TMI Blog2019 (6) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... er, we did not find that the learned assessing officer has pointed out any defect in the books of accounts of the assessee. The learned AO also did not make any verification of various expenditure but has merely compared the gross profit of other entities without giving any benefit of difference in the business model, product dealt with, geographical area operated in et cetera. In view of this, we dismiss ground number 1 and 2 of the appeal of the learned assessing officer. - ITA No. 5214/Del/2015 - - - Dated:- 25-6-2019 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri GC Srivastava, Adv, Shri Suvinay Dash, Adv And Shri Perichay Solanki, CA For the Revenue : Shri J. K. Mishra, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT(A)-30, New Delhi dated 22.05.2015 for the Assessment Year 2011-12. 2. The revenue has raised the following grounds of appeal:- 1. Whether on the facts and circumstances of the case, the ld C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so submitted a comparative statement after considering the discount factor and stated that the gross profit rate of the companies, which are compared by the learned assessing officer, is considerably low to the gross profit ratio of the assessee. The assessee also submitted detailed reasons for difference in the gross profit of the comparable company cited by the learned assessing officer and stated that there is a geographical difference, difference of turnover, the methodology of accounting of discount, surrounding areas populated with many other outlets, product mix with respect to brands et cetera. The learned assessing officer rejected the explanation of the assessee and made an addition of INR 6 9408967/ holding as under:- 6. The submission of the AR of the assessee company has been considered and is found to be devoid of any merit. The AR of the assessee company has tried to substantiate the difference in gross profit by holding that the company had to give higher discount in comparison to other entities, which lowered its gross profit as the discounts are reduced from the sales. Interestingly, there is no such arrangement or any such agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned assessing officer aggrieved with that order has preferred an appeal before us. 5. The learned departmental representative vehemently referred to the order of the learned assessing officer and submitted that the assessee has shown a gross profit of only 4.75 percentage whereas the comparable companies have shown the gross profit rate at of 6% on the basis of turnover and therefore the learned assessing officer has made the addition to the total income of the assessee. It was further stated that the learned CIT A is made deleted the addition merely on the basis of the submission of the assessee. 6. The learned authorised representative vehemently supported the order of the learned CIT capital and submitted that when the books of accounts of the assessee are audited and there are no defects pointed out in the books of accounts, same cannot be rejected on the gross profit addition made by the learned assessing officer on the basis of the comparable companies which are distinguishable on the facts has rightly been deleted by the learned CIT A. 7. We have carefully considered the rival contention and perused the orders of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount allowed, the AO drew a conclusion that the assessee company has suppressed its aims for assessment year 2011 12 through raising a suspicious claim in the form of discount allowed. Every expenditure is allowable u/s 37 of the income tax act, 1961, if they are not in capital in nature or not personal in nature and incurred wholly and truly for the purposes of business. 9. The allowability of any expenditure is governed by the provisions of section 37 of the income tax act. Our books of accounts and vouchers are to be maintained is governed by section 44AA of the income tax act. Unfortunately, no rules has been notified under section 44AA (3), in this regard. The AO did not give any finding that the expenditure incurred in claimed by the assessee whether capital in nature of personal in nature only exclusively not incurred for the purposes of business. His finding was also not that it is not verifiable. It is also not the case of rejection of book results under section 145 (2) of the income tax act. 10. In the liquor business the geographical area of sale matters a lot. To increase its sales are to encourage a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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