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2013 (5) TMI 307 - ITAT KOLKATAEnhancement of the gross profit rate - Whether CIT(A) erred by deleting the addition amount made by invoking provision of section 145(3) - Held that:- CIT(A) observed that the basis adopted by the AO for consequent enhancement of the gross profit rate was itself faulty and can not be considered for assumption of computing correct income in accordance with the provision of Income tax Act - there was no basis for the AO to reject the book result by invoking the provision of section 145(3). DR has not been able to furnish any contrary material to that effect on perusal of the statements and the method of accounting adopted that the books of account reflecting the true and correct income is derived on the basis of purchases, sales and the valuation of closing stock do not require any further deliberation. The ground raised by the Revenue stands dismissed. Disallowance u/s 40(a)(ia) - Held that:- Evidence in respect of the deduction of TDS was made known to the AO who observed that the TDS has been deposited now does not require disallowance u/s 40(a)(ia), in so far as 40(a)(ia) allows deposition of such tax before the due date of filing of the return when the assessee claimed that it had filed the return of income on time in accordance with the provision of section 139(1) of the Act. In favour of assessee Disallowance of of freight charges - identity not proved and verification from angle of violation of non deduction of tax at source - Held that:- AO himself has agreed to the proposition that the said assumption of freight charges to trucks of more than Rs.20,000/- does not apply to the assessee's facts and in so far as the same has come into effect from 1st July, 2007 which the CIT(A) had also acknowledged but as a liberty that the assessee had admitted that there were errors in deduction of tax at source to protect the interest of the revenue confirmed 40% thereof which we are unable to satisfy ourselves either way as mentioned above. There cannot be proportionate disallowance either u/s 40(a) (ia) or 40A(3) which expenses disallowances have to be made on specific items of expenditure cannot be ruled out and the confusion in the minds of the authorities below therefore requires no further deliberation. The ground raised by the assessee is allowed. Confirmation u/s 40A(3) on payments made to M/s. Bharat Goods Transport and Joy Jharkhand Road Lines - Held that:- AO having categorically given a finding that the number of trucks with their registration number and the individual freight paid to them under no circumstances were paid exceeding Rs.20,000/-, thus the provision of section 40A(3) has been considered by the CIT(A) holding a view that such payments in a single day was not to be applied as per the provision of the Income Tax Act itself renders this addition worthy for deletion. The ground raised by the assessee stands allowed. Addition in respect of low drawings - CIT(A) deleted the addition - Held that:- Addition of Rs.36,000/- deleted against drawings already claimed at Rs.85,000/- does not justify the addition in so far as the AO has also not pointed out whether the addition of Rs.36,000/- would justify the income returned by the assessee to acclaim a status for low drawings. The CIT(A) has deleted the same as no material has been brought on record by the AO. In favour of assessee.
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