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2014 (2) TMI 996 - AT - Income TaxRestriction of addition on account of difference in stock - During the course of survey difference in physical stock as compared to the book stock was found. AO has noted that the assessee could not reconcile the difference - the contention of Assessee cannot be accepted that there was mistake in stock taking - with respect to addition made on account of difference in stock, when the difference in stock is found, addition on account of gross/Net profit of such difference can be made instead of the entire difference being added to the income - the AO was not justified in making the addition of the entire difference found in the stocks as income of the Assessee - the gross profit declared by the Assessee for the year under consideration is 22.96% , the addition is restricted made on the basis of gross profit – Decided partly in favour of Revenue. Addition made on account of construction of godown – Held that:- The expenditure in construction of godown was done by Assessee in the year under appeal and earlier years - The percentage of expense, incurred during the year works out to around 26% - valuation is a subjective exercise and in which case the estimates made of construction would differ from valuer to valuer - the Assessee has not maintained books of account with respect to the cost of construction – thus, the estimate of addition of Rs. 7,00,000/- would meet the ends of justice – the AO is directed to restrict the addition to 7,00,000 – Decided partly in favour of Assessee.
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