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2016 (5) TMI 489 - HC - Income TaxAddition on account of fall in GP rate - ITAT deleted the addition - Held that:- The assessee has placed on record a copy of chart, which was also filed before the Assessing Officer to demonstrate that there has been an alarming increase in the price of steel round bar. For example, the rate per mt. of raw material purchased from RINL increased from ₹ 20,350/- in the preceding year to ₹ 26,900/- in the current year, thereby registering an increase of 32%. In the like manner, there is increase in the rate of raw material from other parties ranging between 19% to 36%. This chart indicates that the input costs became costly in the instant year in comparison with the rates prevailing in the preceding year which led to the reduction in the overall profitability. The AO has not contradicted the contents of such chart. When we consider this factor pushing down the gross profit rate coupled with fact that the Assessing officer has not pointed out any mistake in the quantitative records maintained by the assessee or the value of the closing stock, the only conclusion which in our considered opinion can be drawn is that the books of account were properly maintained. We, therefore, hold that the learned CIT(A) was justified in cancelling the action of the AO in rejecting the books and resultantly deleting the addition - Decided against revenue Addition u/s 68 - Held that:- If the assessee, pursuant to the direction of the Assessing Officer for producing certain creditors, expresses its inability to produce the persons but places on record sufficient evidence to prove the genuineness of the deposits, the addition cannot be made under section 68 of the Act without the AO discharging his duty to summon the creditors. Once the receipt of deposits from the above six depositors is held to be genuine, the consequent disallownace of interest made by the Assessing Officer would automatically stand deleted.- Decided against revenue Addition on account of capital subsidy on sales tax - revenue or capital receipt - Held that:- The exercise of option by the assessee in paying half of the amount of deferred tax upfront thereby retaining the remaining half as subsidy, cannot convert the otherwise capital subsidy into an item of revenue. The Special Bench of the Tribunal in Sulzer India Limited vs. DCIT, (2010 (11) TMI 728 - ITAT, MUMBAI) has held that the payment of net present value against a deferred sales tax liability cannot be considered as income under section 41(1) of the Act. CIT(A) was justified in treating sales tax subsidy as a capital receipt.- Decided against revenue
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