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2012 (6) TMI 287 - AT - Income TaxPurchases from sister concern - applicability of section 40(A)(2)(a) of the Act - held that:- The AO has not pointed out that the purchases made by the assessee from PIH were excessive having regard to the fair market value of the goods. He has also not disputed the rate at which the sales were made by the assessee. The fact that assessee provided discount by way of extra cases to its customers has also not been found to be false by the AO. The AO has also not been able to bring any material on record to show as to how and in what manner the assessee intended to avoid payment of tax before invoking the provisions of Section 40A(2)(a) of the Act. - Decided in favor of assessee. Rejection of book of accounts on the ground of declaration of loss - estimation of gross profit - held that:- The conclusion arrived at by the learned CIT(A) that the assessee company has been roped in merely to transfer the losses of the holding company is not based on any evidence or material. The learned CIT(A) further relied upon the rate of profit shown by other group companies but that cannot be a sole criteria to reject the assessee's books of account and then to invoke Section 40A(2)(a) for the purpose of disallowing expenses of purchases. - any estimation of gross profit at the rate of 13.73% is unwarranted. - Decided in favor of assessee.
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