G.P. rate to be accepted if it is higher than average G.P. rate of last three years

TG Team 21 May 2013 1,658 Views 0 comment Print Income Tax | Judiciary

Case Law Details

Case Name : Commissioner of Income Tax Vs Kiran Industries Pvt Ltd (Gujarat High Court at Ahmedabad)

Appeal Number : Tax Appeal No. 449 of 2011

Date of Judgement/Order : 12/09/2012

Related Assessment Year :

Courts :All High Courts Gujarat High Court

Having perused the documents on record with the assistance of the learned counsel for the revenue, we notice that the Tribunal had though confirmed the view of the revenue authorities with respect to the rejection of the books of account of the assessee, did not accept the re-computation of higher rate of gross profit on the premise that the average gross profit rate of last three years immediately preceding the year under consideration came to 14.79%. On such basis, the Tribunal found that the claim of gross profit rate @ 15.27% cannot be stated to be low. On such basis, the assessee’s appeal was allowed.

HIGH COURT OF GUJARAT AT AHMEDABAD

TAX APPEAL No. 449 of 2011

COMMISSIONER OF INCOME TAX
Versus
KIRAN INDUSTRIES PVT LTD

CORAM : HONORABLE MR.JUSTICE AKIL KURESHI and

HONORABLE MS.JUSTICE HARSHA DEVANI

Date : 12/09/2012

ORAL ORDER

(Per : HONORABLE MR.JUSTICE AKIL KURESHI)

1. Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 01.10.2010, raising the following questions for our consideration :

“[1] Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting the addition of Rs. 1,50,58,882/- made by the Assessing Officer and confirmed by the Appellate Commissioner on account of low gross profit rate?

[2] Whether on the facts and in the circumstances of the case, the order passed by the Income Tax Appellate Tribunal is just, proper and legal as the same is passed without giving any cogent and relevant reasons to show how the findings arrived at and the conclusions reached by the Appellate Commissioner are not just, proper and legal?

[3] Whether the order passed by the Income Tax Appellate Tribunal is non-speaking and unreasoned order and hence suffering from infirmity of non-application of mind and perverse or not?”

2. The issue pertains to the gross profit rate presented by the assessee during the year under consideration relevant to assessment year 2005-06. The assessee had claimed income @ 15.27% of the turnover. The Assessing Officer re-computed the same @ 19.27% after rejecting the books. The Commissioner (Appeals) accepted such re-computation of the Assessing Officer. Thereupon, the assessee went in further appeal before the Tribunal. The Tribunal by the impugned order, reversed the orders of the revenue authorities. Hence, the present appeal.

3. Having perused the documents on record with the assistance of the learned counsel for the revenue, we notice that the Tribunal had though confirmed the view of the revenue authorities with respect to the rejection of the books of account of the assessee, did not accept the re-computation of higher rate of gross profit on the premise that the average gross profit rate of last three years immediately preceding the year under consideration came to 14.79%. On such basis, the Tribunal found that the claim of gross profit rate @ 15.27% cannot be stated to be low. On such basis, the assessee’s appeal was allowed.

4. We are of the opinion that the findings of the Tribunal are based on evidence on record and are purely factual in nature. The Tribunal after taking into account relevant materials, came to the conclusion that a certain rate of gross profit presented by the assessee was acceptable.

5. In our view, therefore, no questions of law arise. The appeal is dismissed.