Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (6) TMI 283 - AT - Income TaxRejection of books of accounts - trading addition - Held that:- Admittedly, the rejection of books of accounts is not challenged by the assessee. We are in agreement to the observations of the ld. CIT(A) where the books of account are rejected the Assessing Officer is required to make best judgment and this best judgment should be based on the material on record and after conducting through enquiry a fair and just estimate of profit should be deduced from the materials so placed before him. We find that the ld. CIT(A) sustained an addition of ₹ 5,00,000/- considering the fact that turnover had increased and also taking into consideration, the past history of the assessee qua the Gross Profit. He estimated. Gross Profit at 4.12 % which is lower than the Gross Profit of assessment year 2009-10 and 2008-09 where the Gross Profit was 5.13% and 5.34% respectively against turnover of ₹ 154.37 crores and 150.39 crores respectively. Under these facts. we are of the view that the ld. CIT(A) estimated at the lower side of the Gross Profit, it would be fair to adopt Gross Profit at 4.20%. The ld. Assessing Officer is directed to adopt which the Gross Profit at 4.20% and re-compute the trading addition accordingly. Thus ground No. 1 of Revenue’s appeal is partly allowed Addition involving the provisions of section 40A(2)(b) - CIT-A deleted the addition as A.O.has not established that the payment to relatives is excessive compared to prevailing market rate - Held that:- We find that admittedly, there is increase in turnover of the asssessee company. Moreover, the Assessing Officer has not demonstrated as to how the salary paid is excessive to the Fair Market Value of the services rendered by the Director of the Company under this, which condition precedent for making such disallowance. Therefore, we do not see any infirmity in the order of the Ld. CIT(A), same is hereby upheld. - Decided against revenue Addition u/s 36(1)(iii) - CIT-A allowed claim - Held that:- The Assessee has sufficient other interest free funds available for investment carried for long term business. Assessing Officer was not able to prove anything to the contrary by bifurcating the interest bearing and free funds and their respective use. This finding of fact is not rebutted by the revenue by placing any contrary material on record. We do not see any infirmity in the order of the Ld. CIT(A). As it is not disputed that the assessee has sufficient interest free funds available for advancing money to sister concerns. - Decided against revenue
|