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TMI Blog2014 (7) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... et price because only in that case it could be said that the assessee had paid less than the market price - it cannot be said that assessee had produced more than the ordinary profit because of close connection with the sister concern or that it had declared more profit in order to claim more exemption – thus, the order of the CIT(A) is set aside – Decided in favour of Assessee. - ITA No. 567/Mum/2012 - - - Dated:- 7-8-2013 - Shri Rajendra Singh And Shri Sanjay Garg,JJ. For the Appellant : Shri C. N. Vaze Mrs. Achala Vaidya For the Respondent : Shri R. A Pant ORDER Per Rajendra Singh, AM This appeal by the assessee is directed against the order dated 23.11.2011 of CIT(A) for the assessment year 2008-09. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the hired employees cost of which was ₹ 7084790/- and the revenue earned was ₹ 2.69 crore. He, therefore, computed revenue proportionate to the employees cost at ₹ 1987718/- being the cost of hired employees at ₹ 7570683/-. AO observed that the assessee had earned income of ₹ 7570683/- whereas the payment to the sister concern was only ₹ 1987718/-. He accordingly added a sum of ₹ 3989097/- (7570683-1987718) to the total income. In appeal CIT(A) observed that service of five employees had been provided by the sister concern to assessee at cost without charging any profit and, therefore, the assessee had produced more than ordinary profit. He accordingly, confirmed the addition made by AO on this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of export had hired some employees from the sister concern which had been reimbursed at cost. The AO, therefore, has concluded that the assessee has produced more than ordinary profit corresponding to the revenue earned in relation to the hired employees which has been computed on proportionate basis at ₹ 757068/- . AO had treated the entire revenue as profit earned after deducting the cost of employees hired. The approach adopted by the AO is prima facie incorrect. For applying the provisions of section 10 B(7) read with section 80IA(10), AO has first to show that cost of hiring employees by the assessee had resulted into more than ordinary profit. This could happen only if the assessee had paid less than the market value ..... X X X X Extracts X X X X X X X X Extracts X X X X
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