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TMI Blog2015 (2) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... . The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order 30-12-2008 and the income was determined at Rs. 77,59,280/-. Aggrieved by the aforesaid order of the AO the assessee carried the matter before the learned CIT(A). The learned CIT(A) vide his order dated 22-03-2010 granted partial relief to the assessee. Aggrieved by the aforesaid order of the learned CIT(A), the revenue is in appeal before us and has raised the following grounds: "1. The Ld. Commissioner of Income tax (A)-XI, Ahmedabad has erred in law and on facts in directing to calculate G. P. @29% on estimated sale of Rs. 3,75 crores instead of 32% on sales of Rs. 5 crores. 2. The Ld. Commissioner of Income tax (A)-XI, Ahmedabad has erred in law and on facts in deleting the disallowance of depreciation on vehicle of Rs. 1,45,000/-. 3. On the facts and in the circumstances of the case, the Ld. Commissioner of Income tax (A)-XI Ahmedabad ought to have upheld the order of the Assessing Officer. &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer in the assessment order. I have also gone through the finding of my predecessor in earlier years and the orders of the Hon'ble ITAT, for the earlier years. The following picture emerges on this issue from the earlier years orders:- (Rs. in crores) Asstt. Year Sales as per books Sales estimated by A. O. Sales as per CIT(A) Sales estimated by ITAT 01-02 3.51 4 4 3.75 02-03 3.56 5 5 3.75 03-04 3.38 5 3.38 3.75 04-05 3.87 5.5 3.87 4.25 05-06 3.79 6 3.79 4.25 The sales of the appellant company during the year under consideration is Rs. 3,52,48,694/- which is almost in the same range of the sales of A. Y. 2001-02 and A. Y. 2002-03, which has been estimated by the Hon'ble ITAT at Rs. 3.75 crores. The current year sales is lower as compared to earlier year for the reason that Food Court of the company remained sealed from 27/4/2005 to 25/6/2005 due to the order of the Gujarat High Court and therefore, there was absolutely no sales of Food Court during this period and this has resulted into a lower sales during the year by Rs. 26.82 lacs as compared to preceding previous year. Therefore, there are valid reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as estimation of gross profit is concerned, ITAT estimated the gross profit at 30% for all the assessment years from 2001-02 to 2004-05. The learned CIT(A) after considering the factual position of the closure of Food Court for two months and due to increase in wages and salaries had considered the gross profit rate at 29% as against 26.21% worked out by the AO. We, therefore, feel no reason to interfere with his order as the learned DR could not controvert the findings of the learned CIT(A). Thus, this ground of appeal of the revenue is dismissed. 7. Ground No.2 of the Revenue's appeal relates to deletion of disallowance on vehicle amounting to Rs. 1,45,000/-. On verification of the details filed by the assessee, the AO noticed that the assessee claimed depreciation on vehicles purchased in the name of the directors of the assessee company. He was of the view that since the ownership of the assets does not belong to the assessee, the assessee is not entitled to claim depreciation. He, accordingly disallowed the claim of depreciation of Rs. 1,45,000/-. Aggrieved by the order of the AO the assessee carried the matter before the learned CIT(A). 8. The learned CIT(A) following the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specific circumstances of the appellant during the year under consideration as compared to previous years as also observed by the learned CIT(A), the G. P. ratio of 26.21% as per books of accounts ought to have been accepted by the learned CIT(A). 3. The learned CIT(A) has erred in confirming the addition on account of disallowance u/s. 40a (a) of the Act to the extent of Rs. 1,90,661/- on the ground that the packing material cannot be considered as purchases since they are specifically printed for the appellant company and hence liable for TDS. The applicant contends that since the packing material in question having been purchased off the shelf and as it does not bear any logo of the company or any other printing as assumed by the A. O. and the learned CIT(A), the provisions of Section 194C do not apply and accordingly no disallowance is warranted to the extent of Rs. 1,90,661/- u/s. 40a(ia) of the Act. The impugned disallowance thus requires to be cancelled/deleted." 13. The issue involved in grounds No.1 and 2 of the Cross Objection of the assessee and ground No.1 of the appeal of the Revenue is identical. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of Rs. 1,00,784/- is deleted. The balance disallowance of Rs. 1,90,661/- is confirmed. This ground of appeal is partly allowed." Aggrieved by the order of the learned CIT(A) the assessee is now in appeal before us. 16. Before us, the learned AR submitted that the assessee had not entered into any contract with the said parties for the manufacture of packing materials on its behalf but it was a case of purchase of the packing materials and hence, provisions of section 194C of the Act for deduction of TDS was not applicable to the assessee. He further submitted that the assessee had purchased plastic trays, cups, spoons and plastic carry bags etc. from Preeminent Packing and J. D. Marketing. The materials purchased did not carry any Logo of the company and were of standard size available in the market. These purchases did not constitute any contract with the said parties; hence, the assessee was not liable to deduct TDS from the payment made to them. The learned DR on the other hand, supported the order of the AO and the learned CIT(A). 17. We have heard the rival submissions and perused the materials on record. The assessee before us submitted that the purchases aggreg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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