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2017 (5) TMI 786 - HC - Income TaxAddition on account of low Gross Profit - Held that:- The reasoning given by the Assessing Officer that in the earlier years with respect to the same contract the respondent assessee estimated the profit at 53.32%. However, the Assessing Officer has not properly appreciated the fact that there may be number of reasons for decline in the profit. The expenditure might have increased and /or maybe for some or the other reason the profit might have decreased. Merely with respect to the same contract in the earlier years the respondent assessee estimated the Gross Profit at 53.32% on the aforesaid ground alone the Assessing Officer was not justified in estimating the Gross Profit for the year under consideration. One of the ground, which has been weighed with the learned tribunal in not accepting the Gross Profit ratio at 48.39% claimed by the respondent assessee is, for the year under consideration the income has increased, and therefore, there was justification in decrease in the Gross Profit. Under the circumstances, the learned tribunal has rightly observed and held that the Assessing Officer was not justified in estimating the Gross Profit ratio at 53.32% against the claim of the respondent assessee of Gross Profit at 48.39%. Whether the assessee is doing the huge turnover without maintaining site wise stock register, work-in-progress register - Held that:- What was weighed with the Assessing Officer was that in the contract between the GMDC and the respondent assessee it was agreed that GMDC will pay the diesel expenses to the extent of 30%, and therefore, the Assessing Officer restricted the diesel expenses to 30%. However, it is required to be noted that as per the terms and conditions of the agreement between the GMDC and the respondent assessee, GMDC agreed to pay diesel expenses to the extent of 30% only and whatever expenses above 30% was required to be borne by the respondent assessee, and therefore, merely because GMDC agreed to pay diesel expenses to the extent of 30% the Assessing Officer was not justified in restricting the diesel expenses to 30%.
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