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TMI Blog2017 (4) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... pted. The Assessing Officer by adopting 35 per cent., in our view which is at higher side, even if we accept the profit which has been shown by the assessee from the year 1991-92 to 1996-97, the average of which comes to 31. 4, for that we put the estimate at 32 per cent. instead of 35 per cent. by the Assessing Officer. In that view of the matter, the issue No. 3 is answered in favour of the Department and against the assessee and we estimate profit at 32 per cent. and calculation may be done on that basis by the Assessing Officer. - I. T. A. Nos. 106, 110, 122 of 2002 and 55, 124 and 165 of 2003 and C. O. Nos. 31, 32 and 87 of 2003 - - - Dated:- 18-10-2016 - K. S. Jhaveri And Mahendra Maheshwari, JJ. For the Commissioner : Sameer Jain For the Assessee : N. M. Ranka, Senior advocate, with N. K. Jain JUDGMENT 1. The appeals are preferred by the assessee against the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee. The following substantial question of law was framed by this court while admitting the appeals : Whether the expenses incurred by the appellant- organization for availing the services of vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002 in D. B. Income Tax Appeal No. 122 of 2002 where this court has held that forklift is not a plant and machinery and, therefore, they are not entitled for the benefit under section 80-I of the Income-tax Act, 1961. 5. With regard to other issue for invoking the provisions of section 145 of the Income-tax Act, he has contended that the Tribunal and Commissioner of Income-tax (Appeals) have abruptly deducted ₹ 8,78,985 to ₹ 2,00,000 without any reasoning where the Assessing Officer while assessing the books of account has rejected the given reasons on the basis of gross profit which has been earned by the assessee on an average of 35 per cent. on the basis of increase of turnover to the extent of ₹ 1.65 crores and correspondingly when the turnover is increased, the expenses after they have remained unchanged, therefore, he has estimated 35 per cent. on the basis of increased turnover. Therefore, he contended that the Commissioner of Income-tax (Appeals) and the Tribunal have seriously committed an error in confirming the order of the Commissioner of Income-tax, therefore, he contended that the rational approach which has been taken by the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to profits and gains derived from an industrial undertaking or a ship or the business of a hotel as if for the words twenty-five per cent , the words thirty per cent. had been substituted. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :- (i) it is not formed by the splitting up, or the reconstruction, of a business already in existence ; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose ; (iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India, and begins to manufacture or produce articles or things or to operate such plant or plants, at any time within the period of ten years next following the 31st day of March, 1981, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking ; (iv) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is owned by an Indian company and is wholly used for the purposes of the business carried on by it ; (ii) it was not, previous to the date of its acquisition by the Indian company, owned or used in Indian territorial waters by a person resident in India ; and (iii) it is brought into use by the Indian company at any time within the period of ten years next following the 1st day of April, 1981. (4) This section applies to the business of any hotel, where all the following conditions are fulfilled, namely :- (i) the business of the hotel is not formed by the splitting up, or the reconstruction, of a business already in existence or by the trans fer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose ; (ii) the business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees ; (iii) the hotel is for the time being approved for the purposes of this sub-section by the Central Government ; (iv) the business of the hotel starts functioning after the 31st day of March, 1981, but before the 1st day of April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds 'seven assessment years', the words 'nine assessment years' had been substituted : Provided also that in the case of an assessee, being a co-operative society, deriving profits and gains from an industrial undertaking or a ship or a hotel referred to in the third proviso, the provisions of that proviso shall have effect as if for the words 'nine assessment years', the words 'eleven assessment years' had been substituted. (6) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an industrial undertaking or a ship or the business of a hotel or the business of repairs to oceangoing vessels or other powered craft to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under sub-section (1) for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such industrial undertaking or ship or the business of the hotel or the business of repairs to ocean-going vessels or other powered craft were the only source of income of the assessee during the previous years relevant to the init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reasonable basis as he may deem fit. Explanation.-In this sub-section, 'market value', in relation to any goods, means the price that such goods would ordinarily fetch on sale in the open market. (9) Where it appears to the Assessing Officer that, owing to the close connection between the assessee carrying on the business of the industrial undertaking or the hotel or the operation of the ship or the business of repairs to ocean-going vessels or other powered craft to which this section applies and any other person, or for any other rea son, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in the business of the industrial undertaking or the hotel or the operation of the ship or the business of repairs to ocean-going vessels or other powered craft, the Assessing Officer shall, in computing the profits and gains of the industrial undertaking or the hotel or the ship or the business of repairs to ocean-going vessels or other powered craft for the purposes of the deduction under this section, take the amount of profits as may be reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. 9. Taking into consideration the expenses is required to be allowed. The counsel for the appellant Mr. Jain has taken us to the order and contended that it is a sister concern which has not done in genuine manner and in the transaction and concurrent findings no substantial question is raised. It would not be appropriate for this court to entertain this appeal and contended that the appeal deserves to be dismissed. 10. We have heard Mr. Sameer Jain for the appellant-Department and Mr. N. M. Ranka, senior advocate for the respondent-assessee. 11. Coming to the issue of the appeal of the Department, the first issue which is posted for our consideration is whether in the facts and circumstances of the case, the Tribunal was justified in holding that the assessee is entitled for the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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