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of <h1>High Court affirms ITAT's decision in tax dispute case regarding net profit percentage & laser expenses</h1> <h3>Commissioner of Income-tax -III Versus Vallabhbhai Gandabhai Zapadhiya</h3> The High Court upheld the ITAT's decision in a tax dispute case where the Revenue challenged the application of a net profit percentage on gross receipts, ... - Issues Involved:1. Application of net profit percentage on gross receipts.2. Allowance of excess payment of laser expenses u/s 40A(2)(b).3. Deletion of addition made on account of unverifiable and inflated labour charges.Summary:Issue 1: Application of Net Profit Percentage on Gross ReceiptsThe Revenue challenged the ITAT's decision to apply a net profit of 7.5% on gross receipts instead of 8% as determined by the CIT(A). The High Court upheld the ITAT's decision, noting that the ITAT had not committed any error in restricting the net profit to 7.5%. The ITAT's decision was based on the fact that the assessee had maintained regular books of accounts, which were audited and supported by a tax audit report u/s 44AB. The AO had not detected any defects or discrepancies in the accounts.Issue 2: Allowance of Excess Payment of Laser Expenses u/s 40A(2)(b)The Revenue contended that the ITAT erred in allowing excess payment of laser expenses amounting to Rs. 10,00,000/- to persons covered u/s 40A(2)(b). The High Court found that the CIT(A) had observed that the payments were reflected in the regular books of account and supported by proper bills. The AO had not brought any comparable cases to show that excessive payments were made. The ITAT confirmed the deletion of the disallowance, and the High Court found no error in this decision.Issue 3: Deletion of Addition Made on Account of Unverifiable and Inflated Labour ChargesThe Revenue argued that the ITAT erred in deleting the addition of Rs. 4,22,95,871/- made by the AO on account of unverifiable and inflated labour charges. The High Court noted that the assessee had submitted voluminous records relating to job work receipts, labour expenses, labour registers, and bank statements. The CIT(A) and ITAT found that the AO had not detected any defects or discrepancies in the accounts. The High Court upheld the ITAT's decision to delete the disallowance and compute the income at 7.5% on gross receipts, stating that no substantial question of law arose in the present appeals.Conclusion:The High Court dismissed both tax appeals, affirming the ITAT's decisions on all issues.
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