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2019 (1) TMI 1013 - AT - Income TaxComputation of income of the assessee - applicability of provisions of section 44AD - application of the profit percentage at 8% on estimated turnover - Held that:- Referring to the submission of assessee before CIT(A) that if this amount of turnover is adopted then the provisions of section 44AD are not applicable because the same is applicable only up to turnover of ₹ 1 Crore we feel it proper to restore back the matter to the file of CIT(A) for fresh decision by way of a speaking and reasoned order as to what is the actual turnover of the assessee because if amount of turnover of ₹ 2,04,15,866/- is obtained by adding back the amount of purchases and sales then the same cannot be considered as turnover because in my considered opinion only the amount of sale is turnover and not the amount of purchase. But in this regard, the guidelines issued by The Institute of Chartered Accountants of India (ICAI) should also be considered. CIT-A should decide this aspect first by way of a speaking and reasoned order as to what is the turnover of the assessee. If it is found that the turnover of the assessee is less than ₹ 1 Crore then on the turnover so determined, rate of 8% rates can be applied to compute the income of the assessee but if it is found that the turnover is more than ₹ 1 Crore, then section 44AD of IT Act cannot be applied and the income has to be computed on a reasonable basis after examining the entire material available on record. - Appeal filed by the assessee is allowed for statistical purposes.
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