest on other loans. Tribunal granted that part of relief also. entire controversy turns around question as to whether in assessment made by Assessing Officer under sections 145 and 144 of Act, deductions provided for under sections 30 to 38 of Act are permissible. It has already been mentioned that learned senior standing counsel for Department pleaded that assessment of that category is comprehensive and ordinary deductions are deemed to have been made. There is evidence to show that Assessing Officer himself was not consistent. If in fact, exercise undertaken under sections 145 and 144 of Act is so comprehensive, there was no occasion to allow any deduction at all. However, depreciation under section 32 was allowed by him, in order of assessment itself. Secondly, none of those two sections contain any provision to effect that deductions under section 32 to section 38 of Act are deemed to have been made. It is important to take note of section 44AD of Act for comparison. Sub-section (2) therein reads as under: "Any deduction allowable under provisions of sections 30 to 38 shall, for purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed: Provided that where eligible assessee is firm, salary and interest paid to its partners shall be deducted from income computed under sub- section (1) subject to conditions and limits specified in clause (b) of section 40." Once provision of that nature is not incorporated under sections 144 and 145 of Act, contention of Department in this behalf cannot be accepted. first question is answered in affirmative. Answer to second question, would in fact depend upon answer of first question. Once we hold that even where assessment is done under section 145 of Act normal deductions are to be allowed, there is no way that Assessing Officer could have denied deduction of salaries to partners and interest on financial charges. It is not even mentioned that claims are not factually correct. We, therefore, answer second question also against Revenue and in favour of assessee. Tribunal has taken correct view of matter. We, therefore, dismiss appeal. There shall be no order as to costs. *** Commissioner of Income-tax v. Inter Continental Construction