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2018 (5) TMI 510 - AT - Income TaxEstimation of income from the business of IMFL - 10% OR 5% - Held that:- The coordinate bench of the Tribunal in the case of Tangudu Jogisetty (2016 (7) TMI 379 - ITAT VISAKHAPATNAM) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the assessee. Thus we direct the A.O. to re-compute the income of the assessee at 5% of purchase price. This ground of appeal raised by the assessee is allowed. Addition on account of unproved creditors - Held that:- Addition includes the source consisting of sundry creditors and the unsecured loans. While the sundry creditors and the unsecured loans are the source for investment, the investment made by the assessee is application of funds. AO has not brought on record any asset or expenditure over and above the total investments outstanding of ₹ 18,00,288/- as at the end of the year. The addition representing unsecured creditors and the unsecured loans amounts to taxing the same source twice which amounts to double addition. Therefore we find merit in the argument of the AR that having brought the investment to tax, the liabilities representing the investments should not be treated as income once again. The unsecured loans and the unsecured creditors required to be given telescopic benefit from the addition made on account of investments. We set aside the orders of the lower authorities and delete the addition. - Decided in favour of assessee.
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