2015 (12) TMI 1500

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....O; ii) Deleting the disallowance of salary expenses of Rs. 69,300/- made by AO u/s 40A(2)(b) of the Act. 2. Regarding first ground of appeal, brief facts of the case are that the assessee is a partnership firm doing the business of purchase and sale of petrol and diesel products of Indian Oil Corporation at Kota. It has filed its return on 06.09.2009 declaring an income of Rs. 22,91,270/- which was selected for scrutiny and assessment was completed under section 143(3) of the I.T. Act. During the course of assessment proceedings, the AO noticed that the assessee has declared a turnover of Rs. 33.11 cr. and declared a GP rate of 1.52% as against turnover of Rs. 26.17 cr. and GP of 1.874% in immediately preceding year. The assessee was ask....

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....Company (Indian Oil, HPCL, BPCL etc.). The assessee is also required to maintain various registers by the Oil Marketing Company as well as State Government. Therefore, the books of accounts/trading results cannot be rejected without bringing specific defects on record. The AO is, therefore, directed to delete addition of Rs. 11,49,127/-." 4. The ld. D/R relied on the order of the AO and justified the trading addition of Rs. 11,49,127/-. 5. On the other hand, the ld. A/R of the assessee submitted that firstly the department has not challenged the finding of ld. CIT (A) that " the books of accounts cannot be rejected". Therefore, this finding of ld. CIT (A) has achieved finality. In view of this, the trading addition cannot be made when pro....

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....ndian Oil Corporation (IOC). Accordingly, the margin which is earned by the assessee is effectively governed by the IOC. It is also not under dispute that assessee has declared turnover of Rs. 33.11 cr and it is not the case of the revenue that there is a suppression of sales by the assessee during the year under consideration. Further, the assessee has demonstrated through the chart (reproduced above) that with the change in sale price of the petroleum products, the margin in the hands of the assessee remains the same. Further, we agree with the contention of the ld. A/R that since the revenue has not challenged the finding of the ld. CIT (A) wherein he has held that books of account cannot be rejected, revenue cannot be allowed to take th....

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....son to experienced person. The ld. CIT (A) agreed with the contention of the ld. A/R and held that the salary of a person not only depends on experience but also depends on his qualification and salary of Rs. 15,000/- per month paid to Shri Naresh Pareek who was holding Post Graduate diploma in Management, cannot be considered excessive. 8. We have heard the rival contentions and examined the matter. We believe that ld. CIT (A) has rightly stated that the salary which is derived by a person not only depends on experience but also depends on his qualification. In the instant case it is not under dispute that Shri Naresh Pareek was holding Post Graduate diploma in Management from Balaji Institute of Modern Management, Pune. Secondly, the app....