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TMI Blog2008 (1) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... t price of the DoC. In this transaction the assessee is the seller and the party to whom the sale was made is the purchase and the transaction also exhibits price of the goods. This is the reason where a profit is earned from the purchases made from a sister concern, disallowance under section 40A(2)( b ) is not justifiable. It is not the case that purchases were made in the past. The sale and purchase of DoC has taken place in a period of 2 months only. The assessee had earned the profit. The ld. CIT cannot expect that assessee should earn how much profit whether it is Rs. 25 or Rs. 725. AO might have not discussed this issue for this simple reason. We also find force in the other arguments raised before the ld. CIT also. The very ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... story of the said sister concern is to be gone through. 3. Details of loans free of interest and reasons, therefore, are to be looked into." 3. In response to notice of the Assessing Officer, assessee filed a letter on 18-4-2002 stating therein that the return filed originally should be treated as return filed in response to notice under section 148 of the Act. The ld. Assessing Officer thereafter issued notice under sections 143(2) and 142(1) of the Act. The tax consultant for the assessee appeared on behalf of it and submitted its reply vide letter dated 22-1-2003. Thereafter, without making much discussion the ld. Assessing Officer framed assessment under section 143(3) read with section 147 and computed income of assessee. He de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( b ) of the Act are established, irrespective of the fact that sales out of such purchases were effected at profit or at a loss. The assessee also raised a contention that price of DoC were dependent upon its quality. The ld. Commissioner rejected this contention also on the ground that assessee has not filed any material indicating the quality of soya DoC purchased from sister concern viz-a-viz the purchases made from outside parties. The assessee also raised the contention that price of Soya DoC was fluctuating in the market. The ld. Commissioner rejected this contention on the ground that assessee had made purchases from the associate concern in between 10-1-2000 to 16-3-2000 on the same rate. According to the ld. Commissioner it indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourses permissible under law or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under law. ( vi )If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under section 263 is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. ( vii )The Assessing Officer exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much as it is prejudicial to the interests of revenue. Admittedly, in this case, the discussion on the issue whether disallowance under section 40A(2)( b ) is to be made out of the purchase price paid to associate concern is not discernible from the assessment order, however, in the reply filed before the ld. Commissioner assessee specifically explained its position before the Assessing Officer. 8. A disallowance under section 40A(2)( b ) can be made if the assessee paid higher price for the goods or services to a sister concern over the fair market value, i.e., if those services and goods can be availed from the open market at a lower price then whatever may be the overpayment deserves to be disallowed. In the present case according ..... X X X X Extracts X X X X X X X X Extracts X X X X
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