TaxTMI 
TaxTMI 
2016 (4) TMI 1010
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....hen books of accounts were not rejected by the AO ? and (b) whether interest income received by the assessee on late realization of sale proceeds is to be assessed as business income as disclosed by the assessee or "income from other sources" ? If it is to be assessed as business income, then, the remuneration to the partners would be admissible on such interest income as per computation required under section 40(b) of the Income Tax or not ? 3. Brief facts of the case are that the assessee has filed its return of income on 12.8.2008 declaring total income at Rs. 16,45,010/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Income tax Act was issued and served upon the assessee. The ass....
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....t match with the figures of ledger account and the figures in the audit report. Therefore, the explanation of the assessee is not acceptable. The AO has adopted the GP rate of last year and applied it to cotton segment only. The purchase and sales with regard to cotton during the year was 4,52,04,360/-. The ld.AO worked out the GP on these sales at the rate of 4.70% at Rs. 21,24,605/-. He debited this amount by a sum of Rs. 5,33,411/- which is the GP at the rate of 1.18% disclosed by the assessee qua the cotton sales. The balance amount of Rs. 15,91,194/- is added to the income of the assessee. 4. The appeal to the CIT(A) did not bring any relief to the assessee. 5. With the assistance of the ld.representatives, we have gone through t....
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....rnment may notify in the official gazette from time to time, the Accounting Standard required to be followed by any class of Assessee in respect of any class of income. Thus, it indicates that income has to be computed in accordance with the method of accountancy followed by an Assessee i.e. cash or mercantile, such method has to be followed keeping in view the Accounting Standard notified by the Central Government from time to time. Sub clause 3 provides a situation, that is, if the Assessing Officer is unable to deduce the true income. On the basis of method of accountancy followed by an Assessee than he can reject the book result and the assessee's income according to his estimation or according to his best judgment. The Assessing Office....
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....ese accounts. 8. The ld.counsel for the assessee in the alternate contended that the AO himself has restricted the application of GP on the cotton sales. Meaning thereby, the ld.AO was satisfied that profit in polyester yarn could not be of that scale. The AO has carved out the cotton sales of Rs. 4,52,04,360/- out of the total turnover of the assessee amounting to Rs. 17,56,75,361/-. The ld.AO has applied the GP rate on these sales of earlier year, but that rate contained sales of other items also. The AO ought to have worked out the GP rate for cotton segments in earlier years, and that rate should have been applied in this year. The ld.DR contended that the AO has verified other aspects, and only thereafter, applied this rate. 9. W....
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....considered for making addition. 11. As far as the second issue is concerned, the ld.CIT(A) has made an enhancement on this issue. 12. Brief facts of the case are that the assessee had claimed remuneration to the partners at Rs. 11,23,356/- from net profit of Rs. 26,77,318/-. The ld.CIT(A) further observed that a sum of Rs. 14,57,771/- was interest income which was earned by the assessee on late realization of its sale proceeds. According to the ld.CIT(A), this interest income deserved to be assessed as an income from other sources and not business income. If it is to be assessed as income from other sources, then this component would exclude from computation of partner's remuneration under section 40(b) of the Income Tax Act. The ld.c....