TMI Blog2013 (10) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record - No rejection of books is called for year under appeal – Reliance has been placed upon the judgment of the Hon’ble Gujarat High Court in the case of CIT vs Symphony Comforts System Ltd. [2013 (10) TMI 258 - GUJARAT HIGH COURT] - Decided against the Revenue. - ITA No 677/A/2013 & CO. No.106/A/ 2013 - - - Dated:- 4-10-2013 - Shri D. K. Tyagi, J.M. And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri O. P. Batheja Sr. D. R. For the Respondent : Shri Vijay Ranjan, A. R. ORDER Per Shri Anil Chaturvedi,A. M. 1. This appeal is filed by the Revenue and C.O. by Assessee against the order of CIT(A), Ahmedabad dated 21.12.2012 for A.Y. 2009-10. 2. The facts as culled out from the order of lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are interconnected, both are considered together. 6. During the course of assessment proceedings, Assessing Officer noted that the Assessee had failed to produce the books of accounts to enable him to compute the total income of the assessee. He therefore concluded that the Assessee has failed to maintain books of accounts profit u/s. 44AA read with section 2 (12A) of the Act. He also noticed that the gross profit ratio of the Assessee in the immediately preceding year was 79% that is when the Assessee was eligible for deduction under Section 80IB (10) of the Act. He was of the view that no sooner the Assessee was removed from the higher benefit of deduction under 80IB(10) in the impugned years, the business result drastically reduced an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its. It is claiming that the stock in trade in each of the year was shown to include the profits as per their estimation of project profits. The AO is also not disputing at least the method of accounting claimed employed by the appellant. The following remarks of the AO are pertinent in this regard: " 4.4 However to make it more clear and justifiable the other component of gross profit ratio i.e. closing WIP has to be considered. In the A.Y. 2008-09, it was more than sales value therefore profit result was very high......." Therefore, the AO himself agrees that the closing WIP shown included component of profit which is the basic requirement if before actual sales the revenue is to be recognized. In this case, the appellant has at least ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue of Rs.2,01,77,360/-, incremental revenue offered during the year will come to Rs. 49,28,360/-. Accordingly, the appellant has shown gross profit of Rs 30,51,194/- and gross profit ratio will come to 62%. Therefore, clearly, the profit margin shown for the current year are more than in earlier years on the basis of revenue recognized. However, the wild variations in profit margins show that the appellant has not been even reasonably accurate in estimating the profits includable in Work In Progress from year to year. It is also correct that looking to the figures of assessment year 2007-08, if the appellant had recognized lower profits in assessment year 2008-09; the revenue recognized in the current assessment year which is subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments framed u/s 143(3) in the past the Assessee has been allowed the deduction of 80IB. He further submitted that the books of account of the Assessee are audited and no specific defect in the books of accounts of the Assessee has been pointed out by the Assessing Officer. Since no specific defect has been pointed out in the books, the books of accounts cannot be rejected. He also placed reliance on the decision of Guj. High Court in the case of CIT vs. Symphony Comfort Systems Limited (2013) Taxmann. Com 533 (Guj). 9. We have heard the rival submissions and perused the material on record. CIT(A) while deleting the addition has noted that neither the A.O. nor the Auditor has pointed out any defect in the nature of expenses and fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (2013) 35 taxmann. Com 533 wherein it has been held as under: 1. Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income [Gross profit rate] - Assessment year 2005-06 - Assessing Officer noticed that there was fall in gross profit rate declared by assessee as compared to preceding year and he made addition on account of low gross / profit rate to assessee's income - However, no specific defect in maintenance of books of account by assessee had been pointed out by Assessing Officer -Whether Assessing Officer was not justified in rejecting book results and enhancing gross profit rate - Held, yes [Para 2] [In favour of assessee] 10. Considering the totality of facts and relying on the aforesaid decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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