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The Commissioner of Income Tax Versus M/s. Prime Developers

2016 (7) TMI 967 - BOMBAY HIGH COURT

Taxable profits of the Project 'Prime Mall' by adopting net profit of 17.08% of the total gross sales - Held that:- We find that the Revenue seeks to substitute the estimated net profit arrived at by the Tribunal with a new figure of net profit. This without in any manner showing that the estimate arrived at by the Tribunal in the impugned order is perverse. It is a settled position of law that in estimated net profit arrived at by the authorities is a question of fact and if the material on rec .....

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- There can be no quarrel with the submissions of Mr. Kotangale. In any event, the Assessing Officer would need to redetermine the book profits of the respondent-assessee as a consequence of the impugned order of the Tribunal. At that stage the ceiling provided under Section 40(b) of the Act would also be considered while allowing deduction on account of remuneration and interest paid to the partners. No substantial question of law - Income Tax Appeal No. 2452 of 2013 - Dated:- 18-7-2016 - M. S. .....

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Year 2004-05. 2. This appeal raises the following questions of law for our consideration : (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in directing the Assessing Officer to work out the taxable profits of the Project 'Prime Mall' by adopting net profit of 17.08% of the total gross sales? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in directing the Assessing Officer to allow .....

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b) On 20th April, 2006 there was a search on the respondent-assessee under Section 132 of the Act. During the course of the search it was found that during the previous year relevant to assessment year under consideration it was found that the respondent-assessee had sold 14 units in its Prime Mall Project and received 65% of the total sales consideration as 'on money'. Consequent to the search, the respondent-assessee contended that in the subject assessment year no income is chargeable .....

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on money') of the 14 unit sold. (c) Being aggrieved, the respondent carried the issue in appeal to the Commissioner of Income Tax (A) (CIT(A)). In appeal, by an order dated 30th October, 2009 the CIT(A) modified the order of the Assessing Officer to the extent it held that the total consideration received in respect of sales of 14 unit during the subject assessment year would be taxed at 40% as net profit of the total consideration in place of 65% in respect of sales of 14 units. The CIT(A) .....

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unts came to the conclusion that the reasonable percentage of net profit to be applied is 17.08%. The Tribunal rendered a finding that AnnexureL on which reliance was placed which indicated a net profit of 28.18% was merely an estimated working done by the respondent-assessee. In the above view, the issue was restored to the Assessing Officer to work out the taxable profits after adopting a reasonable net profit of 17.08% on its gross sales turnover of ₹ 11.60 crores in the subject assessm .....

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e of net profit. This without in any manner showing that the estimate arrived at by the Tribunal in the impugned order is perverse. It is a settled position of law that in estimated net profit arrived at by the authorities is a question of fact and if the material on record does support the estimate arrived at by the Tribunal then it does not give rise to any substantial question of law (see CIT v/s. Piramal Spinning and Weaving Mills Ltd. 124 ITR 408). In this case, we find that the net profit .....

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