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2010 (2) TMI 926 - AT - Income TaxAddition on account of suppression of job charges received by the assessee - Assessing Officer observed that on verification of books of account, various defects and discrepancies were noted - shortage of production is worked out on the basis of findings that production for the month of September, 2003 is accepted parameter and if the ratio of the consumption to production for this month is applied, there is a suppression of production for other months - Fallacy lies in comparing the consumption of electricity with production on monthly basis - Held that:- if books of account are to be rejected and even if the income is estimated since almost same result are declared by the assessee, no further addition is called for particularly when the learned Commissioner of Income-tax (Appeals) has applied the gross profit rate of 17 per cent - cloth cannot be processed merely by using electricity, it also requires the consumption of various dyes and chemical and also use of manpower. For all these factors, no adverse finding is given by the Assessing Officer, consumption of intermediate and labour behind this is sufficient for the production achieved by the assessee, Considering all these factors, there is no case of addition as made out by the Assessing Officer, no justification for sustaining the addition as proposed by the Assessing Officer Disallowance of interest expenditure - AO observed that a sum of Rs. 40,00,677 was debited as interest in family members and concern specified under section 40A(2)(b) and the interest paid was more than the net income of the assessee - Assessing Officer held that the assessee had not given any evidence to prove that the deposits obtained from the family members were used for business purposes and not for creating assets - assessee has furnished a table explaining the date of receipt of deposits during the year and utilisation thereof - in respect of the amount borrowed earlier, it was held to be for the purpose of business and interest payable thereof was held as allowable expenditure - deposits received during the year for repayment of old business loan can be considered as amount borrowed for the purpose of business and hence, interest thereon is allowable under section 36(1)(iii) of the Act. Presumption of the Assessing Officer is that the deposits is taken for the purpose of placing fixed deposits is without any basis, no justification for upholding disallowance of interest Disallowance of expenses - AO disallowed various expenses like conveyance, auto fair, tea, coffee, cold drink, water expenses, etc - AO held that only self generated vouchers were prepared and no bills are provided in respect of such expenses - Commissioner of Income-tax (Appeals) upheld the disallowance being registration charges of car by treating the same as capital expenditure and in respect of other expenses, was held disallowable – Held that:- expenses as considered as the Assessing Officer are such in respect of which only self made vouchers can be prepared. The same cannot be of pucca bill, Since, the vouchers contained the details as to the persons in receipt of the amount and purposes for which the expenses are incurred, the same being in the course of business are allowable as such, order of the learned Commissioner of Income-tax (Appeals) needs no interference, appeal of the Revenue is dismissed
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