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2015 (12) TMI 1564 - AT - Income TaxRejection of books of accounts - trading addition - Held that:- During the course of survey, the diary as Annexure A-8 was found and impounded by the ld Assessing Officer where number of transactions were found unrecorded. The stock register has not been maintained by the assessee. Therefore, correct income of the business cannot be deduced in absence of rejection of books of account. Accordingly, the Assessing Officer was right in applying Section 145(3) of the Act. After rejecting the books of account, the ld Assessing Officer estimated the sale at ₹ 5.5 crores against ₹ 4,99,54,718/- and applied the same G.P. rate, which has been disclosed by the assessee, which is reasonable and estimated on the basis of discrepancies found during the course of survey. The assessee’s alternative argument is also not acceptable as the assessee has not correlated with the disclosure of excess stock with the entries made in the Annexure-A-8. The excess stock was in form of furniture. However, this was the discrepancy on unaccounted sale made by the assessee. There was no disclosure on account of excess cash during the course of survey. Accordingly we confirm the order of the ld CIT(A) on both the grounds. Disallowance U/s 40 (a)(ia) - Held that:- The interest of ₹ 3,21,952/- was not payable as on 31/3/2009, therefore, the case laws referred by the assessee is squarely applicable. However, remaining interest amount of ₹ 27,81,388 was paid to M/s India Bulls Bank ltd. against the purchase of machinery. The ld CIT(A) had rightly capitalized the interest payment with the cost of plant and machinery and accordingly, was allowed depreciation on it. The assessee’s argument that there was no extension of existing business during the year is not substantiated with any evidence when interest cost is 27.81 lacs, then addition of assets is in crores, therefore, it is extension of business. Accordingly, we uphold the order of the ld CIT(A).
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