TaxTMI 
TaxTMI 
2016 (5) TMI 489
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....he lst year to 15.71% during the year under consideration? 2. Whether on facts and circumstances of the case, the learned ITAT was justified in law in upholding the deleting of the addition on account of lower GP although the assessee has failed to substantiate continuous fall of gross profit over the years as analyzed along the parameters given by the Assessing Officer either before the Assessing Officer, the CIT(A) and before the learned ITAT? 3. Whether on facts and circumstances of the case, the learned ITAT was justified in law in upholding the deletion of addition on account of low gross profit by holding that the books of account of the assessee could not be rejected by the Assessing Officer despite the Assessing Officer's findings based on hard data that correct profits could not be deduced from the assessee's books? 4. Whether on the facts and in the circumstances, the Hon'ble ITAT was right in law in upholding the order of learned CIT(A) in deleting the addition of Rs. 45,94,710/- made by the Assessing Officer on account of cash credit under section 68 especially when the assessee had failed to prove the creditworthiness of the depos....
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....ly stand deleted. Thirdly, the Assessing Officer made an addition of Rs. 21,68,938/- on account of capital subsidy on sales tax. The CIT(A) deleted the said addition holding that the subsidy was given not to enable the assessee to run the business more profitably but in setting up of the industry in a remote rural area. On appeal by the revenue, the Tribunal upheld the decision taken by the CIT(A) observing that the exercise of option by the assessee in paying half of the amount of deferred tax upfront thereby retaining the remaining half as subsidy cannot convert the otherwise capital subsidy into an item of revenue. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the parties. 4. Detailed findings have been recorded by the Tribunal upholding the deletions made by the CIT(A) on all the issues. The first issue was with regard to addition of Rs. 1,19,93,981/- made by the Assessing Officer on account of fall in GP rate from 18.52% in the preceding year to 15.71% during the year in question. During the assessment proceedings, it was noticed by the Assessing Officer that the GP rate of the assessee had reduced from 18.52% from the preceding year to 15....
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....g increase in the price of steel round bar. For example, the rate per mt. of raw material purchased from RINL increased from Rs. 20,350/- in the preceding year to Rs. 26,900/- in the current year, thereby registering an increase of 32%. In the like manner, there is increase in the rate of raw material from other parties ranging between 19% to 36%. This chart indicates that the input costs became costly in the instant year in comparison with the rates prevailing in the preceding year which led to the reduction in the overall profitability. The AO has not contradicted the contents of such chart. When we consider this factor pushing down the gross profit rate coupled with fact that the Assessing officer has not pointed out any mistake in the quantitative records maintained by the assessee or the value of the closing stock, the only conclusion which in our considered opinion can be drawn is that the books of account were properly maintained. We, therefore, hold that the learned CIT(A) was justified in cancelling the action of the AO in rejecting the books and resultantly deleting the addition of Rs. 1.19 crore on this score." Learned counsel for the appellant-revenue has not been ab....
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....to produce the persons but places on record sufficient evidence to prove the genuineness of the deposits, the addition cannot be made under section 68 of the Act without the AO discharging his duty to summon the creditors. Presently, we are dealing with a situation in which the assessee intimated the AO to call these creditors at his own which he did not and chose to make addition without rebutting the evidence filed by the assessee. We will deal with all the six creditors one by one. 8 to 13. xxxxxxxxxxxxxxxxxxx 14. Once the receipt of deposits amounting to Rs. 44 lac from the above six depositors is held to be genuine, the consequent disallownace of interest amounting to Rs. 1,94,710/- made by the Assessing Officer would automatically stand deleted. We, therefore, uphold the impugned order in deleting the addition of Rs. 45.94 lacs." No material was placed on record by the learned counsel for the appellant to controvert the findings recorded by the Tribunal. 6. The next issue was with regard to addition of Rs. 21,68,938 on account of capital subsidy on sales tax. The assessee received a subsidy of sales tax amounting to Rs. 21,68,938/- which was claimed as....