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TMI Blog2015 (10) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... herein, the same have been heard together and are being disposed of by this single consolidated order for the sake of convenience. 2. First, we shall take up the cross appeals filed for A.Y. 2007-08 which are directed against the order of ld. CIT(A)-9, Mumbai dated 26-03-2012. 3. The relevant facts of the case giving rise to these appeals are as follows. The assessee is a company engaged in the business of providing/supplying air/water purification systems. The return of income for the year under consideration was filed by it on 19-02-2009 declaring total income at 'nil'. However the return was selected for scrutiny u/s 143(3) of the Income Tax Act, 1961. During the course of assessment proceedings, the A.O. noticed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio at 35% and administration of other expenses at 29%. The AO after considering the facts and circumstances of the case adopted rate at 40% against 35% declared by the assessee and allowed administration and other expenses at 20% against the claim of 29% made by the assessee. He, therefore, determined net profit at Rs. 27,16,334/- as against profit estimated at Rs. 4,07,450/-. The AO accordingly held that both Head Office's income and branch income have to be assessed together as per the provisions of IT Act and assessed total income at Rs. 66,77,547/- vide an order dated 7-12-2009 u/s 143 of the Income tax Act, 1961. 4. On appeal before the ld. CIT(A), the assessee contented that as explained in Note to accounts forming part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and properly audited by the auditor. Moreover, no fault has been found by the AO with regard to profit and loss account of Mumbai branch. Therefore, the estimation made by the AO with regard to Mumbai Head Office branch was not based on any material evidences. He held that the AO had not pointed out any mistake in the profit and loss account of Mumbai branch, and hence under the circumstances, the estimation made for Mumbai branch was not sustainable. Aggrieved by the orders of the ld. CIT(A), both assessee and Revenue are in appeal before the Tribunal for assessment years 2007-08 and 2008-09. 5. The ld. Counsel for the assessee has submitted that the assessee company was having its registered office in Mumbai and a branch office in Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and also perused the relevant material available on record. It is observed that there was a dispute between the directors of Mumbai office and Bengaluru branch office which resulted in appointment of Arbitrator and the copy of Arbitration award placed on record. It is further observed that the income in respect of Bengaluru office has been assessed in the hands of the company itself and not in the name of the director. The Revenue is not concerned with the internal dispute between the directors. A perusal of the assessment order shows that efforts were made and a commission was issued by the A.O. u/s 131(1)(d) to the ACIT Circle 7(1), Bengaluru to collect the details and conduct enquiries in respect of income of assesse's Bengaluru br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, we do not find any infirmity in the impugned order of the ld. CIT(A) in sustaining the addition made by the A.O. in respect of Bengaluru office. The appeals filed by the assessee in respect of both the years are dismissed. 8. In its cross appeals, the Revenue has agitated the findings of the ld. CIT(A) that no estimation in respect of Mumbai office could be made by submitting that the books of account of the assessee were rejected in its entirety by the A.O. by invoking the provisions of section 145(3) of the Act. In this regard, it is observed that the ld. CIT(A) has held that since the audited accounts in respect of Mumbai office were submitted by the assessee, hence rejection of accounts of Mumbai office without any defects/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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