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2017 (2) TMI 404 - AT - Income TaxG.P. rate determination - CIT-A reduced rate 20.78% from the gross profit rate of 25% applied by AO - Held that:- Rate of 25% applied by the Assessing Officer was without any comparable case, whereas the learned Commissioner of Income-tax (Appeals) has applied the gross profit rate shown by the assessee in the immediately preceding assessment year. We find that learned Senior Departmental Representative could not controvert the fact that there is no material change in the business activity of the assessee in the year under consideration as compared to the immediately preceding year. As regard to the arguments of learned Authorized Representative of the assessee, we find that the assessee has neither filed any cross objection or appeal contesting the issue of rejection of books of accounts and not taken any additional ground in this respect and therefore the arguments of learned Authorized Representative, not to reject the books of accounts, cannot be considered. The findings of the learned Commissioner of Income-tax (Appeals) on the issue in dispute are well reasoned. Addition u/s 41(1) - cessation/remission of liability in respect of two creditors - Held that:- Trading liability of both the parties, i.e, M/s. Fastech Telecommunication Private Limited and M/s Scientech Technology Private Limited are appearing as opening balance in the Ledger accounts of the parties in the books of accounts the assessee irrespective of the fact that in the books of accounts of the parties the balances of the assessee are shown as nil. Thus, it is clear that in books of account of the assessee, liability has not been remitted or ceased to exist. Secondly, from the nil opening balances in ledger accounts of the assessee in the books of accounts of those parties, it manifests that the liability has been either paid or waived in earlier years and not in the year under consideration. Thus, it is evident that the liabilities of both the parties have not been remitted by the assessee in its books of accounts at least in the year under consideration and no benefit has been obtained in respect of the trading liabilities, therefore, the provisions of section 41(1) of the Act are not applicable in the facts of the assessee in the year under consideration.
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