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The F.C.C. Projects Pvt. Ltd. Versus Assistant Commissioner of Income Tax

2016 (11) TMI 369 - ALLAHABAD HIGH COURT

Administrative expenditure - Held that:- A perusal of the chart shows that not only trend of administrative expenses have gone progressive in assessment years 1986-87, 1987-88 and 1988-89 but there is much increase in assessment year 1989-90. There was no justification to assume that administrative expenses of 1988-89 were same as that of 1986-87 and CIT (Appeals) has not given any cogent reason whatsoever, to accept this profitability that is why in light of difference in receipts of expenses s .....

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unal has discussed profitability as accepted by CIT (Appeals) and found the same not justified or correct, has rightly declined to accept the same. Order of Income Tax Appellate Tribunal restoring assessment order cannot be said to be faulty or erroneous in any manner. - Income Tax Appeal No. 123 of 2006 - Dated:- 21-7-2016 - Hon'ble Sudhir Agarwal And Hon'ble Kaushal Jayendra Thaker, JJ. For the Appellant : S. D. Singh, Manu Ghildyal For the Respondent : S.C., A. N. Mahajan ORDER 1. Hea .....

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by Commissioner Income Tax (Appeals) [hereinafter referred to as CIT (Appeals)] has been set aside and allowable expenditure per month has been estimated at ₹ 1,15000/- as against ₹ 1,00000/- estimated by Assessing Officer. The order of Assessing Officer was accordingly modified. 3. Learned counsel for appellant submitted that CIT (Appeals) in his judgement dated 3.8.2000 has assessed net profit rate at 1% by referring to fact that in assessment year 1986-87 also, same profit rate w .....

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ts have been pointed out that the appellant has claimed excess deduction of ₹ 24,911/-. Another important fact which emerges from the audited accounts as on 1.10.87 and 31.3.89 is that opening trial balance and closing trial balances are not verifiable. I asked a pointed question to the Ld. counsel of the appellant that whether he could not get these verified and prove the sundry creditors and sundry debtor. The Ld. counsel of the appellant expressed his inability on the ground that more t .....

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the Ld. counsel of the appellant has not been able to explain the reason for fail in profit when the line of business is the same. It is quite possible that some sites in the A.Yrs. 1987-88 and 88-89 would be common. Since the appellant has already undergone three assessments, two remand reports it would be futile to send the appellant back to the A.O. for fresh assessment. Litigation must be brought to an end. This observation does not mean that results declared by the appellant should be acce .....

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by CIT (Appeals), it is apparent that it did not accept the explanation given by appellant- assessee for fail in profit and held that line of business is same and no reason has been given for alleged fail in profit. CIT (Appeals) further held that some sites in assessment year 1987-88 and 1988-89 were common. He applied ratio of net profit rate of 1% for assessment year 1988-89 also for the reason that in assessment year 1986-87, appellant himself declared net profit rate of 1%. This finding has .....

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ction etc. However, at the same time it also cannot be ignored that nature of certain expenses like rent, postage, telephone, directors salary and director's fee, audit fee etc. was such which was not prone to manipulates. Ld. Counsel has pointed out that in one earlier round the books were produced and accepted, though the said assessment had been set aside. Ld. CIT(A) had determined the net profit rate at 1%. Keeping into consideration all these facts and entirety of facts and circumstance .....

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previous years and as such expenses claimed by assessee were not verifiable in so far as administrative expenses were concerned. Therefore, contract receipt for assessment year 1987-88 was taken in account and made basis for the purpose of estimating administrative expenses and applying ratio thereof for current assessment year, giving due weitage to inflationary trend, the administrative expenses was determined in respect of assessment year in question, as detailed in para 14 of impunged judgm .....

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claimed by the assessee. The Assessing Officer has observed that the assessee was unable to give details of the administrative expenses taken in the previous years. He has further observed that expenses claimed by the assessee were unverifiable and were not backed by the proper bills and vouchers. He accordingly, concluded that it would be allow the assessee's entire claim under head of administrative expenses. Therefore, after taking into consideration the contract receipt for assessment ye .....

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47 1.42% 6. Tribunal has also given details of administrative expenses claimed by assessee and same has been detailed in para 18 of judgement, which reads as under: List of Administrative Expenses. S.No. Particulars Amounts 1. Payment of personnel 515965.00 2. Rent 95366.00 3. Postage & telegram 14503.00 4. Telephone Expenses 189832.00 5. Travelling & conveyance 292106.00 6. Vehicle Running & maintenance 576311.00 7. Advertisement 117486.00 22637.00 8. News paper Books & Periodic .....

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