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2012 (11) TMI 793 - AT - Income TaxAddition made on account of reduction in the Gross Profit rate – Held that:- AO did not find any defect in the books of account maintained by the assessee nor did he find false with the explanation furnished by the assessee with regard to the deduction in the gross profit - AO has reached the conclusions without taking into account the quantity details furnished by the assessee along with the Tax audit report - book results can be rejected only if it is shown that the books maintained by the assessee are not reliable for deducing correct income - AO has not given any such finding – addition deleted – in favor of assessee Taxability of Sales tax subsidy received by the assessee – Held that:- Subsidy has been received from the Government for expansion of running business - assessee treated it as “Capital subsidy”, where as the AO considered it as “Revenue subsidy” - it is an incentive granted to the assessee under 1993 Package Scheme. The incentive has been provided for making addition fixed capital investment in building and plant and machinery – claim of assessee allowed Disallowance of payment made to Sabarmati Gaushala for purchase of Semen doses – alleged that the assessee could not prove any business connection in incurring this expenditure – Held that:- Appellant has incurred legitimate expense towards purchase of semen doses, which is veterinary item. These semen is injected to get the best quality of breed of milk bearing cattle - expenditure incurred has direct nexus with the objectives of the appellant society – in favor of assessee Disallowance of legal expenses – alleged that assessee could not file confirmation letter and also the basis for charging such a high amount – Held that:- Claim of Rs.24.50 lakhs pertaining to legal expenses was disallowed, the disallowance of Rs.19.50 lakhs has led to double addition which is not permissible under the Act. The Ld. CIT (A) was convinced with the submissions of the assessee and accordingly deleted addition of Rs.19,50,000/-, as it has led to double addition of the same amount - DR, however, submitted that the said claim of double addition needs verification - matter set aside to the AO for verification Disallowance of consultancy expenses – Held that:- AO disallowed the above said claim for the reason that the assessee could not file confirmation letter from the payees and also the basis of the fee charged by M/s Chirayu Consultancy - assessee filed copies of bill, confirmation letter, copy of payment voucher and copy of acknowledgement of return filed by them. The assessee claims that the said professionals have directly sent these documents to the assessing officer - AO has made the impugned addition for want of confirmation letters, which means that the said documents might not have reached the AO in time – matter remanded to AO
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