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4 orders · Page 1 of 1
The Tribunal upheld the CIT(A)'s order, finding that the amounts received were part of a tripartite collaboration agreement and constituted genuine business transactions, not deemed dividends. The Tribunal also found that the admission of additional evidence by the CIT(A) was justified.
The Tribunal held that the valuation of closing stock should be at cost price, not MRP, and directed the AO to consider the excess stock at cost price. The Tribunal also directed to allow set-off for surrendered income, book value of stock, and dead stock.
The Tribunal held that Section 57(iii) of the Income Tax Act does not require that income must actually be earned for an expenditure to be deductible. The expenditure only needs to be laid out wholly and exclusively for the purpose of earning income.
The Tribunal held that the estimate of net profit rate at 5% on turnover, even after rejection of books, was excessive. It noted that comparative results of three years showed a maximum net profit rate of 1.5% and that increased sales could lead to a declined net profit rate.