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TMI Blog2023 (6) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... ere heard together and are disposed of by this common order for the sake of convenience and brevity, though the quantum may differ. 3. The first grievance in A.Ys 2011-12 and 2012-13 relates to the deletion of addition made by the Assessing Officer on account of difference in Gross Profit Rate. 4. The underlying facts in the issue are that during the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed expenses on account of 'trade discount' under the head "Selling and Distribution Expenses". The Assessing Officer was of the opinion that the trade discount claimed by the assessee is directly connected to the sales. Therefore, as per the principles of accountancy, this item of expense shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer computed the GP for the A.Ys 2011-12 and 2012-13 and made addition of Rs. 2,07,68,470/- and Rs. 1,43,40,078/- respectively. 11. The assessee carried the matter before the ld. CIT(A) and explained that during the year under consideration, there was change in the billing method and invoices raised at Dealer List Price [DLP] which is calculated at MRP less rebate with nominal trade discount on DLP. Therefore, comparing the GP rate of A.Y 2010-11 with GP rate of the year under consideration would not give comparable results. 12. It was explained that if the GP rate is adjusted as per the now followed method, there would be negligible decrease in the GP margin and which is very normal in this line of trade. Following chart was submitted fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has accounted the sale at DLP during the A.Y 2010-11 as against the accounting of turnover at MRP during the year under consideration. 18. In our considered opinion, sale is prime component to determine the GP ratio and if the sale factor is not comparable, resulting GP cannot be considered comparable. On totality of facts, we do not find any reason to interfere with the findings of the ld. CIT(A). The common grounds relating to GP addition in A.Y 2011-12 and 2012-13 are dismissed. 19. The next common grievance in all the three appeals relates to the deletion of addition made by the Assessing Officer on account of Scheme Expenses, though the quantum may differ. 20. While scrutinizing the return of income, the Assessing Officer noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case and directed the Assessing Officer to delete the addition on account of Scheme Expenses in all the three years under consideration. 24. Before us, the ld. DR reiterated what has been observed by the Assessing Officer vehemently stating that during the course of assessment proceedings, the assessee neither produced books of account for verification nor furnished any details supporting the claim of expenses. 25. We have given thoughtful consideration to the orders of the authorities below. It is true that during the assessment proceedings, the assessee did not produce the books of accounts for verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the commission has been paid to few persons who helped the company in selling its products. It was explained that the commission has been paid to MAP Auto Ltd. for marketing and technical support given to it. 30. After going through the reply of the assessee, the Assessing Officer was of the opinion that the justification for payment given by the assessee is too general and no specific information has been given justifying payment to M/s MAP Auto Ltd. Drawing support from the findings given by the Assessing Officer in A.Y 2010-11, the Assessing Officer disallowed Rs. 1,11,16,495/-. 31. The assessee agitated the matter before the ld. CIT(A) and pointed out that similar disallowance made in A.Y 2010-11 was deleted. Strong reliance was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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