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Sr. No. F.Y. Turnover Employee Employee Net Profit Net Profit
in Lacs Cost in cost in % in Lacs in %
Lacs
1 2012-13 506.03 191.48 37.84% 48.16 9.52%
2 2013-14 325.24 166.86 51.30% 24.87 7.65%
3.2. From the above table, it can be seen that assessee's net profit
has decreased by 1.87%, whereas the employee cost increased by
13.46 %. Despite steep decrease in turnover, with almost same
amount of overhead costs one cannot achieve reasonable net profit
for the year under consideration. The assessee being engaged in
repairing of power generation transformer, the turnover depends on
the nature of job received by it. The nature of job, number of jobs
depends on the wear and tear of transformer. Thus the assessee to
keep team of workers for whole the year, whether work is there or
not. Even there is always keen competition to get the repairs jobs,
the assessee required to quote reasonable rate for the job. The
quantum of job is not continuous, whereas overheads are constant
in nature. Hence the profit margin or profit ratio cannot be directly
linked with turnover of the nature of assessee business. The
assessee is not engaged in any product driven industry, wherein
the margins per product are more or less fixed. There is reduction
in turnover from Rs.5.06 crores in financial year 2012-13 to
Rs.3.25 crores in financial year 2013-14. There is reduction in
turnover by 35.77% compared to last year. Overheads and normal
business expenditures are incurred throughout the year. Hence
there is impact on the profits of the assessee company, and its
books of accounts are audited. The transactions are supported by
I.T.A No. 2367/Ahd/2018 & 917/Ahd/19 A.Y. 2014-15 Page No 5
Baroda Industrial Electrical Products Pvt. Ltd. Vs. ITO
necessary evidences in the form of bills and vouchers. Book results
have been accepted in past. Assessee's main revenue is from
service & repairing, which is not fixed, it depends on customer
requirements, whereas overheads-are fixed. Therefore the assessee
requested to accept the book results as true and genuine.