TaxTMI 
TaxTMI 
2018 (9) TMI 1306
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....mitting total income of Rs. 42,62,570/- under normal provisions of Income Tax Act, 1961 ( in short 'the Act') and book profit under section 115JB of Rs. 28,.69,695/-., which was processed u/s 143 (1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) was issued, against which, the assessee filed the information as called for. 2.1 From the P&L A/c during the year under consideration, AO noticed that the assessee recorded sales of Rs. 1259,84,89,400/- as against the purchases of Rs. 1251,43,77,442/- and there is no opening stock nor closing stock of material in which the assessee supposed to have traded in. He noted that the gross profit of the assessee worked out to Rs. 8.41 crores i.e. 0.67% OF THE SALES. ....
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....er and request the supplier to directly deliver the goods to our customer. We raise the invoices and the material is directly received by our customer without reaching our premises based on our instructions. As the material does not touch our premises at the points of purchase or sale, we do not have any loading, unloading, transportation charges which are borne by the supplier and the customer at their respective places and we do not book any such charges". After considering the submissions of the AR of the assessee, the AO held that the facts of the assessee company clearly establish that it is a mere paper company which is not dealing in real trading activity as claimed, therefore, the financial charges claimed by the assessee of Rs. ....
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....s bank charges (Bill Discounting). 5. The Ld. CIT (A)-9 erred that the company has not debited any expenditure related to the actual delivery of goods. 6. The Ld. CIT (A)-9 erred in treating the company as Paper Company on the ground that here is no trading activity done by the company. 7. The Ld. CIT (A)-9 erred in concluding that no business activity is conducted merely on the ground that no expenditure is incurred relating to the activity of delivery of traded goods. 8. The Ld. CIT (A)-9 ought to have appreciated the fact that the assessee is having proper ledger accounts in respect to each of the trade creditor. 9. The CIT (A)-9 ought to have appreciated the fact that the Letter of Credit pro....
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....or. Letters of credit which are from reputed Banks/ Financial institutions regarding the amount of discounting charges have been filed. He submitted that these expenses on discounting charges, charged by the financial institutions was incurred in the normal course of business and they are verifiable. 7.1 He submitted the above issue of disallowance of financial charges is already covered in assessee's own case (formerly known as M/s Global Forgings Ltd.) for the AY 2010-11 wherein ITAT vide ITA No. 1269/Hyd/2014, order dated 26/11/2014, has dismissed the appeal of the revenue and upheld the order of CIT(A), who deleted the disallowance of financial charges. A copy of the said order is available on record. He submitted the following docum....