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2016 (9) TMI 646 - ITAT JAIPURNon-deduction of tax in respect of interest paid to non-banking finance companies - Held that:- Since there are conflicting views of the Hon’ble High Courts, therefore, the view favourable to the assessee is being adopted by respectfully following the judgment of the Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd (1973 (1) TMI 1 - SUPREME Court ). The fact whether the amount was outstanding requires verification at the end of the AO hence the order of the ld. CIT (A) is set aside. The issue is restored to the file of the AO to verify whether any amount is payable on the last date of financial year in the balance sheet and in case he finds that no amount is payable on the last day of the financial year, he would delete the disallowance. Addition on trading advances - Held that:- We find that the advances are in the nature of trade advances. The AO has already rejected the books of account and made the addition on account of suppressed sales. The Hon’ble Jurisdictional High Court in the case of G.K. Contractor [2009 (1) TMI 840 - RAJASTHAN HIGH COURT] has held that when estimated profit is considered after rejecting assessee’s books of accounts by invoking the provisions of section 145(3) of the Act, no separate addition can be made even u/s 68 of the Act, even though the assessee has failed to discharge the onus of proof in explaining the amount shown in the books of accounts as ‘market outstanding’. Respectfully following the same, we direct the AO to delete the disallowance. Addition on sales estimation - Held that:- The assessee has not challenged rejection of books of accounts. The AO has made addition on the basis of the difference in sales. As per the material consumption, the AO estimated the sales at ₹ 1,56,09,536/- and as per books of accounts, the sales were reflected at ₹ 1,32,70,543/-. We find that there is no scientific reason for such estimation. The AO has not considered the past history. Therefore, after considering the totality of the facts and considering the past history of the assessee, we restrict the disallowance to the extent of ₹ 15,00,000/-. The AO is directed to restrict the addition to the extent of ₹ 15,00,000/-. This ground of the assessee is partly allowed.
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