9911796707
TMI Blog2010 (6) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,210 addition made under section 92 on account of ALP. In third ground the assessee is objecting sustaining the disallowance of Rs. 8,595 for telephone expenses and Rs. 24,878 for vehicle expenses used exclusively for business purposes. 3. The assessee deals in jewellery, diamond, precious and semiprecious stones and pearls. During the year on sales of Rs. 3,80,23,375 GP rate of 17.89 per cent has been declared which is lower than 19.83 per cent declared in assessment year 2004-05 on export sales of Rs. 5.15 crores. The Assessing Officer invoked the provisions of section 145(3) of the Act by observing the following observation : "(1) The appellant failed to get verified the closing stock with respect to purchase and sale bills and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered into international transactions with M/s Sunshine Exim (Traders) Ltd., an associate concern as referred to in section 92A(2). Total sales of Rs. 3,73,81,375 has been made to this associate enterprise. Required audit report in Form No. 3CEB was filed. The assessee adopted "transactional net margin method" and comparison was made with the cases of M/s Golkunda Diamonds & Jewellery Ltd. and M/s Encharte Jewellery Ltd. To examine the issue the assessee was asked to justify the ALP compared with the other person vis-a-vis turnover, direct expenses, Profit & Loss account expenses, commodities, nature of adjustment made and suitability of method adopted as required under rule 10D of Income-tax Rules. The assessee filed balance sheet and Prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from international transactions done by the assessee was determined at Rs. 66,03,707 as against Rs. 52,88,497 declared by the assessee resulting into an addition of Rs. 13,15,210. Contentions raised before the Assessing Officer were reiterated before the learned CIT(A). However, the learned CIT(A) was in agreement with the finding of the Assessing Officer. Accordingly, he confirmed the action of the Assessing Officer. The assessee had also relied upon the Board's circular by which it was stated that if there is a difference in margin of profit by 5 per cent then trading result shown by the assessee should not be disturbed was also not accepted by the learned CIT(A). 6. The Assessing Officer has further made a disallowance of Rs. 8,595 ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty proceedings initiated under section 271AA were dropped. Accordingly it was submitted that addition made by Assessing Officer is not justified. 9. Regarding the other expenses sustained by learned CIT(A), it was submitted that telephone and vehicles were used only for business purposes and assessee being 100 per cent exporter, disallowances on account of telephone expenses and car expenses were not justified. 10. On the other hand the learned Departmental Representative strongly placed reliance on the order of authorities below. Further, detailed written submissions were also filed by learned Departmental Representative. The learned Departmental Representative also explained and read the written submissions filed by him. 11. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e address given or that they did not bother to reply the summons issued by the Department. Otherwise, all other details along with purchases and sales vouchers, day-to-day stock register etc., were maintained by the assessee and they were not found incorrect. It is also a matter of fact that sales made against those purchases have been accepted by the Assessing Officer himself. Therefore, in our considered view rejection of books of account were not justified. Accordingly, we allow this ground of the assessee. 13. Regarding the trading result, it is seen that there is a marginal decline in the GP rate as compared to earlier year as in earlier year the GP rate shown by the assessee was 19.93 per cent and in the year under consideration the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Rules. The CBDT has also issued Circular No. 12 of 2001, dated 23-8-2001 [2001] 169 CTR (St) 45 by which it has been directed to the Assessing Officer that "the Assessing Officer shall not make any adjustment to the ALP determined by taxpayer, if such price is upto 5 per cent less or upto 5 per cent more than the price determined by the Assessing Officer. In such cases the price declared by taxpayer may be accepted". In the present case, the difference in the price declared by assessee and the price as per ALP adopted by the Assessing Officer is less than 5 per cent. Therefore, Board's circular is applicable in the facts of the present case. 15. The learned Departmental Representative has vehemently argued that there was an amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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