Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 2468 - AT - Income TaxAddition u/s 41 - increase in the capital reserve on waiver of loans - Held that:- The correlation of the loans borrowed by the assessee and the purpose for which they were borrowed and the loans waived to the assessee has to be established by the assessee. In the absence of correlation it is not possible to decide the purpose for which the loan has been availed by the assessee. It is only when the purpose of the loan is ascertained it can be decided as to whether the provision of section 41(1) of the Act will be attracted or not. We therefore set aside the order of the CIT(A) in so far as the addition sustained by the CIT(A) and remand the issue to the AO for fresh consideration in the light of the observations made above. The assessee is at liberty to file the required documents to substantiate its case regarding non applicability of the provision of section 41(1) of the Act or section 28(iv) of the Act. In so far as the appeal of the revenue is concerned it is quite clear that from the order of the CIT(A) that the interest which was waived was not claimed as an expenditure by the assessee in the past and therefore the addition of the said sum u/s 41(1) of the Act cannot be sustained. In so far as the applicability of the provision of section 28(iv) of the Act is concerned the benefit in question was not received in kind and therefore the addition on the above said provision cannot be sustained. The decision referred to by the CIT(A) in the impugned order on this issue clearly support the conclusion arrived at by the CIT(A). We therefore do not find any ground to interfere. Consequently the appeal filed by the revenue is dismissed. - Decided in favour of assessee for statistical purposes. Unexplained share application money - Held that:- In the light of the letter of the AO to Saurabjh Agrotech (P) Ltd., a copy of which is placed at pages 32 to 39 of the assessee’s paper book No.2, the additions sustained by the CIT(A) deserves to be deleted. It is clear from the evidence that identity, capacity and genuineness of the transaction of the receipt of share application money of the assessee has been clearly established. In fact the additional evidence in the form of confirmation from the share applicant ought to have admitted by the CIT(A) as additional evidence and in the light of the enquiry carried out by the AO which clearly established the receipt of share application money as genuine, the addition ought to have been deleted. We therefore direct that the addition sustained by the CIT(A) in this regard should be deleted.- Decided in favour of assessee. Disallowance on account of alleged excess consumption of Hexane in Solvent Extraction Plant - Held that:- The AO did not reject the book results before resorting to an estimation of income. For rejecting the book results, the provisions of Sec.145(3) of the Act requires that the Assessing Officer should be not be satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided u/s.145(1) of the Act or accounting standards as notified under Section 145(2) of the Act have not been regularly followed by the Assessee. The AO has to compute income from business accounting to the books of accounts of the Assessee. It is only when the book results are rejected the question of estimation of income arises for consideration. The AO has to specifically point out the defects in the books or incomplete and incorrectness in the books of accounts and call upon the Assessee as to why the books of accounts should not be rejected. The above principle is applicable even when the AO doubts the correctness of the claim of expenditure made in the Profit and Loss Account. The AO has not doubted the purchase of Hexane. He has indulged in a guess work regarding the quantity of Hexane that is to be consumed in the process of manufacture of oil from oil cake. The AO has done this on the basis of a report of an expert. As to whether the report of the expert can be applied to all manufacturers of oil from oil cake and as to whether these are ideal quantity of consumption, is not spelt out in the order of the AO. The entries in the regular books of accounts which are duly audited have not been shown to be suffering from any infirmities. The past history of consumption of Hexane compares favourably with the consumption in the past and the AO has nothing to say about the past history. No such addition has been made in the past. In such circumstances, we are of the view that the addition made by the AO and confirmed by the CIT(A) was without any basis and cannot be sustained. - Decided in favour of assessee.
|