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“profit element”

DisallowancesSection 69CSection 69C5,654 judgments

The decision most relied on for profit element is CIT v. President Industries (258 ITR 654), cited in 471 judgments on BharatTax.

Leading authorities on profit element

CIT v. President Industries
258 ITR 654 · 2002 · High Court
471
citing judgments

When books of account are rejected and unaccounted sales or receipts are discovered, the income addition is restricted to the net profit element embedded in these undisclosed transactions, not the entire sale proceeds or receipts, especially if corresponding purchases are not proven to be outside the books.

Sanjay Oilcake Industries v. CIT
316 ITR 274 · 2009 · High Court
460
citing judgments

In cases of alleged bogus or unverifiable purchases, rather than disallowing the entire purchase value, a reasonable profit element or a proportionate percentage of the purchases should be added back to the assessee's income.

CIT v. Siemens Aktiongesellschaft
310 ITR 320 · 2009 · High Court
259
citing judgments

Reimbursements of actual expenses without any profit element are not taxable income. Additionally, mere amendments to the Income-tax Act do not override the provisions of Double Taxation Avoidance Agreements (DTAAs).

CIT v. Vijay M. Mistry Construction Ltd.
355 ITR 498 · 2013 · High Court
252
citing judgments

In cases of alleged bogus or hawala purchases where the existence of transactions is not entirely denied, only the profit element embedded in such purchases, and not the entire purchase price, can be added to the assessee's income. The focus is on determining a reasonable profit percentage for such additions.

CIT v. Balchand Ajit Kumar
263 ITR 610 · 2003 · High Court
212
citing judgments

When making an addition for unaccounted receipts, on-money, or non-genuine purchases/sales, the addition should be restricted to the estimated profit element embedded in such transactions, rather than the entire gross amount, particularly when evidence of corresponding expenditure is incomplete. This estimation often involves applying a net profit rate.

CIT v. Gurubachhan Singh J. Juneja
302 ITR 63 · 2008 · High Court
147
citing judgments

When unaccounted receipts or suppressed sales are detected and books of account are rejected under Section 145(3), additions to income must be restricted to the profit element embedded in such transactions, not the entire transaction value. This profit element is to be estimated by considering the assessee's regular profit ratio as per books of account.

Vijay Trading Co. v. ITO
388 ITR 377 · 2016 · High Court
119
citing judgments

When purchases are found bogus, only the profit element embedded therein, and not the entire purchase value, can be added to the assessee's income.

NK Proteins Ltd. v. DCIT
292 CTR 354 · 2017 · Supreme Court
115
citing judgments

When purchases are unverifiable or alleged to be bogus, only the profit element embedded in such transactions is taxable, not the entire purchase amount; the onus lies on the assessee to prove the genuineness of the transactions.

Judgments citing profit element

Kokan Mercantile Co Op Bank Ltd, Mumbai vs. DCIT 17(1), Mumbai

In the result, the appeal is partly allowed

ITA 2729/MUM/2015[2010-11]Status: DisposedITAT Mumbai16 May 2018AY 2010-11

Bench: Shri Saktijit Dey () & Shri N.K. Pradhan () Assessment Year: 2010-11 Kokan Mercantile Coop. Dy. Cit-Range-20(2) Bank Ltd. Harbour Crest, Vs. Piramal Chambers, Mazagaon T.T. Mumbai- Lalbaug, Mumbai- 400010. 400012. Pan No. Aaaak2527P Appellant Respondent Assessee By : None Revenue By : Mr. Anoop Hiwase, Dr Date Of Hearing : 10/05/2018 Date Of Pronouncement : 16/05/2018

For Appellant: NoneFor Respondent: Mr. Anoop Hiwase, DR
Section 143(3)Section 14A

Portfolio Management Schemes (PMS), the fee charged ranges between 2 and 2.5 per cent of the portfolio value which would be inclusive of a profit element for the portfolio manager. While the fixed administrative expenses were excluded on the ground that in the case of a large corporate taxpayer they

Shyamdhar S. Mishra, Mumbai vs. DCIT 13(2), Mumbai

The appeals of the assessee are partly allowed

ITA 4314/MUM/2016[2011-12]Status: DisposedITAT Mumbai15 May 2018AY 2011-12

Bench: Shri Joginder Singh & Shri Manoj Kumar Aggarwal

Section 133(6)Section 147

sell the finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this court Shyamdhar S. Mishra in the case of Sanjay Oilcake Industries

Shyamdhar S. Mishra, Mumbai vs. ITO 13(2)(3), Mumbai

The appeals of the assessee are partly allowed

ITA 4313/MUM/2016[2010-11]Status: DisposedITAT Mumbai15 May 2018AY 2010-11

Bench: Shri Joginder Singh & Shri Manoj Kumar Aggarwal

Section 133(6)Section 147

sell the finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this court Shyamdhar S. Mishra in the case of Sanjay Oilcake Industries

M/S.Us Technology Resources P. Ltd, Trivandrum vs. The DCIT, Trivandrum

In the result, the appeal for assessment year 2011-2012

ITA 475/COCH/2016[2012-13]Status: DisposedITAT Cochin11 May 2018AY 2012-13

Bench: Shri Chandra Poojari, Am & Shri George George K, Jm

For Appellant: Sri.Raghunathan S., AdvocateFor Respondent: Sri. Santham Bose, CIT-DR
Section 144C(5)Section 190Section 194JSection 234BSection 40Section 92C(3)

this query, it was informed vide letter dated 04/02/2016 that the payments are in the nature of pure reimbursement and that there is no profit element in those payments. Further, they had stated that the portion pertaining to salary and other allowance claimed to be reimbursement were directly made ... Mumbai Tribunal held that where the cost of services is charged and recovered by way of reimbursement, even without any profit element, TDS will be applicable. In case of Cochin Refineries (1996) 222 ITR 354 (Ker.), HNS VSAT Inc 95 ITD 157 (Del ITAT) and Hindalco

M/S.Us Technology Resources P. Ltd, Trivandrum vs. The ACIT, Trivandrum

In the result, the appeal for assessment year 2011-2012

ITA 134/COCH/2016[2011-12]Status: DisposedITAT Cochin11 May 2018AY 2011-12

Bench: Shri Chandra Poojari, Am & Shri George George K, Jm

For Appellant: Sri.Raghunathan S., AdvocateFor Respondent: Sri. Santham Bose, CIT-DR
Section 144C(5)Section 190Section 194JSection 234BSection 40Section 92C(3)

this query, it was informed vide letter dated 04/02/2016 that the payments are in the nature of pure reimbursement and that there is no profit element in those payments. Further, they had stated that the portion pertaining to salary and other allowance claimed to be reimbursement were directly made ... Mumbai Tribunal held that where the cost of services is charged and recovered by way of reimbursement, even without any profit element, TDS will be applicable. In case of Cochin Refineries (1996) 222 ITR 354 (Ker.), HNS VSAT Inc 95 ITD 157 (Del ITAT) and Hindalco

At&S India Private Limited vs. D.C.I.T., Circle-11(1), Kolkata

In the result, appeal filed by the assessee, is allowed

ITA 77/KOL/2017[2012-13]Status: DisposedITAT Kolkata11 May 2018AY 2012-13

Bench: Shri A. T. Varkey, Jm &Dr. A.L.Saini, Am आयकरअपीलसं./Ita No.77/Kol/2017 ("नधा"रणवष" / Assessment Year: 2012-13) At & S India (P) Ltd. Vs. D.C.I.T, Circle-11(1), Kolkata

For Appellant: Smt. Rituparna Sinha, ARFor Respondent: Shri G. Mallikarjuna, CIT(DR)
Section 143(3)Section 144CSection 37Section 92C

Assessment Year: 2012-13 allocated to the parties to the aforesaid agreement using appropriate allocation keys mentioned in the CCA without adding any profit element thereto. The team formed under the CCA taking staff from all the group companies, was responsible for development of market / customer base for the group ... shared information technology services under the CCA during the relevant financial year. As the aforesaid transactions constituted reimbursement of actual cost without any profit element having been included therein, the assessee applied the CUP Method for determining the arm's length, nature of the aforesaid transactions. The assessee filed submissions

Asst CIT 27(2), Navi Mumbai vs. Polyplast & Paper Product, Mumbai

In the result, Revenue’s appeal is partly allowed and the assessee’s appeal is dismissed

ITA 1024/MUM/2016[2011-12]Status: DisposedITAT Mumbai11 May 2018AY 2011-12

Bench: Shri Saktijit Dey, Jm & Shri N. K. Pradhan, Am आयकर अपील सं./I.T.A. No.1024/Mum/2016 ("नधा"रण वष" / Assessment Year: 2011-12) The Asst. Cit-27(2) M/S. Polyplast & Paper Product, Room No. 420, 4Th Floor, 322/9, Trimurti Housing Society, बनाम/ Tower No. 6, Vashi Railway Station Hingwala Lane, Ghatkopar (E), Complex, Vashi, Mumbai-400 077 Vs. Navi Mumbai-400 703 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaefp 7401 Q (Revenue) : (Assessee) आयकर अपील सं./I.T.A. No.1241/Mum/2016 ("नधा"रण वष" / Assessment Year: 2011-12) M/S. Polyplast & Paper Product, The Asst. Cit-27(2) Room No. 420, 4Th Floor, 322/9, Trimurti Housing Society, बनाम/ Hingwala Lane, Ghatkopar (E), Tower No. 6, Vashi Railway Mumbai-400 077 Station Complex, Vashi, Vs. Navi Mumbai-400 703 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaefp 7401 Q (Assessee) : (Revenue) : Shri Y. K. Bhaskar Revenue By Assessee By : Shri Anuj Kisnadwalla सुनवाई क" तार"ख / : 07.05.2018 Date Of Hearing घोषणा क" तार"ख / : 11.05.2018 Date Of Pronouncement M/S. Polyplast & Paper Product आदेश / O R D E R Per Saktijit Dey, J. M.: The Afore-Said Cross Appeals Arise Out Of Order Dated 30.12.2015 Of The Ld. Commissioner Of Income Tax (Appeals)-25, Mumbai Pertaining To The Assessment Year 2011-12. 2. The Common Issue Arising For Consideration In These Appeals Pertain To The Decision Of The Ld. Commissioner Of Income Tax (Appeals) In Deleting/Sustaining Part Of The Addition Made By The Assessing Officer On Account Of Alleged Bogus Purchases.

For Appellant: Shri Anuj Kisnadwalla
Section 133(6)Section 69C

open market and in the grey market on account of sales tax, etc. Therefore, the ld. Commissioner of Income Tax (Appeals) opined that only profit element embedded in the transaction could be brought to tax. Noticing that the assessee has disclosed gross profit rate of 1.5% for the year under ... purchased the goods from grey market, thereby avoiding the payment of sales tax. That being the case, in our considered view, only the profit element embedded in such purchases, alleged to be bogus, has to be added to the income of the assessee. That being the case, the question which

ITO 19(1)(2), Mumbai vs. Babulal U Munot, Mumbai

In the result, the appeal filed by the revenue is hereby ordered to be dismissed

ITA 4506/MUM/2015[2010-11]Status: DisposedITAT Mumbai11 May 2018AY 2010-11

Bench: Shri Rajendra, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.4506/Mum/2015 (निर्धारण वर्ा / Assessment Year: 2010-11) The Ito-19(1)(2), Mumbai, बिधम/ Shri Babulal U Munot 2Nd Floor, Matru Mandir, Prop. M/S. Steel Samrat Vs. (India) Flat No. 1901-A, 19Th Tardeo Road, Mumbai- 400007 Floor, Shreepati Tower, A Wing, Tatya Gharpure Path, Girgaon Mumbai-04 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aftpm5429H (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Revenue By: Shri T. A. Khan (Dr) Assessee By: None सुनवाई की तारीख / Date Of Hearing: 26.03.2018 घोषणा की तारीख /Date Of Pronouncement: 11.05.2018 आदेश / O R D E R Per Amarjit Singh, Jm: The Revenue Has Filed The Present Appeal Against The Order Dated 15.05.2015 Passed By The Commissioner Of Income Tax (Appeals) -30, Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y.2010- 11. 2. The Revenue Has Raised The Following Grounds: - “(1) Whether, On The Facts & In The Circumstances Of The Case & In Law, The Ld. Cit(A) Has Erred In Restricting The Addition To The Extent Of 7.5% Of Non-Genuine Purchase Claimed By The Assessee A.Y.2010-11

For Appellant: NoneFor Respondent: Shri T. A. Khan (DR)
Section 133(6)Section 143(1)Section 143(2)Section 69C

cloth and sell finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax This was the view of this Court in the case of Sanjay Oilcake Industries ... Court held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessor’s income and as such no question of law arose in such estimation. While

Sachin Laxman Jangid, Thane vs. ITO WD 3(3), Thane

The appeal of the assessee is partly allowed

ITA 1071/MUM/2016[2009-10]Status: DisposedITAT Mumbai10 May 2018AY 2009-10

Bench: Shri Joginder Singh & Shri Manoj Kumar Aggarwalassessment Year: 2009-10 Shri Sachin Laxman Jangid, Income Tax Officer, Porp. Sachin Construction, Ward-3(3), बनाम/ 1, Mandelia House, Wagle Ind. Estate, Vs. Ramesh Pradhan Road, Thane (W)-400604 Naupada, Thane-400602 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No. Adbpj0867C "नधा"रती क" ओर से / Assessee By Shri M.Subramanian Shri M.V. Rajguru-Dr राज"व क" ओर से / Revenue By 10/05/2018 सुनवाई क" तार"ख / Date Of Hearing: 10/05/2018 आदेश क" तार"ख /Date Of Order:

Section 147

sell the finished goods. In that view of the matter, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. This was the view of this court in the case of Sanjay Oilcake Industries

Jitendra Shivjibhai Patel, Mumbai vs. Income Tax Officer 27(1)(5), Mumbai

In the result, the appeal of the appellant is partly allowed

ITA 391/MUM/2018[2010-11]Status: DisposedITAT Mumbai09 May 2018AY 2010-11

Bench: Sri Mahavir Singh

For Appellant: Ruchi M Rathod, ARFor Respondent: P.R. Chauhan, DR
Section 143(3)Section 69C

circumstances of the case and the judicial pronouncements cited above, what can be disallowed or taxed in the instant case, is the excess profit element embedded in such purchases shown to have been made from aforesaid parties. As narrated earlier, the AO in this case has held that the parties

Jitendra D. Shah, Mumbai vs. Income Tax Officer 27(1)(5), Mumbai

In the result, the appeal Assessee is partly allowed

ITA 759/MUM/2018[2009-10]Status: DisposedITAT Mumbai07 May 2018AY 2009-10

Bench: Sri Mahavir Singh

For Appellant: Dharmil Jhaveri, ARFor Respondent: V Vidhyadhar, DR
Section 133(6)Section 143(3)

circumstances of the case and the judicial pronouncements cited above, what can be disallowed or taxed in the instant case, is the excess profit element embedded in such purchases shown to have been made from aforesaid parties. As narrated earlier, the AO in this case has held that the parties ... view of the above discussed factual man-ic and precedents, I am of the view that the AO is justified in estimating the profit element calculated @ 12.3% embedded in impugned purchases of Rs. 1.67 crore shown from the alleged hawala parties and adding the same to the total income returned

Mokalsar Steel Private Limited, Mumbai vs. Income Tax Officer 5(2)(3), Mumbai

In the result, the appeal Assessee is partly allowed

ITA 720/MUM/2018[2011-12]Status: DisposedITAT Mumbai07 May 2018AY 2011-12

Bench: Sri Mahavir Singh

For Appellant: NoneFor Respondent: V Vidhyadhar, DR
Section 143(3)Section 147

Simit P Sheh (2013) 356 ITR 451 (Guj HC), not the entire purchase price but only profit element embedded in such purchases can be added to the income of the assessee. However, the details of payments made for purchases during AY 2011-12 have not been brought on record

Mubarak Hussain Shaikh, Mumbai vs. Income Tax Officer, Ward 26(3)(4), Mumbai

In the result, the appeal Assessee is partly allowed

ITA 644/MUM/2018[2009-10]Status: DisposedITAT Mumbai07 May 2018AY 2009-10

Bench: Sri Mahavir Singh

For Appellant: Awadhesh Kumar, ARFor Respondent: V Vidhyadhar, DR
Section 133(6)Section 143(3)

confirmed the action of the AO by observing in Para 3.3.15 as under: - “3.3.15 In the instant case, the AO has only added the profit element embedded in the aforesaid bogus purchases @ 25% which seems to be justified in view of the nature of the business of the appellant

ACIT, Ludhiana vs. M/S Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 575/CHANDI/2009[2005-06]Status: DisposedITAT Chandigarh04 May 2018AY 2005-06

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance ... profits of the business. What can be included in the profits of the business for working out the relief u/s 80HHC is the profit element in respect of sales of scrap and not the total sales of scrap. On the facts of the case, the profit element on sale

M/S Vardhman Textiles Ltd., Ludhiana vs. Addl. CIT, Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 528/CHANDI/2009[2005-06]Status: DisposedITAT Chandigarh04 May 2018AY 2005-06

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance ... profits of the business. What can be included in the profits of the business for working out the relief u/s 80HHC is the profit element in respect of sales of scrap and not the total sales of scrap. On the facts of the case, the profit element on sale

ACIT, Ludhiana vs. M/S Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 981/CHANDI/2008[2004-05]Status: DisposedITAT Chandigarh04 May 2018AY 2004-05

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance ... profits of the business. What can be included in the profits of the business for working out the relief u/s 80HHC is the profit element in respect of sales of scrap and not the total sales of scrap. On the facts of the case, the profit element on sale

Vardhman Textiles Ltd., Ludhiana vs. JCIT, Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 938/CHANDI/2008[2004-05]Status: DisposedITAT Chandigarh04 May 2018AY 2004-05

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance ... profits of the business. What can be included in the profits of the business for working out the relief u/s 80HHC is the profit element in respect of sales of scrap and not the total sales of scrap. On the facts of the case, the profit element on sale

ACIT, Ludhiana vs. M/S Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 530/CHANDI/2008[2003-04]Status: DisposedITAT Chandigarh04 May 2018AY 2003-04

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance ... profits of the business. What can be included in the profits of the business for working out the relief u/s 80HHC is the profit element in respect of sales of scrap and not the total sales of scrap. On the facts of the case, the profit element on sale

Vardhman Textile Ltd., Ludhiana vs. ACIT, Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 475/CHANDI/2008[2003-04]Status: DisposedITAT Chandigarh04 May 2018AY 2003-04

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance ... profits of the business. What can be included in the profits of the business for working out the relief u/s 80HHC is the profit element in respect of sales of scrap and not the total sales of scrap. On the facts of the case, the profit element on sale

ACIT, Ludhiana vs. Vardhman Textiles Ltd., Ludhiana

In the result appeals of the Assessee and the Revenue are partly allowed

ITA 691/CHANDI/2007[2002-03]Status: DisposedITAT Chandigarh04 May 2018AY 2002-03

Bench: Smt. Diva Singh & Dr. B.R.R. Kumarassessment Year: 2002-03

For Appellant: Shri. Subhash AggarwalFor Respondent: Sh. Ashish Abrol
Section 10BSection 14ASection 80H

business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance ... profits of the business. What can be included in the profits of the business for working out the relief u/s 80HHC is the profit element in respect of sales of scrap and not the total sales of scrap. On the facts of the case, the profit element on sale