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2013 (1) TMI 538 - HC - Income TaxRate to be applied for determining the profits of the business - Whether the Tribunal was justified in adopting net profit rate of 7% on contract receipts including sub-contract receipts . Assessee not produced the purchase file and fixed assets bill – AO referred the case for special audit under Section 142(2A) of the Act - As per special auditor - Assessee had not maintained proper books - Assessing officer rejected the books of account and applied 10% net profit rate – Assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] - CIT(A) applied net profit rate of 6.5% to the direct contract receipts and rate of 5% to receipts of sub contract – revenue went in Tribunal - Tribulal adopted consolidated rate of 7% to be applied on the total contract receipts . Held that :- Nothing could be shown by either side that the rate was either arbitrary or irrational in the facts and circumstances, though some amount of guess work may necessarily be there in adopting the net profit rate as there is no definite method prescribed under the statute, the court shall interfere only where the same appears to be excessive or arbitrary or discriminatory, that being not the situation in the present case. Adoption of 7% rate by the Tribunal accepted.
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