TMI Blog2012 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... edly the assessee is not an exclusive wine shop and it also runs restaurant along with Bar and food items are sold along with liquor. Therefore, the profit in case of the assessee cannot be same as in the case of exclusive wine shop - Thus, considering the fact that the sale of food items are very less compared to sale of liquor and beer and also considering the fact that the ITAT has also in some cases directed for estimation of net profit in case of wine shops at 5% it is reasonable to direct the AO to estimate the profit at 10% of purchases or stock put to sale during the year subject to the assessed income is not less than the returned income - The CIT (A)’s order is modified to this extent - partly in favour of assessee. - ITA No.186 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit Loss a/c enclosed to the return and the assessee had declared purchases at Rs.2,10,27,958/- and sales at Rs.2,28,28,192/- respectively in respect of liquor and beer items. In view of non-verifiable nature of sales admitted in the return due to non production of sale bills, the AO proposed to estimate profit at the rate of 27% on the cost of goods sold in respect of liquor and beer as per the Government of Andhra Pradesh, Prohibition and Excise- Excise Policy for the year 2005- 06,Revenue (Excise-II) Department, GOMS No.184 dated 7-2-2005. As has been observed by the AO though the assessee s AR agreed for estimation of income u/s 145 of the Act but was not willing to accept estimation of profit at 27% on the total cost of goods sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as constrained to offer the liquor with lesser margins. The premises of the Bar is in a very old building belonging to one of the partners family and as such the major saving is there with regard to the rent of the premises. The Bar is an ordinary Bar without any kind of ambience like Air Conditioning, neat atmosphere, best flooring, furniture and interior decoration as the kind of visitors focused by the management are from lower strata of the society and also lower middle income group and the food articles supplied are at grass root price and some time visitors even do not prefer to have any food articles while consuming liquor. The assessee contended that keeping in view these facts, the estimation of profit arrived at by the AO is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to sell liquor by keeping less margin of profit. The learned AR contended that sale of food item being of very negligible amount, the estimation of profit at 3% directed by the ITAT, Hyderabad Bench in Kanaka Durga Wines will also apply to the facts of the instant case. 7. We have heard rival contentions of the parties and perused the material on record. The ITAT, Hyderabad Bench in the Kanaka Durga Wines ( ITA No.591/Hyd/2011 dated 28-7-2011) has held in the following manner:- 5. We have considered the submissions of the rival parties and perused the material available on record. It is an admitted fact that the maximum retail price of the liquor products is fixed at 30% over the cost price of the assessee as per the understanding wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee on this issue is allowed. 8. In the present case, admittedly the assessee is not an exclusive wine shop and it also runs restaurant along with Bar and food items are sold along with liquor. Therefore, the profit in case of the assessee cannot be same as in the case of exclusive wine shop. However, considering the fact that the sale of food items are very less compared to sale of liquor and beer and also considering the fact that the ITAT has also in some cases directed for estimation of net profit in case of wine shops at 5%, we consider it reasonable to direct the AO to estimate the profit at 10% of purchases or stock put to sale during the year subject to the assessed income is not less than the returned income. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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