increase of turnover and manufacturing activities as
against job work charges and due to flood gross profit has marginally
decreased. However, ld. Assessing Officer ... ignored some important facts which needs consideration in
adjudicating this issue:-
(1) Turnover of the assessee has more than doubled in Asst. Year
Learned AR
has also argued that due to substantial increase in turnover there was
a slight deduction in the profit margin which was offered ... both the sides, we are also of
the view that the marginal decrease in the gross profit ratio was
properly explained by the assessee; hence
that assessee has not
explained the decrease in GP from 8.45% to 5.88%. Only apparent
explanation is that turnover of the assessee has increased three
fact that the turnover of the
assessee in year under consideration has not increased as compared to last
year but has decreased
turnover of
Rs.17,36,68,915/- as compared to Net Profit of Rs.71,30,820/- at the rate
of 5% on the turnover ... Profit. It was found by Assessing Officer that security charges have been
decreased from 92.78% shown in the last year to 91.5% during the year
turnover has increased from Rs.7.43 crores to Rs.11.15
crores which could be achieved only a competitive rates thereby
decreasing ... addition, I agree with the appellant that the
increase of turnover is due to non-disclosure of work-in-progress and no
other major defects
regard submitted
following chart showing the turnover/gross profit and GP ratio as under:-
Sl.No. Assessment Turnover (Rs.) Gross profit G.P. Ratio (%)
Year ... increase in turnover
from 4.57 crore in AY 2004-05 to 5.54 crore in AY 2005-06 prices have
been decreased to ensure sales
rate as applied by the CIT(A) at 5% of the turnover was
confirmed discarding the application of N.P. rate ... gross contract receipts invoking S.44Ad of the Act 'when the turnover
of the assessee had exceeded the Rs. 40 lakh limit prescribed
year the appellant's turnover was Rs. 7.80 cr
with a G.P. rate of 6.41% as against turnover of 7.81 cr with ... these factors have
resulted in decrease in G.P. by Rs. 3801862/- which is
equivalent to 6.08/- of the turnover. This is depicted
place of
15.82% declared by assessee on the gross turnover of
Rs.1,69,62,197/-. Accordingly addition of Rs.7,09,229/- was made ... deleted on the basis of
observation that there was no substantial decrease in GP vis-à-vis
average of last three years GP calculated
