Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (7) TMI 513 - AT - Income TaxAddition u/s.40A(2) - unreasonable purchase price paid to its sister concern for purchase of scrap - Held that:- CIT(A) observed that AO arrived at the cost of purchases by working out opening stock, generation, sales and the closing stock. While doing so AO adopted the opening stock of scrap at 117.985 MT and arrived at the closing stock at 124.50 MT. However, from the record, the opening stock should have been 5.2 MT as against 117.985 MT adopted by the AO. In case correct opening balance is adopted, the closing stock would have been worked out to 11.715 MT. The same closing stock was found to be accepted in M/s.Aarti Steel Industries for A.Y. 2006-07. In view of the above mistake by AO the cost of purchases worked out to be very high and the AO presumed that the assessee paid excessive and unreasonable price to M/s.Aarti Steel Industries, thus AO's conclusion was on account of wrong assumption of facts and figures which were contrary to the records. Even otherwise, the assessee filed details of rates paid to sister concern and also other outside/unrelated parties according to which rate paid to the sister concern was found reasonable after considering the transportation charges which the assessee would have to incur in case of purchases made from outside. Therefore, the CIT(A) rightly concluded that disallowance made by the AO u/s. 40A(2) was not justified. In favour of assessee.
|