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2016 (6) TMI 1048 - HC - Income TaxBogus purchases - possible inflation of purchase price - Held that:- Assessing Officer’s action in treating the purchases as bogus and adding the entire cost of purchases in the assessment ought not to have been restored by the Tribunal. The view taken by the Tribunal in the case of Vijay Proteins Ltd. vs. CIT reported in [1996 (1) TMI 144 - ITAT AHMEDABAD-C ] has been approved. In that view of the matter, keeping in mind the fact that not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax, we find that it shall be appropriate to restrict the disallowance made in this regard to 25% of the cost of such purchases in each year. Thus 25% of the payments made to the parties shall be disallowed on account of possible inflation of purchase price. In view of the above, the question raised in the present appeals is answered partly in favour of the assessee and partly in favour of the revenue.
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