TaxTMI 
TaxTMI 
2014 (12) TMI 718
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....t "Income from other sources" assessed by the Assessing Officer. 3. That the order of Ld. CIT(A) be set aside and that of A.O. be restored." 1. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 10,19,255/- made by the Assessing Officer on account of low yield. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in directing the Assessing Officer to assess the commission income of Rs. 2,05,34,037/- under the head "income from Business" as against "Income from other sources" assessed by the Assessing Officer. 3. That the order of Ld. CIT(A) be set aside and that of A.O. be restored." 2. The relevant facts as are emanating from the assessment order in the case of M/s Rana Casting are that the assessee vide return dt. 31.10.2001 returned a loss of Rs. 1,16,13,290/- and computed profit u/s 115JB of Rs. 851536/-. The said return was subjected to scrutiny after issuance of notice u/s 143(2) & 142(1) alongwith questionnaire etc. The AO referring to schedule-16 of the Audit Report took note of the fact that the assessee had shown an income of Rs. 3,46,85,515/- which consisted of the followin....
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....ing as under:- "That the assessee is a Private Limited Company carrying on business of manufacturing and Trading of Mild Steel Ingots, Rounds etc. in a induction finance Mill. The appellant Co. has maintained regular and proper books of accounts, along with manufacturing records, as required under Excise Rules, Stock Registers, Sales and Purchase Bills and vouchers and the same have been produced before the Assessing Officer time to time, as and when required. The Raw-material of the assessee appellant Company is Iron Scrap & Sponge Ironore is also excisable, as well as the finished goods are also excisable. The Assessing Officer has made the following additions to the income of the assessee while completing the assessment u/s 143(3):- 1. Estimated ad-hoc addition on account of low yield. Rs. 10,19,255 = 00 2. The A.O has also observed that the commission income received by the appellant Co. is actually income from other sources and not income from business as declared by the assessee appellant. 1) Regarding estimated adhoc addition on account of low yield- Rs. 10,19,255 = 00:- The Assessing officer has made estimated addition of Rs. 10,19,255 = 00 to the income of the ....
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....bservations have been made by the Assessing Officer in the similar case in assessment year 1995-96. On appeal the learned CIT (appeals) has accepted the appeal of the assessee and has allowed the issue in favour of the assessee that the income from commission is to be assessed as income from business as disclosed by the assessee. The Deptt. Has gone in appeal before hon'ble ITAT. Hon'ble ITAT has discussed the appeal of Deptt. And has confirmed the order of learned CIT (appeals) in ITA No.2101/Del/00 vide order dated 31.03.2006 (Copy enclosed) for your ready-reference. That the Assessing Officer has made the observation about the other income as disclosed by the assessee-appellant company from different parties. The Assessing officer has accepted this income as income from other sources, while the income, as earned by the appellant company, actually the income from business and the similar income has been accepted as income from Business in the past as well as in future, the copies of the Profit & Loss account of the assessee Company is being enclosed for your ready reference. The Assessing Officer has called the details directly from the parties through whom the assessee appellant....
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....to send the copy of primary records showing orders of purchases & sale (5) No of share purchased and sold through them with distinctive numbers and date of purchase and sale of shares and name of companies (6) total amount paid by the company (assessee) for purchase of share and mode of payment (7) amount of profit remitted to the company and mode of payment of profit (8) rates of shares (9) whether any tax paid by the company on share profit (10) amount of commission paid by te company with copy of bank account. For payment of commission, the parties were asked to furnish copy of agreement for commission, copy of bank A/c showing payment of commission, evidences of services and name and address of their Assessing Officers. Letter have been received unserved in the case of cases of KCS Financial Services M.v. Marketing (P.) Ltd, Adhunik Sales India, Churuwala Exports (P.) Ltd. and Ankur Cultivators (P.) Ltd. have been received back unserved. Also in other case, no replies have been received. To prove the services rendered to earn the commission/share profit of Rs. 20534037/-, only nature of work done have been submitted. Genuineness of services rendered not established. There....
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....That the assessee is a Private Limited Company carrying on business of manufacturing and Trading of Mild Steel Ingots, Rounds etc. in a induction finance Mill. The appellant Co. has maintained regular and proper books of accounts, along with manufacturing records, as required under Excise Rules, Stock Registers, Sales and Purchase Bills and vouchers and the same have been produced before the Assessing Officer time to time, as and when required. The Raw-material of the assessee appellant Company is Iron Scrap & Sponge Ironore is also excisable, as well as the finished goods are also excisable. The Assessing Officer has made the following additions to the income of the assessee while completing the assessment u/s 143(3):- 1. Estimated ad-hoc addition on account of low yield. Rs. 10,19,255=00 2. The A.O has also observed that the commission income received by the appellant Co. is actually income from other sources and not income from business as declared by the assessee appellant. 1) Regarding estimated adhoc addition on account of low yield- Rs. 10,19,255=00:-The Assessing officer has made estimated addition of Rs. 10,19,255=00 to the income of the assessee with the observat....
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....ade by the Assessing Officer in the similar case in assessment year 1995-96. On appeal the learned CIT (appeals) has accepted the appeal of the assessee and has allowed the issue in favour of the assessee that the income from commission is to be assessed as income from business as disclosed by the assessee. The Deptt. Has gone in appeal before hon'ble ITAT. Hon'ble ITAT has discussed the appeal of Deptt. And has confirmed the order of learned CIT (appeals) in ITA No.2101/Del/00 vide order dated 31.03.2006 (Copy enclosed) for your ready-reference. That the Assessing Officer has made the observation about the other income as disclosed by the assessee-appellant company from different parties. The Assessing officer has accepted this income as income from other sources, while the income, as earned by the appellant company, actually the income from business and the similar income has been accepted as income from Business in the past as well as in future, the copies of the Profit & Loss account of the assessee Company is being enclosed for your ready reference. The Assessing Officer has called the details directly from the parties through whom the assessee appellant Company has earned ....
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....he Hon'ble High Court, reliance was placed on the findings arrived at in the impugned order for both the assessment years, it was also his submission that again in the case of M/s Doaba rolling Mills Pvt. Ltd. order dated 31.03.2006 in ITA No.-2101/Del/2000 pertaining to 1995-96, the departmental ground had been dismissed. Inviting further attention to the impugned order referring to the facts recorded in the assessment order in the case of Rana Castings Pvt. Ltd. It was his submission that firstly the facts pertaining to M/s Vehelna Steel Ltd. were never confronted to the assessee. Moreover the fact that the said concern as per the information recorded in the assessment order itself was using sponge iron only to the extent 41.43% as against the 68 % utilized by the assessee. The yield consequently was bound to be higher in the case of M/s Vehelna Steel Ltd. who used higher percentage of Iron Ingots as raw material and this fact along cannot lead to the conclusion that the records maintained by the assessee did not reflect the true picture. Referring to the order it was his submission hat no specific defects have been pointed out and an adhoc addition on this ground accordingly was....