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2017 (10) TMI 51 - AT - Income TaxNet profit determination - income from the transport business of trucks - Held that:- CIT(A) has rightly held that the case of assessee required rejection of book result by invoking the provisions of section 145(3) of the Act. Consequently, the income was required to be determined by applying the net profit rate. Therefore, in the interest of justice, it was fair and reasonable to estimate the net profit by applying the rate of 3.0% on sale of tyres as adopted by the AO in earlier years as a matter of consistency and rate of 2.0% on the freight receipts. The adopted rate of 2% as the case of M/ s. Siddharth Road Carriers, Faridabad pertain to A.Y. 2005-06 and not exactly to the year under appeal as well as on the reason that the turnover of the case of assessee is almost half of M/s. Siddharth Road Carriers, Faridabad, for which the net profit margin is likely to be higher due to lesser turnover. Consequently, the income of ₹ 96,977/- in the tyres business is estimated by applying the rate of 3% on total sales of ₹ 32.32 lacs and income of 4,93,434/- is estimated by applying the net profit rate of 2% on the, total freight receipts of ₹ 246.71 lacs. Disallowance of expenses and depreciation - Held that:- When the books of account are rejected and income is computed by applying the net profit rate, the same books of accounts cannot be made the basis for making disallowance of specific expenses and the claim of various expenses including depreciation stand allowed. Hence, the addition to the extent of ₹ 5,90,411/- was rightly confirmed and the balance additions made by the AO under specific heads was rightly deleted
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