2013 (12) TMI 593 - AT - Income Tax

Addition on account of fall in GP rate Held that - Following assessee s own case from A.Y. 2003-04 to 2006-07 - In view of the past records of the gross profit rate of the assessee The small variation in GP rate is considered while accepting books of accounts - Factually there was no fall in GP rate for the year under consideration During previous year the percentage of GP ratio was taken by including the other income in the total turnover; while the turnover of the assessment year compared with was after excluding the other income .

Summary

Issues:
- Dispute over deletion of addition made by the AO on account of fall in G.P. in the case of different assessees.
- Consistency of view in rejecting the stand of the Revenue Department by deleting the GP addition based on past judgments.

Analysis:
1. The appeals were filed by the Revenue concerning separate orders of ld.CIT(A)-I, Surat for A.Y. 2007-08, regarding the deletion of additions made by the AO on account of fall in G.P. The issue was identical in both cases, leading to a common order for convenience.

2. In the case of M/s. Alidhara Texpro Engg.P.Ltd., the AO rejected the books of accounts due to a decrease in G.P. ratio from the previous year. The AO computed the G.P. based on estimation, resulting in an addition to the total income. However, the ld.CIT(A) overruled the rejection of books, stating no specific defect was highlighted, and the nature of the business required tailormade machines, making standard profit rates impractical. The addition was deleted.

3. Referring to past cases, it was noted that consistent decisions were made in favor of the assessee, rejecting GP additions for minor variations. The Tribunal emphasized the importance of Excise Duty compliance and cited relevant legal precedents. The Tribunal upheld the view of the ld.CIT(A) based on historical consistency and dismissed the appeal of the Revenue.

4. Similarly, in the case of M/s. Alidhara Textool Engg.Pvt.Ltd., the appeal by the Revenue was dismissed following the same reasoning and circumstances as the previous case. The Tribunal maintained the stance taken in past judgments and upheld the deletion of the GP addition.

5. The Tribunal concluded that the Revenue's appeals lacked merit due to consistent past decisions favoring the assessee. The factual discrepancies regarding the GP rate were addressed, leading to the dismissal of both appeals.

This judgment highlights the importance of consistent legal interpretation and the significance of factual accuracy in tax disputes, ultimately resulting in the dismissal of the Revenue's appeals based on historical precedents and detailed analysis of the issues involved.