1976 (9) TMI 68

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....e surplus and could not be utilised by it in its business, were disposed of by it to outsiders for Rs. 31,228. It owns a truck also which is mainly used by it for its own business, but when it is not in need for its business, it is given to outsiders on hire basis. Hire receipts of this truck from outsider during the year amounted to Rs. 40,369. The assessee also has income from interest mainly from concerns be longing to the partners of the assessee firm. The interest charged is @ 6%. During the course of business, some money was borrowed also from outsiders. According to the Appellate Assistant Commissioner, such sum is Rs. 60,000, for which it paid the interest @ 12%. 2. It is common ground that, so far as the contract business is con....

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....finding of the Appellate Assistant Commissioner. The main contention of the learned Chartered Accountant, Shri C.L. Jhanwar, who represented the assessee before us, is that the rates of the net profit applied by the learned Appellate Assistant Commissioner, were excessive and that the same should be reduced. He, however, frankly conceded that the figure of income as reflected in its books of account, could not be accepted as correct because of the inadequacy of the accounts, particularly the non-availability of the figures of opening and closing balance of the work in progress. On behalf of the Department, the order of the learned Appellate Assistant Commissioner was stoutly supported. 5. We have carefully examined the rival submissions.....

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....f cannot but be treated as part and parcel of the receipts of the contract account for the sale of the bricks is nothing but the disposal of the surplus raw-material and there is, in principle, no justification to treat the sale of bricks as separate business. The same rate of net profit which was applied to the contract business ought to have been applied to the receipts from the sale of bricks also. The income from this source will, therefore, be recomputed by the adding the sale proceeds of bricks to the contract receipts and by applying the net profit rate of 14% to the entry of it. The Income-tax Officer will accordingly recompute the income from the contract business. 7. So far as the controversy regarding the proper net profit rat....