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2017 (4) TMI 107 - ITAT MUMBAIBogus purchases - CIT-A retaining part addition - Held that:- the assessee has made purchases from three parties and these three parties were declared as bogus Hawala dealers and the assessee was unable to produce these three parties before the Assessing Officer. The assessee has made payment by cheque to these parties and thus the purchases have been made by the assessee. Moreover, the assessee has sold this much goods which he has purchased from the above parties therefore, it is rightly concluded that the purchases shown by the assessee is not in doubt, but the assessee might have not purchased from these parties who he might have purchased it from the grey market. Therefore, we are of the view that entire purchases cannot be added to the total income of the assessee Addition on account of capitalization of interest in respect of capital expenses incurred - Held that:- As seen from the record that credit obtained by the assessee firm Canara Bank has been utilized for financing overseas export. Similarly, cash credit facility of ₹ 36 lakh have been utilized for day to day business. Therefore, the entire interest expenditure cannot be disallowed. The assessee himself has capitalized the expenditure of ₹ 6,96,075/- as per the working given by the assessee. The CIT(A) has not pointed out any defect in the working given before CIT(A) therefore, we direct the AO to capitalize interest expenditure of ₹ 6,96,075/- in the result ground of assessee’s appeal is allowed. Disallowance of ‘Administration and Selling expenses’ - Held that:- The total administrative expenses for the year ended 31/03/2010 was ₹ 1,60,40,916/-. This year the expenditure has increased. The total expenditure had increased by 10% as against this sales have increased by 72.93%. All the major expenses have been shown under the heading ‘Administration and selling expenses’. Such expenses are advertisement and sales promotion freight on sales, freight and other commission on sales. Thus we are of the view that there is no scope of estimating the expenditure, therefore, we deleted the same. - Decided in favour of assessee
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