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2018 (11) TMI 431 - AT - Income TaxDisallowing of deduction u/s 80IB(10) - Bogus / non genuine purchases - Held that:- In the instant case, the AO has not found faults with the sales made by the assessee. In the case of CIT vs. Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT)) has held that where purchases were not bogus but were made from parties other than those mentioned in the books of account, not entire purchase price but only profit element embedded in such purchases can be added to income of the assessee. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. Thus we set aside the order of the CIT(A) and direct the AO to restrict the disallowance to 12.5% of the bogus purchases of ₹ 1,38,01,084/-. Thus the 1st ground of appeal is partly allowed. As it is a case of bogus purchases, the question of allowability of deduction u/s 80IB(10) does not arise and accordingly, the 2nd ground of appeal is dismissed.
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