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2017 (9) TMI 1464 - AT - Income TaxAddition on account of Gross Profit ratio - G.P. rate determination - Held that:- It is an admitted fact that the AO worked out the average GP rate of the comparable units which were working in the same line and vicinity at 10.58%, and after considering this fact that the assessee incurred more expenses of ₹ 20/- to ₹ 30 per quintal higher than the purchases shown by the other similar units of the same vicinity. He, therefore, allowed a leverage of 1.58% to the assessee and applied the GP rate of 9%. CIT(A) also accepted this contention of the assessee that the trading account of the units with whom the AO had compared assessee’s account did not include certain expenses such as bardana, Jhonk, Mandi Fees and Purchase tax etc. Thus the action of the ld. CIT(A) for adopting the average GP rate of 10.58% shown by the comparable cases was not justified, particularly when, he had not also given any reason for not accepting the GP rate applied by the AO at 9%. Therefore, we modify the order of the ld. CIT(A) and direct the AO to apply the GP rate of 9% instead of 10.58% applied by the ld. CIT(A) and work out the addition, if any.
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