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2019 (5) TMI 1210 - HC - Income TaxAddition on account of decline in GP /NP Ratio u/s 145 - AO rejected the explanation offered by the assessee stating that it maintained excise records and that the note of the auditor was only in respect of valuation - invoking Section 145, the AO applied the net profit ratio of the earlier AY and confirmed by CIT - ITAT deleted addition - HELD THAT:- ITAT having perused the auditor’s report noticed that a company’s inventory was valued at lower cost or net reliable value and included cost of bringing the goods in the present location and other conditions. The Auditor had stated that the valuation adopted that is based on the retail method could be used when the actual cost of production was approximated. With the nature of business activity carried on by the Assessee, it was not possible to keep the production cost of each and every finished product, it could be, therefore, on an approximate basis, it could be spread over the goods produced. ITAT has also referred to the accounting standards and come to the conclusion that there was a valid explanation for the drop in the net profit ratio. Having perused the impugned order of the ITAT, the Court finds that it deals essentially with the factual aspects after having perused the Auditor’s report. No substantial question of law.
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