ASHU ORGANICS (I) P.LTD,THANE vs. ASST CIT CIR-1, MUMBAI

आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 17/02/2012 of the ld. First Appellate Authority, Mumbai. The only ground agitated/pressed by the ld. Counsel for the assessee is with respect to adopting the net profit of unit-I at the rate of 4.15% of the total receipt (i.e. 4.15% of Rs.15,11,97,160/- i.e. Rs.62,74,682/-) instead of considering the same at Rs.22,50,776/- (which is considered in the return of income by wrongly applying the provisions of section 145(3) of the Act that to without any cogent reason. 2. During hearing, the ld. Counsel for the assessee, Shri R. K. Mulchandani along with Shri Sunil S. Gadre, advanced arguments which are identical to the ground raised. On the other hand, the ld. DR, shri M. Murli, defended the conclusion arrived at in the impugned order by contending that for A.Y. 2005-06, the net profit was considered at 4.15%, wherein, facts are identical, therefore, the same net profit was applied by the ld. CIT(A). It was further contended that reduction to 4.15% was from 10% adopted by the Assessing Officer. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee company is engaged in the business of manufacturing specialty chemicals, pigments and intermediates, dyes, etc. The assessee is having two manufacturing units one at MIDC, Badlapur (Unit-I) and another one at MIDC, Ambernanth (Unit-II). Unit-II of the assessee company is an 100% EOU and eligible to claim exemption u/s 10B of the Income Tax Act, 1961 (hereinafter the Act). The assessee maintained separate books of accounts for both the unit. The assessee was asked to explain the details of apportionment of expenses etc. Considering the explanation of the assessee and profitability of Unit-II, the Assessing Officer estimated the net profit of Unit-I at the rate of 10% of the total receipts. The ld. Assessing Officer applied the provisions of section 145(3) of the Act on the plea that the accounts of the assessee, with respect to Unit-I, the same are incomplete/incorrect. The net profit of Unit-I was estimated at Rs.1,51,19,716/- as against the claimed net profit of Rs.20,20,814/- (as per profit & loss account). 2.2. On appeal, before the ld. CIT(A), the explanation of the assessee was considered and finally the net profit of Unit-I was reduced to 4.15%, as against 10% adopted by the ld. Assessing Officer. The assessee is in further appeal before this Tribunal. 2.3. Considering the totality of facts, we note that while coming to a particular conclusion the ld. CIT(A) analyzed the net profit of Unit-I for financial years 2007-08 (1.33%), F.Y. 2006-07 (4.96%) and F.Y. 2005-06 (4.15%). It is further noted that the ld. CIT(A) duly considered the explanation of the assessee with respect to increase in freight expenses, CETP, affluent treatment expenses of preceding years, which as per the assessee, reduced the profitability. However, neither before the ld. CIT(A) nor before this Tribunal, the assessee has produced any material or satisfactory explanation for its claim for booking the large expenses of Unit-I as compare to Unit-II. It is noteworthy that for A.Y. 2006-07, the net profit of the assessee was 4.15% and the same was accepted by the Department while finalizing the assessment u/s 143(3) of the Act. The assessee has not adduced any plausible reasoning for its claim. Thus, we find no infirmity in the order of the ld. CIT(A), consequently, there is no merit in the impugned ground, raised by the assessee.

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :