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2015 (3) TMI 840 - DELHI HIGH COURT

2015 (3) TMI 840 - DELHI HIGH COURT - TMI - N.P. estimation - ITAT instead of estimation of income at 8% on the basis of Section 44AD, as done by AO directed application of 2.5% as the net profit margin - Held that:- The ITAT apparently took note of the profit rate for other previous years and had, on an average exercise, concluded that the NP rate ought to be 2.5%. In the circumstances, it cannot be said that the reasoning is unsustainable or so erroneous as to call for interference under Secti .....

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24/Del/2010 and urges that the N.P. rate found in the present case, i.e., 2.5% was erroneous. The brief facts are that the assessee reported its income for AY 2006-07 and claimed the benefit of Section 44AD of the Income Tax Act, 1961. After considering the records, including the materials available, the AO rejected the assessee's contention and estimated the gross total income of ₹ 1,74,68,474/-. The total income was computed at ₹ 1,62,68,640/-. In doing so, the AO took into acc .....

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tantially accepted its contentions, the ITAT should have maintained the AO's determination of the net income at 8% since that was what in fact the assessee had claimed in the first instance and that the ITAT has not given sufficient reasons for reducing the said net profit margin. This Court notices that the ITAT's rationale for imposing the 2.5% net margin was, firstly, the rejection of books of accounts and the consequent denial of the benefit of Section 44AD. Secondly, the ITAT took n .....

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