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2017 (6) TMI 1032 - AT - Income TaxN.P. determination - the defects pointed out for invoking the provisions of section 145(3) are in respect to the job work only and no doubts were created in respect to sales made. - Held that:- The assessee has carried out sales activity which has been shown and reflected separately in the profit/loss account as an independent stream of purchase and sale activity and corresponding revenues have been offered as sales receipts. Regarding the observations of the ld CIT(A) that the expenses relating to the business of supply of material (relating to sales) and contract receipts cannot be bifurcated and the expenses relating to job work expenses and labour charges would pertain to both the revenue streams, the ld AR has submitted that the said observation of the ld CIT(A) is not correct as the same is not arising out of facts on record. Thus the estimation of net profit of 7% should be restricted to the contract activity only. At the same time, given that there are no segmental profit/loss account in respect of contract activity and trading activity available on record, the matter is set-aside to the file of the AO to apply net profit rate of 7% in respect of contract activity only after examining the segmental profit/loss account.
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