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Income Tax - Highlights / Catch Notes

Home Highlights January 2019 Year 2019 This

When the percentage of discounts to sales is consistent over the ...

Income Tax

January 31, 2019

When the percentage of discounts to sales is consistent over the years then the ad-hoc disallowance is bad in law. Just because there are certain difficulty in verification of bills, the discounts cannot be restricted to the absolute figure of what amount was allowed in the immediately previous year.

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  1. Disallowance on an ad-hoc basis - in the absence of necessary documentary evidence the AO had no alternative except to make the disallowance on an ad-hoc basis.

  2. Ad hoc disallowance of 10% of expenses - Since the AO or the Ld. CIT(A) has not rejected the books of account of the assessee they could not have estimated (ad hoc...

  3. Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of...

  4. Leakage of revenue - Any disallowance should be specific and properly quantified - presumptive and ad-hoc addition based on an outlandish consideration of plugging...

  5. Ad-hoc disallowance of 20% of the creditor value – there is no provision in the Act to disallow 20% out of sundry creditors. - AT

  6. Discount to customers - Merely because the receipt vouchers were made by the assessee cannot be a ground to make ad hoc disallowance out of the claim of discount - AT

  7. Bogus sale - allegation of unaccounted sale to the petrol pump owners/other industries - the sale price declared by the assessee was accepted by the sales tax department...

  8. Provision for ascertained liability or contingent liability - Tribunal committed a serious error in law in holding that such ad hoc provision would nevertheless qualify...

  9. Ad-hoc deduction allowed at 25% for purchase expenditure, as admittedly corresponding sales against these very purchases have been offered and accepted for tax

  10. Addition made on account of unaccounted cash receipts – Cash receipts of brokerage – Sale of car parking charges - the assessee’s purchases cannot be doubted on ad-hoc basis - AT

 

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