Only Profit element can be added to income, not sales amount

Last updated: 12 December 2022
Quick Summary
The Income Tax Appellate Tribunal (ITAT) has clarified that for tax purposes, only the profit element of sales should be considered income, not the entire sales amount. This ruling came in a case where a taxpayer's entire sales figure was initially added to their income due to a discrepancy between profit and loss accounts and VAT returns. The ITAT found that even in cases of consignment sales, only the embedded profit could be taxed. Furthermore, the tribunal allowed interest paid on loans used for business purposes as a deductible expense.

Court :
ITAT Jaipur

Brief :
The Income Tax Appellate Tribunal, Jaipur ("the ITAT") in the case of Mr. Nikhil Garg v. Income Tax Officer (ITA No. 180/JP/2018) dated February 14, 2022 held that in no case the entire sales amount can be treated as income and only the profit embedded should be treated as income for the purpose of computation of income under Income Tax Act, 1961 ("the IT Act").

Citation :
ITA No. 180/JP/2018

Daily Limit Reached

You have reached your daily limit of 2 Free Judgements

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?
  • No Ads
  • WhatsApp Broadcasts
  • Daily E-Newsletter
  • Unlimited Judgements Access
BEST VALUE
2 YEAR PLAN
3,499
(Inclusive of GST)
1 YEAR PLAN
1,999
(Inclusive of GST)
View all CCI PRO benfits

Already a PRO member? Login here for an ad-free experience.

 

Bimal Jain
Published in Income Tax
Views : 323
Share Report Abuse
Comments


Recent Judgments :

  1. Forest Development Tax Demand, Collection and Refund Subject to Final Outcome of Pending Cases
  2. SC : Extended Limitation Cannot Be Invoked Where Department Was Aware of Valuation Facts
  3. SC : Selling Shares While in Possession of UPSI Constitutes Insider Trading Even if No Profit Is Made
  4. SC : Laser Imagers Compatible with Machines Under Different Tariff Headings Classifiable Under CTH 9033
  5. Education Consultancy Services to Foreign Universities Not Intermediary Services; Refund of IGST on Export of Services Allowed
  6. Penalty Cannot Be Confirmed Beyond What is Specified in Statutory Form GST DRC-01
  7. Non-Supply of Field Visit Report Vitiates Rejection of Revocation Application
  8. Alternative Remedy before GSTAT to be Exhausted Despite Allegation that Adjudication Travelled Beyond SCN
  9. ITAT Jodhpur: AO Allows ₹2.61 Crore Deduction under Sections 54EC and 54F; Assessee's Appeal Dismissed as Infructuous
  10. CESTAT Revokes Suspension of Customs Broker Licence for Non-Compliance with Mandatory 15-Day Hearing Requirement

View More Judgments »


Trending Online Classes

view all classess

CCI Pro
Meet our CAclubindia PRO Members
Pro Member CA DamodaramCA DamodaramPro Member Ritesh PanpaliyaRitesh PanpaliyaPro Member PARAS CHHAJEDPARAS CHHAJEDPro Member CA Rahul PatwardhanCA Rahul PatwardhanPro Member Nandkishore VishwakarmaNandkishore Vishwakarma
Subscribe to Pro
Join an elite circle of professionals

Browse by Category