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2012 (10) TMI 395 - AT - Income TaxAddition made on account of Credit note – Weather credit notes are account for in books on accrual or received basis – Held that:- Even on accrual basis, the amount can be accounted for only when credit note is received. The amount becomes debt to the dealers as and when the credit note is received in books of assessee. Therefore what they receive from Telecom Company as a credit note is for dealer. In such a situation nothing has been added in the hands of the assessee as the benefit was intended for dealers and not for him. Appeal decide in favor of assessee Disallowance of interest free loan – Assessee has also taken & also provided interest free loan – AO issue show cause notice to assessee to explain why interest liability should not be disallowed – Assessee did not reply - Held that:- As interest free amount ( capital plus loan) was in possession of assessee which is more than amount of loan given. Therefore it cannot be said that the money was lent from borrowed funds and not from interest free funds. Decision in favor of assessee Disallowance of expense u/s 37 – Held that:- As AO have a clear finding in respect of staff welfare expenses and travelling and local conveyances expenses use by assessee and his family. Treat it as personal expenditure and disallowed the same. No verification has been made in respect of the personal user of telephone and petrol expenses and these expenses are not fully vouched therefore allowed. Appeal partial allowed.
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