TaxTMI 
TaxTMI 
2007 (10) TMI 451
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....ith the remark 'left'. The revenue was directed to serve the notice of hearing on the assessee. The notice has been served on the assessee for fixing the date of hearing for 4-10-2007. None appeared on behalf of the assessee and we proceed to dispose of the appeal after hearing the Ld. DR for the revenue. 3. The grounds of appeal raised by the revenue are as under :- "1. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in reducing the net profit to 2 per cent of the disclosed sale from 4 per cent net profit computed by the Assessing Officer on the disclosed sale. 2. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in considering the fact that the net profit has varied from yea....
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....e Assessing Officer is purely hypothetical. The Assessing Officer while estimating the net profit rate had based its estimation on the net profit shown by the assessee in assessment year 1996-97 at 12.57 per cent, which was in fact the first year of operation. The assessee had shown varied percentage of net profits as is apparent from the chart of the total sales and net profits relating to assessment years 1996-97 to 2003-04, as detailed below :- Asst. Year Total Sales Net profit before tax Net profit ratio before tax 1995-96 - -11,153 0 1996-97 1,086,870 136,655 12.57 1997-98 38,225,253 -1,596,957 -4.18 1998-99 60,966,563 -2,675,168 -4.39 1999-2000 90,731,770 -21,146,072 -23.31 2000-01 185,302,792 3,950,241 2.1....
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....in directing the labour charges should not be reduced to arrive at the point of the business for the purpose of deduction under section 80HHC. 2. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the labour charges received by the assessee were devoted to the job work done for other parties for whom labour charges were paid and therefore were incidental to the assessee's business and not part of the operational income of the assessee. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing that the capital receipts should be excluded from the book profit of the assessee rejecting the Assessing Officer's computation of book profit as per ....
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....bay High Court in CIT v. Bangalore Clothing Co. [2003] 260 ITR 371 have held that in case any income earned by the assessee constitutes the operational income, the receipts from the same are includible in the business profits while computing the deduction under section 80HHC of the Income-tax Act. The labour charges received by the assessee for job-work carried out is in line with manufacturing activity carried on by the assessee constitutes, operational income and the profits and the receipts from the said labour charges are includible in the business profits of the assessee, while computing the deduction under section 80HHC of the Income-tax Act. We confirm the order of the CIT(A) in this regard and dismiss the ground of appeal in ground ....
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....movable property or fixed assets of a capital nature is not to be taken into the Profit & Loss Account. The CIT(A) further observed that in view of the said specific provision of the Companies Act the profit arising from sale of capital assets to the holding company cannot be considered as part of book profits of the assessee. Further, it was observed that the receipt on transfer of assets to holding company are of non-income category and cannot be subjected to tax by employing the mechanism of section 115JB. 12. We have perused the records and found that the profits arising on transfer of capital assets by the assessee to its holding company is a capital receipt in the hands of the assessee being not taxable in view of the provisions of s....