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2016 (2) TMI 1093 - AT - Income TaxAddition u/s 36(1)(iii) - Held that:- From the perusal of the ledger account of M/s J.V. Steel Traders, it is quite clear that it is a regular supplier of the assessee since 1.4.2005. The purchases were being made and payments were given in regular course of business. Even the advance given during the year is an advance against purchases. It is also not in dispute that of M/s J.V. Steel Traders is not related to the assessee. The observations of the CIT (Appeals) that the item sold by of M/s J.V. Steel Traders is not a unique item is not relevant to the issue in question. It is the prudence of businessman how to run his business, the department cannot dictate its terms as how to deal with the parties. It is none of the department’s concern as to when the advance has to be given to supplier and when not. There is no need for the learned CIT (Appeals) to ask the assessee the evidence to prove the ‘other reasons’ for giving advances. There may be thousands of reasons for giving such advances, which the assessee is not obliged to answer to the department, it in his business acumen according to which he takes these business decisions. It is not in dispute that M/s J.V. Steel Traders is a regular supplier and advances have been given during the regular course of business. Regular debit and credit entries are appearing in the ledger account. The purchases were made in the earlier as well as subsequent years. These reasons are enough to prove that advance was made out of commercial expediency. - Decided in favour of assessee.
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