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Assistant Commissioner of Income Tax, Circle-2, Kota Versus M/s. Om Service Station

2015 (12) TMI 1500 - ITAT JAIPUR

Trading addition - CIT(A) deleted the addition - Held that:- Firstly, it is not under dispute that the assessee is in a line of business of petroleum trading wherein both purchase of petroleum products as well as subsequent sale thereof are governed by Oil Marketing Companies, in the instant case which is Indian Oil Corporation (IOC). Accordingly, the margin which is earned by the assessee is effectively governed by the IOC. It is also not under dispute that assessee has declared turnover of  .....

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count cannot be rejected, revenue cannot be allowed to take the ground that ld. CIT (A) has erred in deleting the trading addition. In the light of above, we do not find any infirmity in the order of ld. CIT (A) - Decided against revenue.

Disallowance of salary expenses made by AO u/s 40A(2)(b) - CIT(A) deleted the addition - Held that:- We believe that ld. CIT (A) has rightly stated that the salary which is derived by a person not only depends on experience but also depends on his qu .....

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reasonable compensation to avail the services. In the instant case the appellant in his wisdom has decided to appoint Shri Naresh Pareek to run its business more efficiently and have agreed to pay a salary of ₹ 15,000/- per month to him. We see no infirmity in the order of ld. CIT (A). - Decided against revenue. - ITA No. 257/JP/2014 - Dated:- 10-11-2015 - SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YADAV, AM For The Revenue : Shri Puroshottam Kashyap, (Addl.CIT) For The Assessee : Shri V .....

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arding first ground of appeal, brief facts of the case are that the assessee is a partnership firm doing the business of purchase and sale of petrol and diesel products of Indian Oil Corporation at Kota. It has filed its return on 06.09.2009 declaring an income of ₹ 22,91,270/- which was selected for scrutiny and assessment was completed under section 143(3) of the I.T. Act. During the course of assessment proceedings, the AO noticed that the assessee has declared a turnover of ₹ 33. .....

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centage basis. Therefore, with increase in rates, the percentage of gross profit reduces because it is fixed in amount per litre. However, the AO did not accept the contention of the assessee and stated that the assessee has not maintained quantitative details of Lubricants, Diesel, Extra Miles and Premium Petrol goods on day- to-day basis. Hence the trading results are not open for verification. Further, the AO mentioned that the assessee s submission is not supported by any sale bills so as to .....

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the following observations :- In the line of petroleum products trading, the purchase and sale rates of various product is determined by the Oil Marketing Company (Indian Oil, HPCL, BPCL etc.). The assessee is also required to maintain various registers by the Oil Marketing Company as well as State Government. Therefore, the books of accounts/trading results cannot be rejected without bringing specific defects on record. The AO is, therefore, directed to delete addition of ₹ 11,49,127/-. 4 .....

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llenged by the department. Further, the assessee reiterated its submission made before the lower authorities and as part of its written submission has stated as under :- 1.3. The assessee has submitted that the margin of the assessee is fixed on the basis of amount per litre. The margin remains the same inspite of increase in rates of products by the company. The margin is not fixed on percentage basis. Therefore, with increase in rates, the percentage of gross profit reduces because it is fixed .....

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; 1.26 2.44% 2.17% 6. We have heard the rival contentions and perused the material available on record. Firstly, it is not under dispute that the assessee is in a line of business of petroleum trading wherein both purchase of petroleum products as well as subsequent sale thereof are governed by Oil Marketing Companies, in the instant case which is Indian Oil Corporation (IOC). Accordingly, the margin which is earned by the assessee is effectively governed by the IOC. It is also not under dispute .....

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IT (A) wherein he has held that books of account cannot be rejected, revenue cannot be allowed to take the ground that ld. CIT (A) has erred in deleting the trading addition of ₹ 11,49,127/-. In the light of above, we do not find any infirmity in the order of ld. CIT (A). Hence this ground of appeal taken by the revenue is dismissed. 7. Regarding second ground of appeal wherein the revenue has challenged the deletion of salary expenses of ₹ 69,300/- under section 40A(2)(b) of the IT .....

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ience of 15 years in the said line of business has been paid a monthly salary of ₹ 4,700/- during the year. The ld. A/R submitted that there was necessity to manage the business more scientifically and also to deal with the company in more efficient manner. Hence need was felt to appoint some qualified person and accordingly Shri Naresh Pareek who holds a Post Graduate diploma in Management was hired at a monthly salary of ₹ 15,000/-. The ld. A/R also submitted that education and exp .....

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