Income cannot be assessed at 10% when assessee was allowed to charge only 5% as per mandate of Government

DCIT Vs Jharkhand State Beverages Corporation Ltd (ITAT Ranchi)

The undisputed facts are that the assessee is engaged in the business of procurement and supply of IMFL, FMFL as well as country made liquor and other similar products and as per Government mandate the assessee is authorized to charge 5% on MRP on the wholesales effected in the state of Jharkhand. We note that the assessee during the year was engaged in making wholesale of IMFL, FMFL and country made liquor and similar items and used to charge 5% only in terms of mandate of Government of During the course of hearing, the Ld. A.R produced before us the certificate issued by the Excise Commissioner to the effect that the assessee has only done wholesale marketing of IMFL/FMFL/country liquor in the state of Jharkhand which is extracted below:

“This is to certify that Jharkhand State Beverages Corporation Limited (JSBCL)- A wholly owned Government of Jharkhand undertaking did only wholesale marketing of IMFL/Country liquor in the State of Jharkhand during FY 2014-15 in terms of Mandate given by the State Government to JSBCL vide Gazette Notification dated 07.10.2010.”

Once this is accepted that the assessee was engaged in making wholesale marketing of IMFL/FMFL/country made liquor than the revenue as disclosed by the assessee has to be accepted as the application of net profit rate of 15% by the AO as well as subsequent reduction by 10% by the Ld. CIT(A) are wrong and against the facts on record. We note that the assessee is a Government body engaged in wholesale marketing of IMFL/FMFL/country liquor in terms of Govt. direction and charging margin 5% as has been prescribed by the State Government. Therefore, we are not in a position to accept the conclusion as recorded by the Ld. CIT(A) accordingly we set aside the order of Ld. CIT(A) and direct the AO to accept the income of the assessee as returned.

FULL TEXT OF THE ORDER OF ITAT RANCHI

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