Judgment Rajesh Balia, J.-Heard learned counsel for the parties. 2. These two appeals filed by the Revenue relate to the assessment years 1994-95 and 1996-97. 3. Thecore question raised before us, as is apparent from the question framed at the time of admission, whether the Income-tax Appellate Tribunal was justified in law allowing interest paid to third parties. 4. Reference to CIT vs. Jain Construction Co. [2000] 245 ITR 527 (Raj), is primarily for the purpose of showing that whether on reaching this conclusion, reliance can be placed on that Judgment laying down any such rate. 5. Having perused the Judgment under appeal and other material, which has been referred to by both learned counsel, we are of the opinion that in the facts and circumstances of the case, the decision of Jain Construction Co. [2000] 245 ITR 527 (Raj) referred to above which was rendered in an application under Section 256 really does not call for any consideration in this case as the finding has been reached on appreciation of facts concerning the assessment in question. 6. The background of the question is that the Assessing Officer finding that the net profit rate disclosed in the books of account of the assessee for the previous years relevant to the assessment years in question, respectively, were not showing the true and correct picture of the trading results and therefore by rejecting the books of account, the Assessing Officer resorted to Section 145(2) and computed the income chargeable to tax for the respective assessment years by estimating the net profit rate at 11 per cent. without subject to any appropriation. 7. For considering that the books of account by the assessee do not disclose the correct picture of profit and gain from business, the Assessing Officer has referred to the net profit rate showing the trading result as per books of account was lower than previous years. Such net profit rate taken into account was without taking into account the allowable depreciation and interest paid to third parties, and the same were still to be appropriated from the net profit so disclosed by the assessee. 8. Likewise for the assessment year 1996-97 the net profit rate disclosed by the assessee in his books of account was arrived at without taking into account depreciation and interest payable to the third parties. 9. 8. Likewise for the assessment year 1996-97 the net profit rate disclosed by the assessee in his books of account was arrived at without taking into account depreciation and interest payable to the third parties. 9. However, while increasing the net profit rate as disclosed by the assessee to 11 per cent. the Assessing Officer did not leave room for any further appropriation on account of depreciation or interest payable to third parties, or for that matter any other claim to appropriation from such net profit rate was not considered. 10. The Tribunal by tracing the history of the assessee in the matter of determining its taxable income by estimating it on the basis of net profit rate for earlier years has found : Firstly, as a fact that the assessee has declared net profit rate in the three assessment years preceding assessment year 1989-90 (the Tribunal was considering appeals arising from proceedings relating to the assessment year 1989-90 and subsequent years up to 1996-97) and the average rate of net profit applied was taken to be 11 per cent. 10.11. This net profit rate has been taken to replace the basic net profit rate as declared by the assessee under the subsequent years also. 12. Thus, finding 11 per cent. net profit rate as basic rate for computing income for the purpose of levying tax, the Tribunal has found that the basic net profit rate fixed by the Income-tax Officer at 11 per cent. for each of the two years in question also does not call for any change so far as percentage is concerned. 13. However, the Tribunal has further found by noticing the past record of the assessee both in the matter of declaration of income by him and assessment made on the estimated basis by the Assessing Officer as finally affirmed or modified by the appellate authorities that in determining the income ot the assessee on estimated basis, past record and history of assessment is always relevant factor. That history we find up to the finding recorded by the Commissioner of Income-tax (Appeals) as noticed by the Tribunal in para. That history we find up to the finding recorded by the Commissioner of Income-tax (Appeals) as noticed by the Tribunal in para. 16 of its order under appeal which reads as under: The factual position regarding the net profit rate applied by the Assessing Officer and confirmed/sustained by learned Commissioner of Income-tax (Appeals) for the assessment years can be better appreciated from the figures given in the following comparative chart: Net profit rate disclosed Net profit rate applied by Net profit rate confirmed Assessm by the assessee in the the Assessing Officer sustained by the learnedent year return Commissioner of Income-tax (Appeals) (1) (2) (3) (4) 10.99% 12.5% 12.5% 1989-90 (Subject to depreciation (Subject to depreciation (Subject to depreciation and and interest to third parties) and interest to third interest to third par-ties) parties) 8.10% 12.5% 10% 1990-91(Subject to depreciation (Subject to depreciation (Subject to depreciation and and interest to third parties) and interest to third interest to third parties) parties) 10.49% 10.49% + Rs. 80,000 10.49% 1991-92 (Subject to depreciation (Subject to depreciation (Subject to depreciation and and interest to third parties) and interest to third interest to third parties) parties) 6.58% 11% 10.0% 1992-93(Su1 ject to depreciation, (Subject to depreciation (Subject to depreciation and interest and sales tax) and interest to third interest to third parties) parties) 9.97% 12.5% 12.5% 1993-94 (Subject to depreciation (Subject to depreciation (Subject to depreciationinteres interest and sales tax) interest and sales tax) third parties and sales tax) 8.63% 11.0% Without any 10.0% 1994-95 (Subject to depreciation furtherl separate (Subject to depreciation intere interest to third parties deduction) third parties, sales tax, sub-letti sales tax, sub-letting corn commission, salary and interest mission, salary and inter partners) est to partners) 10.0 1% 1995-96 (Subject to depreciation interest to third parties sales tax, and interest tc partners, commission salary and interest to part ners) 11% 12% (Without any further/sep arate deduction) Note: (1) The figures for the assessment years 1990-91, 1991-92 and 1993-94 are also shown in the chart to facilitate better comparison; (2) The Tribunal has upheld the net profit rates of 10% and 10.49% for the assessment years 1990-9 1 and 199 1-92, respectively. 14. 14. From the aforesaid chart, it is apparent that in the case of the assessee at least since 1989-90, the Assessing Officer has taken trading result of the asses-see on the basis of the net profit rate before appropriation towards depreciation and interest to third parties, though in the case of the assessment years 1994-95 and 1995-96 some other expenses have also been claimed. 15. The Tribunal also referred to the net profit rate as per the assessee’s methodology disclosed in the assessment years 1986-87 at 10.7 per cent. 1987-88 at 10.4 per cent. and 1988-89 at 11.6 per cent. to sustain basic net profit rate at 11 per cent. 16. The Assessing Officer while altering the net profit rate as disclosed in the books of account of the assessee has estimated the net profit rate successively for six assessment years 1989-90 to 1994-95 subject to appropriation towards depreciation and interest to third parties. While affirming or modifying the net profit rate determined by the Assessing Officer, the first appellate 11% (Without any further separated deduction) 10.77% 1996-97 (Subject to depreciationinterest to third parties) 11.0% (Subject to depreciation, inter to third parties, sales tax, salar3 and interest to partners) (Subject to depreciation intere third parties, salary and interest partners) authority has also determined net profit rate subject to appropriation towards depreciation and interest to third parties and sales tax. 17. Thus, it was apparent from the aforesaid background of the determination of the assessee’s income on estimated basis that throughout the net profit rate disclosed by the assessee, has been computed and taken into account by the Assessing Officer to determine the trading results prior to allowance of depreciation and payment of interest to the third parties and has himself determined the net profit rate to be applied subject to similar appropriation. 18. 18. All through past years history of the assessee in connection with income-tax assessment is consistent with the finding that the net profit rate disclosed by him in his books of account and the net profit rate applied by the Assessing Officer for estimating his income from business and profession for the relevant years as affirmed by the Commissioner of Income-tax (Appeals) had been without the element of appropriation towards depreciation and interest to third parties which are otherwise allowable expenditure under the provisions of the Income-tax Act to be taken into account for determining the taxable income and were required to be so appropriated against the trading result obtained by applying the estimated net profit rate. 19. It is on the aforesaid premise that the net profit rate to be applied to the assessee was devised by the Assessing Officer as well as by the Tribunal. 20. However, in devising the net profit rate and estimating the income of the assessee in relation to the assessment years in question on the basis of the past record of practice the Income-tax Officer has, for the first time deviated from method of final estimate by not considering the element of later appropriation towards depreciation and interest as has been consistently followed in the case of the assessee in past years by the Revenue itself 21. The Tribunal while accepting the basic net profit rate on the basis of the history ot case, has found no reason to deviate from the past history of estimating the income of the assessee. 22. We are of the opinion that there is a reasonable nexus in the reasoning of the Tribunal by linking the process of estimating income with the past practice followed in the assessee’s case by the Revenue itself consistently for five years prior to the relevant years in question. 23. In this case the very foundation of fixing the net profit rate has been the average net profit rate as has been applied by the Revenue in the past consistently since the assessment year 1989-90 and which has been followed in determining the taxable income of the assessee year after year. Such net profit rate was determined without considering any appropriation towards depreciation and interest on borrowings. Such net profit rate was determined without considering any appropriation towards depreciation and interest on borrowings. Once the basic premise was founded on past history which was apparently denoting towards fixing of net profit rate by the assessing authority vis-a-vis the net profit rate declared by the assessee by excluding the element of depreciation and interest on borrowings whether in computing the net profit rate disclosed by the assessee or the net profit rate applied by the Assessing Officer, the consequence automatically follows that in the net profit rate so fixed the element of depreciation on the fixed asset and interest on borrowings has not been taken into consideration in determining the net profit rate. Consequently, the trading result obtained by applying such net profit rate needed further appropriation towards allowable depreciation and interest on borrowings. There is no doubt about the fact that both expenses, on account of depreciation and interest on borrowings are allowable expenses and without taking into account such expenses net taxable income cannot be determined. In fact there is no dispute about the appropriation towards depreciation, notwithstanding the assessing authority has applied the net profit rate excluding appropriation towards any allowable expenditure. 24. We are in agreement with the Tribunal for modiiring the order passed by the assessing authority by making the net profit rate subject to adjustment towards depreciation and interest on borrowings. 9.25. This conclusion, in our opinion, was a pure finding of fact and would not give rise to a question of law much less a substantial question of law unless the finding is shown to be perverse or without any rationale. That being not so, we do not find any merit in these appeals and the same are hereby dismissed with no order as to costs.