Case Law Details
DCIT Vs Kortek Electronics (India) Ltd. (ITAT Delhi)
ITAT Delhi Rules in Favor of Kortek Electronics (India) Ltd., Deletes Additions for GP Ratio Fall
The Income Tax Appellate Tribunal (ITAT) Delhi recently delivered a verdict in the case of DCIT Vs Kortek Electronics (India) Ltd. for the assessment year 2010-11. The ITAT’s decision pertained to the addition of income and the disallowance of expenses.
Background: Kortek Electronics (India) Ltd. is involved in the business of manufacturing electronics goods, components, and Set-Top Boxes. In the assessment year 2010-11, the company filed its return with an income declaration of Rs. 20,28,59,210.
Scrutiny Assessment: The Income Tax department selected the company’s return for scrutiny assessment. During the assessment, the Assessing Officer (AO) noted that the company had shown a Gross Profit (GP) rate of 11.25%, significantly lower than the previous year’s GP rate of 12.8%. The AO sought detailed explanations and justifications for this decline in GP and requested itemized purchase details and manufacturing expense explanations.
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