9911796707
TMI Blog1980 (3) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... out Rs. 3,88,000 as compared to the preceding year is a contributory factor for the decline in the rate of G.P. It was further submitted that during this year various new shops were opened at Sojati Gate and the competition with these shops also contributed to the lower rate of G.P. It was also submitted that sales to the extent of about Rs. 2,00,000 were on wholesale basis wherein either the assessee incurred a loss or the rates of G.P. varied only from 2 per cent to 10 per cent. The ITO did not accept these submissions. He pointed out that even when the rate of G.P. was shown at 14.5 per cent for the immediately preceding year the assessee had agreed to an addition of Rs. 5,000. He further pointed out that M/s Jhankar, Jodhpur, which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nover of the assessee. It was pleaded that the books result should have been accepted. The AAC considered these submissions and reduced the rates of G.P. on wholesale sales to 7.5 per cent and further reduced the rate of G.P. in retail sales to 13.5 per cent. He thus granted a relief of Rs. 12,850 and sustained an addition of Rs. 8,414. The assessee is aggrieved by this order of the AAC. 3. The ld. counsel for the assessee reiterated the same submissions which were made before the AAC. He submitted that the four shops which were the assessee's competitors, namely, (1) M/s Ishwarlal Bhagatram, (2) M/s Lovely Silk Palace, (3) M/s Munimal Tapsimal, came into existence in this year. He submitted that without any specific defects in the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be accepted. After holding that the proviso to s. 145(1) is applicable the next step would be to consider whether the estimate of sales and G.P. made by the AAC is reasonable. The estimate of wholesale sales at Rs. 2,00,000 is on the basis of the assessee's own estimate of such sales made in the letter dt. 17th Oct., 1977 filed before the ITO. The application of the rate of 7 1/2 per cent on wholesale sales in our opinion is reasonable. The assessee in the immediately preceding two years had shown G.P. rate at 14.5 per cent and keeping this rate in view the estimates of G.P. rate at 13.5 per cent on retail sales also is neither excessive nor unreasonable. We thus confirm the addition of Rs. 8,414. 5. The second ground pertains to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure should be incurred in the course of its business. In the case of Addl. CIT vs. Kuber Singh Bhagwandass it has been similarly held that for an expenditure to fall within s. 37(1) of the IT Act, 1961 it is not necessary that it should have been incurred "necessarily". An expenditure can be allowed under s. 37(1) if it fulfils the necessary conditions even though it is incurred voluntarily and without any necessity. The expression "for the purpose of the business" as it occurs in the section is wider in scope than the expression "for the purposes of earning profits". It may take in not only the day-to-day running of a business but also many other acts incidental to the carrying on of a business. There is no dispute about the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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