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TMI Blog2018 (11) TMI 1965X X X X Extracts X X X X X X X X Extracts X X X X ..... it) [for short, 'MEL (Non-EOU)']. The company is owned by Sri Basant Poddar and his family members. 2. On 22nd July, 2005, a search under s. 132 of the IT Act, 1961, (for short, 'the Act') was initiated in the case of MEL and during the course of search proceedings, several books of accounts and incriminating documents were seized. Consequent to the search, a notice under s. 153A of the Act was issued to the assessee. In response to the same, the company filed its return of income, declaring the income as originally returned. Subsequently, a notice under s. 143(2) of the Act was issued to the assessee. The AO computed the profits of both the units on the basis of allocation of proportionate expenditures, in the ratio of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the CIT(A) as well as the Tribunal are erroneous. They have failed to consider the material placed on record and have not considered the books of accounts of the company. He contends that MEL (EOU) receives various income and the same was exempted from tax for the relevant years. Therefore, in order to show a higher rate of profit, the expenses have wrongly shown in MEL (Non-EOU). Consequently, the net profit, as shown for MEL (EOU), is an inflated and unnatural amount. The authorities have failed to consider the same. Therefore, he pleads that the substantial questions of law be answered in his favour. 5. The same is disputed by Sri A. Shankar, the learned senior counsel appearing for the respondent's counsel. His submission is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OU). The AO, on considering the same, recomputed the profit. Accordingly, the net profit was worked out as under: Sl. No. Particulars F.Y. 2004-05 1 Total turnover of the company (Both MEL (EOU) & MEL (Non-EOU) Rs. 336,71,17,482/- 2 Total Net Profit (Both EOU & Non-EOU) Rs. 50,87,26,086/- 3 Turn over of MEL (EOU) Rs. 61,34,48,618/- 4 Turn over of (Non-EOU) Rs. 2,75,36,68,863/- 5 Net Profit attributable to MEL (EOU) Rs. 9,26,83,821/- 6 Net Profit attributable to MEL (Non- EOU) Rs. 41,60,42,264/- 9. The CIT(A) considered each one of the grounds, which was considered by the assessing order. So far as the Keyman Insurance is concerned, he came to the conclusion that the insurance premium paid is based on the profits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) accepted the re-computation made by the AO. The Tribunal affirmed the view of the CIT(A). It also came to the view that the AO has not found any defect or mistake in the books of accounts so as to justify invocation of s. 145 of the Act. That, in fact, the AO having accepted the books profit as shown in respect of MEL (EOU), P & L a/c. as well as that of MEL (Non-EOU) could not have interfered with the same. That in the absence of any defect in the books of accounts, there was no justification for determination of profits of MEL (EOU) undertaking in the ratio of turnover by aggregating the profit shown in respect of two undertakings. That activity of MEL (Non-EOU) is largely trading, whereas in the case of MEL (EOU), it is manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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