TMI Blog2014 (7) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... making fair estimation. It has been found in this case that during the relevant period, the assessee has made heavy investment in plant and machinery which is evident from the closing balance of the fixed assets which were produced before the A.O. The steep rise in the cost and consumption are also relevant which are found to be correct. The fact that from the table itself it has been noted that in A.Y. 2007-08, net profit ratio was 3.85% and it has been accepted by the A.O. showing that in this assessee’s case, there has been variance in the net profit rate for various reasons applicable to that particular A.Y. The ld. CIT(A) has considered these factors and has given part relief to the assessee. Thus it would be fair and reasonable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dungarpur and PWD Sagwara, Udaipur, etc. For A.Y. 2009-10, the firm filed its Return of Income [ROI] on 25.9.2009 declaring total income of ₹ 61,77,950/- as against which assessment was completed at a total income of ₹ 1,09,72,080/-. The A.O. has made trading addition of ₹ 40,38,427/- and interest income claimed by the assessee as its business income of ₹ 7,55,701/- by treating it as income from other sources. In appeal, the assessee was successful in getting part relief. Now both the parties are aggrieved and have raised their respective grounds as under: 2.1 Revenue s Grounds read as under:- On the facts and in the circumstances of the case, the ld. CIT(A) has erred in: 1. restricting/reducing the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest. The interest, so charged, being contrary to the provisions of law and facts, kindly be deleted in full. 3. We have heard the rival submissions and have carefully perused the entire material on record. It was argued by the ld. A.R. that during the course of verification of turnover, and net profit ratio, the comparative figures excluding the income from other sources is found as under: A.Y. Turnover Net profit N.P. ratio 2007-08 6,6,1,74,781 25,46,690 3.85% 2008-09 13,22,49,279 68,90,529 5.21% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of profit as it earned from contracts taken by it and therefore, net profit rate would definitely be affected. During the year under consideration, gross turnover is as under: Three kinds of contracts Turnover (i) Assessee own contracts and machine job works 138240932 118000 (ii) contracts taken from sub contracts 2114290 (iii) contracts given to other parties on sub contracts 34100136 Gross contract receipt 174573358 3.3 As per the ld. A.R., keeping in view the above three factors, net profit shown by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute regarding rejection of books of account. The A.O. has adopted rate of 5.75% on the total contract receipts and has made addition of ₹ 40,38,547-. The A.O. has particularly added ₹ 7,45,901/- as assessee s income from other sources. The ld. CIT(A) has however, reduced this addition to ₹ 18,56,260/- by invoking net profit rate of 4.55 on the declared turnover after considering the substantial increase in the turnover which is more than ₹ 4 crores and after considering the steep rise in the prices in various items as also been accepted by the A.O. to that extent. We are aware that u/s 145 of the Act, fair estimation of income has to be done when books of account are rejected. The past history of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either by the ld. A.R. or the ld. D.R. while arguing before us. The steep rise in the cost and consumption are also relevant which are found to be correct. The fact that from the table itself it has been noted that in A.Y. 2007-08, net profit ratio was 3.85% and it has been accepted by the A.O. showing that in this assessee s case, there has been variance in the net profit rate for various reasons applicable to that particular A.Y. The ld. CIT(A) has considered these factors and has given part relief to the assessee. However, in our considered opinion, keeping in view all the above factors which have either been accepted by the A.O. or have not been denied by him and which definitely contribute towards a magical figure of net profit ratio, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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