income is
assessed at the rate of 3% of the sales turnover of the current year in the light of
book profit declared ... last year. It is commonly observed that when turnover is
increased the profit margin is generally decreased. The assessed income of the
assessee
admitted fact that there was a tremendous increase in the
turnover of the assessee which increased from Rs. 5 Crore in the earlier
year ... earlier year, the increase in
the turnover may be a reason for slight decrease in the gross profit rate.
In the present case, the Assessing
ratio for the last three A.Ys is as under:
AY. Turnover G.P. rate N.P. rate
(Rs.)
G.P. (Rs.) G.P. rate ... turnover has exceeded by 3 times
compared to A. Y.2006-07. This is one of the reasons that when
turnover increases profit ratio decreases
indicated that the net profit of assessee was decreased from
.23% of total turnover to .13% in this year due to increase in this expense
simply stated that the G.P. ratio is decreased due to decline in sales
turnover and increase in purchase cost of raw material
ratio of the assessee was decreasing due to steep increase in the labour
charges and increase in the turnover, and the AO applied ... case it is noticed that the
turnover of the assessee was increasing year after year but there was decrease in
the net profit rate consistently
turnover
of the appellant, cost of certain raw materials has gone up sharply
and average realisations from finished goods have decreased
between ... decline in
turnover and the cost of certain raw materials have gone up
sharply and the average realization from finished goods have
decreased between
accepted as a
matter of principle that increase in turnover will result in
decrease in net profit.
8. In the case of a contractor ... reproducing the
comparative decrease for both the asst. years:-
Item A.Y. 2004-05 A.Y. 2005-06
(Rs.0 (Rs.)
Turnover
last year balance at Rs.25,54,378/-. Thus, the advance
had decreased during the year under consideration. Copies of all these accounts ... categorically observed that even in case of
fall in turnover there may not be proportionate decrease in the salary as the regular
employees cannot
assessee,
which the department has not accepted as the actual turnover/sale was much more.
That, in fact, the Accountant of the assessee neither ... assessee that with the increase of turnover, generally the N.P rate is decreased.
The plea of the assessee has been that though the figure
