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TMI Blog2013 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant had shown turn over of Rs.23,46,35,236/- and net profit of Rs. 14,30,242/- @ .16%. He further observed that during the course of assessment various details furnished by the assessee has been verified and placed on record. However, during the verification of books of account of the assessee, the assessee had claimed that he had proceeds 4,10,816 ct. of makeable rough diamonds out of the total rough diamonds received by the assessee from the principal. As per the quantity details furnished by the assessee average job charges per labour contactor comes Rs.545/- per ct. and he claimed that Rs.400/- to Rs.700/- paid by him to the labour contractor based on the quality of rough diamonds. But during the verification of books of account no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total manufactured rough diamonds of 600106 cts. For arriving at the makeable diamonds you have to do lot of processes like assortment of rough diamonds received and laser cutting and sawing which requires substantial amount of labour and expenses from your side. As per the P&L a/c processing charges claimed by you also indicates the electricity expenses of Rs.22,46,050/- which has been incurred within your factory and salary expenses of Rs.43,57,900/- also shown under administrative expenses. This means total of Rs.66,03,950/- has been incurred by you for making makeable diamonds out of 600106 cts. This means Rs.11/ct. As per the calculation sheet furnished by you vide letter dt.18.12.2008 assortment charges rate has been mentioned as Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also replied the query but the ld. A.O. finally concluded as under: "During the verification of books of a/c assessee was unable to show any qualitative details on the bills of sub contractor to whom assessee has given the job work. Hence, the basis on which payment to job work contractors made by the assessee in the range of Rs. 400/- to Rs. 700/- cannot be verifiable from the bills furnished by the assessee during the verification of books of a/c. The contention of the assessee regarding payment made to labour contractors cannot be verifiable completely. The total net profit shown by the assessee including interest on capital and remuneration to the partners comes to 1.06% which is very low in comparison to comparable concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r contractor at the given address by the assessee. Hon'ble ITAT held in its decision in the case ACIT vs. P.C. Mundra 80 TTJ 945 held that even in the case of assessee how was doing only billing business and not a manufacturer/dealer, the A.O has to compute net profit at 1.5% of the turnover. Hence in the light of above decision and the N.P ratio of comparable concerns clearly indicates that minimum profit in the case of labour job work business is not below 1.5% of the total turnover. Thus, total addition of Rs.10,39,217/- was made by the A.O. in the income of the assessee. 4. Being aggrieved by the order of the A.O., the assessee carried the matter before CIT(A), who has deleted the addition after considering the reasons of rejection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant had not made qualitative detail of the diamond and N.P. has been shown very less. The ld. A.O. rightly rejected the books of account on the basis of various defects pointed out by him. At the outset, ld. Counsel for the appellant filed a written reply and argued that the appellant had been engaged in the business of job work on cutting and polishing of the rough diamond i.e. received rough diamond from the parties and got polished through subcontractors. The appellant, therefore, doing more or less job of the commission agent. The appellant had shown N.P. at Rs.14,30,242/-. If the salary to the partner of Rs.10,74,327/- is added in the return income then the N.P. is worked out @ 1.06%. The qualitywise details were not maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , except not maintaining qualitative stock and increasing outstanding labour charges liability. The total turnover of the assessee is more than 23.45 crore of labour charges receipts which did not include cost of the diamond which shows that the appellant had paid labour charges monthly more than Rs.1 crore. Thus, the outstanding labour charges are resulted of the business activity. TDS on payment of labour charges has been deducted by the appellant and payments made through account payee cheque. Thus, we have considered view that we do not find any reason to intervene in the order of the CIT(A). Accordingly, the Revenue's appeal is dismissed. 7. In the result, the Revenue's appeal is dismissed. This Order pronounced in open Court on 22.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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