9911796707
TMI Blog2013 (10) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income for A.Y. 2009-10 on 29.09.2009 declaring total income of Rs. 21,93,970/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 30.12.2011 and the total income was determined at Rs. 93,57,404/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) vide order dated 21.12.2012 granted partial relief to the Assessee. Aggrieved by he aforesaid order of CIT(A), the Revenue is now in appeal before us and the Assessee has also filed a CO. The ground raised by Revenue reads as under: 1. The learned CIT(A) has erred in law and on facts in taking gross profit of Rs. 8,00,000/- instead of Rs. 1,03,16,684/- taken by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considering the average gross profits of A.Y. 07-08 & 08-09 concluded that the gross profit for the year should be at 51.13%. He accordingly worked out the gross profit at Rs. 1,03,16,684/- (51.13% of sales of Rs. 2,01,77,360/-) as against Rs. 30,51,194/- shown by Assessee and after allowing expenditure of Rs. 8 lakhs on account of administrative expenses on various counts made an addition of Rs. 95,16,684/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) decided the issue by holding as under: 6.2. I have gone through the facts of the case, the decisions on the issue, the assessment order and the submissions of the appellant discussed earlier in the order. After thorough consideration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits meaning thereby that certain revenue has been recognized on completion of the project even prior to sales; the appellant is perfectly justified to say that the AO has erred in working out the gross profit based on the sales alone. The correct method would be to take increase in sales recognized + WIP (which includes estimated profits) during the year, as denominator to work out the gross profit rate. (d) The appellant had also itself in the statement of facts had made certain mistakes which were pointed out. The corrected figures in the final submissions as reproduced earlier in the order, are as follows: A.Y. GP as per books of A/c Sales recognized during the year Closing WIP Opening WIP Total of sales and incremental WIP Corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from all angles. I uphold the rejection of accounts on the basis that the appellant has not been even reasonably accurate in estimating the profits includable in work in progress from year to year and also it has failed to give a verifiable basis for such recognition of revenue in earlier years. However, when we look at the margins disclosed this year and the entirety of facts discussed earlier in detail, in my considered opinion, a gross profit addition (which basically is related to revenue recognition and not exactly the rate) of estimated Rs. 8,00,000/- is only held reasonable and is upheld. The remaining addition which is based on incorrect working of gross profit rates by the Assessing Officer and in the light of the facts discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also noted that the gross profit ratio shown by the Assessee for the current year was more than in earlier years. The aforesaid findings of CIT(A) has not been controverted by Revenue by bringing any contrary material on record. CIT(A) has however estimated Rs. 8 lakhs to be reasonable disallowance and accordingly upheld the same. We are of the view that since no specific defects has been pointed out by the Assessing Officer in the books of accounts and since the Assessee has been consistently following the Project Completion Method of accounting in the year under appeal and in earlier years and on the basis of the same, the Assessee has been allowed deduction under 80IB in the past in the assessment framed u/s. 143(3). We are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
