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2023 (11) TMI 736 - ITAT AHMEDABADNet profit estimation of firms involved in cheque discounting and commission earned thereon - Disallowance of expenditure claimed against gross commission income while allowing only 5% of the expenditure claimed - as argued in case of similar business of cheque discounting in case of group Company Jalaram Finvest Limited, the same AO has accepted the net profit in the range of 9.50% to 12.50% of the gross commission income and hence estimation of 95% net profit by the CIT(A) without any evidence or comparable case is bad in law and illogical - HELD THAT:- It is an admitted position that the assessee is keeping the record of commission income and from the statement it emerges that the commission paid to other shroffs is also reflected from various statements. The fact in case of Jalaram Finvest Limited, net profit which was shown at 9.5% to 12.5% should have been adopted in assessee’s case is justifiable as the assessee is also dealing with the cheque discounting and commission on not just directly but through various other shroffs for whom the assessee has to pay commission in part. The net profit at 25% of gross commission adopted in Dahyalal I. Thakkar, the same rate should be adopted in the case of assessee as well as the same is justifiable through various records of commission income earned as well as commission paid to other shrifts by the assessee. Observation of the CIT(A) that there is no documentary evidence appears to be incorrect as the assessee has given clarification to that extent by giving the modus operandi of the working of the cheque discounting and commission paid thereon. The Revenue at no point of time disputed that the assessee is also providing cash to various parties on cheque and also taking cash for which the assessee is issuing cheque. Thus, the expenditure worked out at Rs. 75,388/- appears to be not justifiable and it is hereby directed to the Assessing Officer to give credit of the expenditure by allowing the same at 25% of gross commission as expenditure and quantify the same.
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