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2011 (1) TMI 14 - AT - Income TaxLoss on account of sale of opening stock - treatment as undisclosed investment u/s 69 - the investments are recorded in the books of account - Disallowance of salary expenses and telephone expenses - Held that: - (i) we do not find any reason to doubt the genuineness of the sales being effected at loss after five years of holding the chemicals. There is no gain saying that chemicals loose their quality with the passage of time and, therefore, whatever assessee could realize by sale of the same, could not be doubted. We, accordingly, set aside the order of the learned CIT (A) and allow the ground of appeal raised by the assessee. - (ii) regarding salary, the assessee could not give the details of services rendered by these employees - onus is on the assessee to substantiate its claim and when it fails to do the same, the disallowance is called for - salary expenses partly allowed - (iii) telephone in the name of director - 50% expenses allowed - (iv) merely because a liability is existing in the books for over three years would not lead to the conclusion that the liability has ceased to exist and, therefore, the same could not be taxed as deemed profit u/s 41(1)
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