Skip to main content

Only Profit Element in Sale can be treated as income not the Entire sale consideration

In Shri Nikhil Garg vs Vs ITO (ITAT Jaipur), appeal was filed before the ITAT against the order of the CIT(A).

Background

The Audit Party of I.T. Department observed a difference of Rs. 66,35,957/- between the total turnover declared in the Profit & Loss Account and Sales Tax Assessment Order and the AO completed the impugned reassessment u/s 143(3)/263 of the Act vide order dated 05.03.2015 by making addition of Rs.66,35,957 (difference in turnover). 

ld. CIT(A), who after considering the submissions of both the parties and material placed on record, dismissed the appeal filed by the assessee. Against which, the assessee has preferred the present appeal before the ITAT on the grounds mentioned above.

The Appellant submitted that the assessee has manifestly proved on record that the difference between the declared sales and the sales as per VAT return was “consignment sale” made by the assessee on behalf of the consigner (an independent party), therefore, the additions so made were completely contrary to the provisions of law and the facts and evidences available on record. the consignment sale was not considered as part of total sales of the assessee. and then the entire amount of 'Consignment Sales', thus, cannot be treated as the income of the assessee.

Judgment

The ITAT referred to CIT v President Industries (2000) 158 CTR 372 (Guj) and K Venkatesh vs Income Tax Officer (2016) 47 CCH 0447, held that whether the purported sale is “consignment sale” or “ordinary sale” is immaterial at this stage as even if the said sales undertaken by the assessee is treated as ordinary sale instead of consignment sale then also the entire sales cannot be treated as an income of the assessee. Thus, keeping in view the principles laid down by the Hon’ble High Court as well as the Coordinate Bench of the Tribunal, the ITAT was of the view that the entire sale consideration cannot be treated as income of the assessee but the addition could be made only to the extent of estimated profits embedded in sales,



Comments

Post a Comment

Most viewed this month

Appellate authorities under Special Statutes cannot be asked to condone delay

Madras High Court in R.Gowrishankar vs. The Commissioner of Service Tax has held that Appellate authorities cannot be asked to condone the delay, beyond the extended period of limitation A Division Bench comprising of Justices S. Manikumar and D. Krishnakumar, made this observation while considering an appeal filed against Single Bench order declining to set aside the order made in the condone delay petition filed by the petitioner to condone 223 days in filing the appeal before the Commissioner of Service Tax (Appeals). Article referred: http://www.livelaw.in/appellate-authorities-special-statutes-cannot-asked-condone-delay-beyond-extended-period-limitation-madras-hc/
Post a Comment
Read more

'Seize assets to pay damages to accident victim'

Her story might be an inspiration for the physically challenged but justice has remained elusive for her. In 2008, a bus accident left research engineer S Thenmozhi, 30, paraplegic. In April 2013, the motor accident claims tribunal directed the Tamil Nadu State Transport Corporation (TNSTC) to provide her a compensation of 57.9 lakh. However, TNSTC refused to budge and on Tuesday a city court ordered attaching of movable assets of the transport corporation. Thenmozhi was employed in C-DOT, a telecom technology development centre in Bangalore. On July 21, 2008, she was coming to Chennai in a private bus. Around 2am, the bus had a flat tyre and the driver parked it on the left side of the road near Pallikonda in Vellore district on the Bangalore-Chennai highway. While the tyre was being changed, a TNSTC bus of Dharmapuri division hit the stationary bus. The rear part of the bus was smashed and passengers were injured. Thenmozhi who had a seat at the back of the bus suffered...
Post a Comment
Read more

Mumbai ITAT rules income of offshore discretionary trust is subject to tax in India

The Mumbai Income Tax Appellate Tribunal (ITAT) has recently determined the following issue in the affirmative in the case of Manoj Dhupelia: Should the income of an offshore discretionary trust be subject to tax in India, if no distributions have been made to beneficiaries in India? The question arose from appeals filed by individual beneficiaries in relation to a Lichtenstein-based trust, the Ambrunova Trust and Merlyn Management SA (the Trust) with the ITAT. It is important to note that the individuals in this case were amongst those first identified by the Government of India (GOI) as holding undeclared bank accounts in Lichtenstein. The ITAT ruling raises the following issues: Taxation of Trust Corpus: ITAT classified the corpus of the trust as "undisclosed income" and declared it taxable in the hands of the beneficiaries. Taxation of Undistributed Income: ITAT refused to draw a distinction between the corpus and undistributed income from the trust and declared i...
Post a Comment
Read more