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2020 (5) TMI 202 - ITAT CHANDIGARHDeduction u/s 80IC - profits to the extent of 2% of sales (excluding sale of insulated copper wire) are not eligible for deduction - Excessive estimation of profit - HELD THAT:- A.O. only on the basis of presumption made the disallowance by observing that the assessee might have inflated net profit rate by not paying the technical know how fee and declaring the higher net profit rate. However he ignored this explanation of the assessee that increase in the higher rate for the year under consideration was due to low expenses on account of interest and lesser amount of depreciation. Assessee also explained that one of the partner namely Shri Mohinder Sethi was experienced and that no expense on account of royalty / technical know how had been incurred by the assessee. The assessee that neither in the preceding year nor in the succeeding year such disallowance has been made in the similar circumstances has not been rebutted. Therefore, we are of the view that the impugned disallowance made by the A.O. and sustained by the CIT(A) was not justified, accordingly the same is deleted. Amount charged in excess from sister / related concern - HELD THAT:- A.O. without pointing out any specific difference in the rates made the addition by taking the average rate although the variation was only 0.64% even the explanation of the assessee that different rates were prevailing at different point of time when sales were made to the outsider was not considered. Addition made by the A.O. and sustained by the Ld. CIT(A) was not justified, accordingly, the same is deleted. - Decided in favour of assessee.
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