Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (7) TMI 1283 - AT - Income TaxRejection of books of accounts u/s 145(3) - estimating the net profit of 12.5% on direct works and 8% on sub contract works by AO - Held that:- A.O. has relied upon certain judicial precedents to estimate the net profit, wherein the net profit of 12.5% and 8% in respect of main contracts and sub contracts are upheld. The A.O. has given his own reasons for adopting particular rate of net profit. The assessee has relied upon certain judicial precedents, wherein the net profit of 8% and 5% is upheld. The assessee has given his own reasons for reporting low net profit. However, both the sides failed to justify how a particular case is fit in to the facts of this case for adopting particular rate of net profit. There is no straight jacket formula for estimation of net profit. Before estimation of net profit, the facts and circumstances of case should be considered. But, one common understanding is that, the moment an entity reaches break-even level, its profit would be high, because of fixed overheads. In the present case on hand, on perusal of the facts available on record, we find that the assessee is a large contractor having turnover of more than ₹ 100 crores. Therefore, keeping in view of facts & circumstances of this case, we are of the view that to meet the ends of justice, we direct the A.O. to adopt a net profit of 10% on direct works contracts and 6% net profit on sub contract works. - Decided partly in favour of revenue
|