2001 (4) TMI 73

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....ssessee. On appeal, the Commissioner reduced the tailoring receipts omitted by the. assessee to Rs. 1,25,000 and Rs. 2,00,000, respectively. The assessee took up the matter to the Appellate Tribunal, where it was contended on behalf of the assessee that the actual omissions on the basis of the statements prepared by the assessee came to Rs. 1,29,664 and Rs. 1,81,806, respectively. The assessee further claimed that deduction should have been given from these amounts towards stitching charges that might not have been received by the assessee on account of non-delivery of stitched clothes. The assessee further claimed that the normal rate of gross profit in this business is 40 per cent. and if the above omissions are added to the assessee's....

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....Tribunal is right in law in declining to allow deduction of expenditure that would have been necessarily incurred for executing their orders for stitching garments such as wages for stitching, costs of lining cloth, buttons and other tailoring materials from out of the gross tailoring receipts omitted and determined for the assessment years 1981-82 and 1982-83 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in declining to set off the addition made to the business income for the current assessment year against all the additions made for investments under section 69B, cash deposits in banks, investments in machines, etc., and to sustain only the balance of such additions for the ass....

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....he tailoring charges do not depend upon the abovesaid factors, but it depends upon the reputation that has been earned by the tailor and, therefore, the Tribunal was correct in having come to the conclusion that the charges said to have been spent for other purposes cannot be deducted. We have carefully considered the rival submissions and we feel that a tailor would normally incur expenditure towards wages for stitching the clothes, lining cloth, buttons and other tailoring materials and the claim of the assessee in respect of the same cannot be brushed aside. The skill and the reputation earned by the assessee may be an added factor for getting some more customers and in any event, the tailor has to necessarily incur certain expenditur....