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2015 (8) TMI 114 - AT - Income TaxAddition on account of income from joint venture - differential sale price and variation in the profit margin - addition in the profit of the assessee by the AO as the assessee has sold its product on different rates to various parties and there is a huge variation in the profit margin in different kinds of material sold - CIT(A) deleted addition - Held that:- It is undisputed fact that all the items have been imported by the assessee and the payment of the same have been made in foreign exchange. In support, the assessee has brought on record that there was a huge foreign exchange fluctuation in the financial year 2008-2009, which varied up to 33%. This is a major factor for determining the purchase and sale price. The other factors which have been noted by the CIT(A) like nature of buyers, i.e., whether material has been sold to bulk buyers or retail buyers or spot buyers etc., terms of credit, i.e., whether the assessee has received the payment immediately or after a credit period of few months, whether the sales are inclusive of excise duty or not and host of other factors taking into consideration commercial and market factors are relevant for determining the sale price. The AO cannot disturb the sales figure as mentioned in the sale bill and substitute with his own price without carrying out any inquiry from the buyers as to whether the sale prices as mentioned in the bills have been inflated or suppressed. Even the net profit margin of the assessee as compared to earlier years is also ranging between 7.88% and 8.37%. If the over all profit margin is taken into consideration, then there cannot be any reason to disbelieve the assessee’s margin on the sales in this year, which is in conformity with the past results. We thus, agree with the conclusion and finding arrived by the CIT(A) that, once all the sales have been made through banking channel, i.e., through account payee cheques and there is no specific inquiry by the AO to rebut the assessee’s explanation, then no addition on account of differential sale price and variation in the profit margin can be made. Thus, the entire finding of the CIT(A) is not only legally correct but also factually correct based on the material on record, and therefore, we do not find any reason to deviate from such a finding. Accordingly, the order of the CIT(A) is affirmed - Decided against revenue.
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