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TMI Blog2018 (2) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... aim is completely unsubstantiated and unproved. The disallowance is accordingly confirmed. - Decided against assessee Estimation of the assessee’s income from its two workshops - addition to its’ dealership (trading) business in respect of which the assessee is not maintaining any separate books of account - Held that:- We are, on balance, satisfied with the explanations (including the corroborative material) furnished by the assessee (through the ld. AR) in respect of the queries raised qua the accounting of the job work segment of the assessee’s business. We are, however, unable to appreciate as to how the sale of used oil is, as claimed, credited to the sale of spare parts inasmuch as there is no purchase thereof (used oil). However, where credited to a sale account, the same, irrespective of the account head, gets credited to the profit & loss account, so that the same is in order. The total sale for the relevant year, as appears from the sale bills enclosed in the paper-book (PB pgs. 69-72), is for ₹ 28,444/-. Revenue has not doubted the sale volume thereof, making an informed estimate of the sale that ought to have materialized. Under the circumstances, therefore, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard the parties, and perused the material on record. We find little merit in the assessee s - who has in our view been allowed substantial relief by the ld. CIT(A), claim. The rendering of service, for which commission is allowed, remains completely unproved. That apart, if an exemployee of a finance company could refer customers, why would not the current employees of the same or even different companies, several of which operate in the market, i.e., in the auto finance segment, do so. The assessee is selling standardized products, with trained staff, well-versed with different models of the vehicles being sold as well as with that in competition, so as to properly educate and engage with the customers and, thus, market the same. The market being a fast changing one, with new models being launched on a regular basis, she may not even be aware of the models currently in vogue. No wonder, the prices known to her were of the models sold in 2010. Buying a vehicle, a capital asset, with long term implications, is ordinarily a result of an informed decision. A customer intending to purchase a vehicle would visit an auto dealer directly, and on the basis of discussions, includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ld. CIT(A), in appeal, found that while the assessee was able to explain some aspects, it could not satisfactorily explain the balance, so that he allowed relief to the extent of ₹ 10 lacs, confirming the balance ₹ 5 lacs. Aggrieved, the assessee is in second appeal. 5. We have heard the parties, and perused the material on record. At the very outset, it was observed (and questioned) by the Bench that the ld. CIT(A) having confirmed 1/3 of the addition made by the AO, had affectively assessed the workshop income at less than 3% (2.67%, to be precise) of expenditure. This would work to an even lower figure when reckoned on gross receipt (turnover) basis, i.e., at 2.60% (2.67/102.67x100). How could that be regarded as excessive or higher? Does the assessee therefore mean to say that the profitability of it s servicing business is lower than 2.6%? The ld. AR would reply by stating that the AO s working is wrong, and that the assessee had in fact earned a profit on the said business, as against a loss, as worked out by the AO. However, neither before the AO nor even before the ld. CIT(A) did the assessee furnish its working of the said business, which it claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicative, and did not represent a proper working so as to compute the profit of the two business segments. In fact, the turnover of the workshop business is ₹ 712.97 lacs in-as-much as the figure of ₹ 172.58 lacs (the turnover stated earlier) does not include the sale of spare parts, which is at ₹ 542.51 lacs. The assessee has now prepared a chart apportioning the overhead expenditure on the basis of turnover, i.e., after allocation of direct expenditure, and which reflects the profit of the workshop segment at ₹ 18.72 lacs, furnishing a new set of papers (marked PB II, at pages 18, 19). Coming to the specific objections which had remained unaddressed, and specifically called for being addressed by the Bench, his submissions were as follows: [ a) opening and closing inventory of consumable stores, which includes paint material, was furnished (PB II, pgs. 2-5). Further, the rebate availed on paint material stands credited to the consumables stores account, so that the consumption of the paint material is at ₹ 47.68 lacs (and not ₹ 59.27 lacs), even has clarified by the assessee during assessment proceedings itself vide its letter dated 12.10. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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