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2017 (9) TMI 1162 - HC - Income TaxAddition on account of ‘fall in net profit to turnover ratio’ - ITAT deleted the addition - Held that:- The ITAT observed that the lower net profit rate of 24.80% has been accepted by the AO for the earlier AY, i.e. 2008-09. However, the Assessee’s line of business was not consistent over the years. The ITAT was of the view that, without rejecting the accounts of the Assessee, making an addition merely on the basis of fall of the net profit ratio was not warranted. The view of the ITAT does not suffer from any infirmity. No substantial question of law arises. Disallowance u/s 40(a)(ia) - reimbursement of expenses paid to the employees/vendors on behalf of the Assessee - ITAT held that the CIT (A) exceeded his powers in issuing a notice of enhancement and making the above disallowance - Held that:- CIT (A) issued notice for enhancement of the disallowance but, in that process, entered into the question whether the expense in question was eligible for deduction at all in the first place. As rightly pointed out by the ITAT, this was beyond the scope of inquiry before the CIT (A). There was also no factual basis for the CIT (A) to doubt the reimbursement of the employees’ expenses. In the circumstances, the impugned order of ITAT holding that the CIT (A) travelled beyond the scope of the appellate proceedings in disallowing the above expenses does not suffer from perversity. The Court is, therefore, not inclined to frame a question of law on this issue as well. Revenue appeal dismissed.
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