TaxTMI 
TaxTMI 
2021 (11) TMI 65
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....nd facts of the case. ii. That in the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in conditional allowing section 80IC taking 40% G.P. Rate. iii. That in the facts and in the circumstances of the case and in law, the Ld. CIT(A) has wrongly restricted to G.P. percentage of 40% for allow ability u/s 80IC of the Income Tax Act though the appellant's G.T. 57.01%. Appellant in regularly assessed u/s 143(3) of the Income Tax Act since A.Y. 2007-08 and full Gross Profit had been allowed for deduction u/s 80IC of the Act. iv. That in the facts and circumstances of the case in in law, the Ld. CIT(A) has wrongly taken about G.P. and restricted to G.P. - 40% and wrongly stated that rest amount be taken for tax. v. That the appellant craves leave for the permission to add, delete or amend the grounds of appeal before or at the time of bearing of appeal." 4. Brief facts of the case as called out from the records are that the assessee is a partnership firm engaged in the business of running coke industries. The assessee is claiming deduction under section 80IC of the Act consistently. For the year under consideration, the assessee has claimed deduction u/s....
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....t rate disclosed by the assessee at 57.01% and directed to tax the difference amount as "Income from other sources". 8. Aggrieved the assessee is now in appeal before the Tribunal solely raising the issue that the Ld. CIT(A) erred in estimated the gross profit rate at 40%. Disregarding the fact that the assessee has been regularly assessed u/s 143(3) of the Act since A.Y. 2007-08 and gross profit disclosed has been accepted. The ld. counsel for the assessee also took us through the paper book running from 1 to 61 and also placed reliance on the decision of ITAT, Kolkata in the case of DCIT vs Goodcare Pharma Pvt. Ltd. ITA No. 2485 & 2486/Kol/2017 dated 05.04.2019. 9. Per contra, the ld. Departmental Representative submitted that the assessee has not raised any ground challenging the finding of the Ld. CIT(A) rejecting the books of account u/s 145(3) of the Act. Various discrepancies have been noticed in the financials of the assessee-firm. Books of accounts were not produced before the Ld. CIT(A) as well as the Assessing Officer. Documents to substantiate the genuineness of purchase, sales and transportation expenses were not filed. The Ld. CIT, DR heavily relied on the finding o....
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.... sketchy picture of the facts related to the appellant's business. It lacks the authenticity of incontrovertible facts and reliable data. When the ld. AR says that the increase in the GP% was because of a rise in sale price of finished products, he does not back it with any data at National level or with any data released by or related to a Government department or a Government undertaking. Coke is not a commodity the price of which can be erratically and arbitrarily determined by its producer. The prices will need to be kept at par with other players in the market in order to able to compete with them. What the ld. AR has tried to argue is based on simple arithmetical calculations based on its own statistics of purchase and sales recorded in its books. 23. The ld. AR has also stated that one of the factors contributing to the high rate of GP% is Transport Subsidy that the appellant receives from the Government. In a tabular presentation, he has furnished the details of GP and NP% calculated with and without transport subsidy. GP & NP percentage of With Transport Subsidy A.Y Sales Transport Subsidy Total Turnover Gross Profit Net Profit GP% NP% 07-08 77,81,....
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....a product of transport subsidy does not help the appellant's case as of now. 24.1 The appellant has another sister concern with the name Kamrup Coke Industries. A comparison between GP and NP% without transport subsidy is made in the table below: A.Y Kamrup Coke Industries Sheo Shakti Coke Industries GP% NP% GP% NP% 2010-11 59.56 2.81 75.31 16.24% 2011-12 34.91 2.78 73.34 15.93% 2012-13 41.14 4.56 81.28 21.56% 2013-14 46.83 38.39 82.04 15.44% 2014-15 76.15 0.20 79.64% 2.10% 25. During the years under comparison, Kamrup Coke Industries has also not received any transport subsidy. Therefore, a comparison is made without considering transport subsidy. As can be seen, there is no comparison between the GP and NP declared by the two concerns. While the average GP of Kamrup Coke Industries has hovered around 51.7% that of the appellant has remained around 15 to 20%. There is no plausible explanation for this difference. These differences gain significance because the two sister concerns are located at the same address, the place of production, raw material used, the items of production are the same and so are the burning losses and ....
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.... return and the same has been accepted by the Sales Tax Authorities. In my view, filling a Sales Tax Return and its acceptance by the Sales Tax Authorities has no bearing on the issues involved in this case. The Sales Tax Authorities have not looked into the genuineness of the sales reported by the appellant. Under the Income Tax Act, the ld. AO has examined if the appellant's sales were genuine. The question here is, has the appellant really earned those receipts or has it inflated those figures in order to push in higher amounts as tax free income? The question here was from the stand point of the benefits u/s 80IC of the Act. The Sales Tax Authorities have not examined if the appellant has 'inflated' its sales. Therefore, the issue, question and facts here are different from what was there before the Sales Tax Authorities. 27.2 Therefore, in my view, even though the appellant has filed its Sales Tax Return disclosing exactly the same amount as its sales, the genuineness of those sales as have been borne out by the facts of this case in terms of the Income Tax Act are of a completely different dimension and are in a very different parlance. Hence this argument put forth by the ....
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....01,260 - 16,580 01,42,949 01,16,109 02,25,276 02,53,236 02,53,242 29.2 The figures for wages appear to be abysmally low. In order to verify it, the website for the department of labour, Government of Assam was referred. The website of Govt. of Assam gives the details of basic minimum daily wages for skilled, semi-skilled and unskilled workers as Rs. 227, Rs. 175 and Rs. 169 respectively. Since there is no detail of "number of workers employed by the appellant or the number of skilled, semi-skilled and unskilled workers, the average daily pay of the three categories of workers is taken at Rs. 190. 29.3 During the FY 2010-11 the total wages paid was Rs. Rs. 5,91,825. It was orally stated by the Id. AR that the factory works for 8 months in a year and during the monsoons, it remains closed. For an estimated calculation, therefore, we may take the number of days when the factory was operational as 30 days X 8 months = 240 days. Hence, the appellant has paid Rs. 2,466 per day towards labour charges. At an average rate of Rs. 190 per worker per day, the number of workers is calculated at 12 or 13 workers under the appellant's employment. In other words, with 12 or 13 w....
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....ns to the AY 2014-15 and not to the AY under reference in this appeal. I find it necessary to be highlighted so that an overall picture of the way the appellant's profits are declared, comes out clearly. The quantity of Raw Material consumed in FY 2014-15 is stated to be 791. 25 MT but the production of BH Coke is 31,547 MT. During the FY 3013-14, raw material consumption was at 1,03,545 MT and the finished product was 56,950 MT. In other words, while the production was 55% of material consumed, it was 3,987% of raw material consumed in FY 2014-15, if the production schedule annexed to the audit report is anything to go by. 30. Further, the Burning losses recorded by the appellant are roughly around 45%. As stated earlier in this order, there is no detail about the quality of coal and its content. As such for a better appreciation of facts, certain very general aspects of conversion of coal into BH Coke need to be considered. The coal found in the mines in Assam are generally categorized as subbituminous coal which contains less carbon and more moisture. The contents of Coal are carbon, volatile contents and moisture. The moisture content varies among different grades of coa....
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....ome for exemption u/s 80IC by taking the GP at 40% and taking into account the items in profit and loss account. The balance amount should be brought to tax as 'income from other sources'. These grounds of appeal are, therefore, partly allowed. For estimating the GP at 40%, the burning losses is taken at 55% and the yield is estimated at 45%. The miniscule amount of expenses is also considered for estimation and so are the unsubstantiated cash sales. As an overall view of the financial transactions, in my view estimating the GP at 40% is reasonable. The claim of transport subsidy is held to be eligible for deduction u/s 80IC(10) in view of the decision of the Hon'ble Calcutta High Court in the case of ITO vs SKJ Coke Industries Ltd. and also on the decision of the Hon'ble Supreme Court in the case of Ponny Sugars Mills (Erode) Ltd. wherein it was held that transport charges and subsidy was includable in business profits eligible for deduction u/s 80IC of the Act. The ld. AO is directed to compute the allowable exemption u/s 80IC by taking the GP% as 40% of the sum of sales and transport subsidy. These grounds are partly allowed." 13. From the perusal of above finding of the Ld. ....