Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (4) TMI 967 - ITAT DELHIRestriction of Gross profit addition – Rejection of books of accounts - Held that:- CIT(A) was right in holding that the rejections of books of accounts is not justified - the AO has not pointed out any particular defect in the book account of the assessee - The sole basis for application of provisions of Sec. 145(3), is the purchases and sales to sister concern is not at arm’s length - Instead of examining these transaction u/s 40A(2) of the Act the AO rejected the books of account and estimated the gross profits which is not correct - the profit has to be arrived at based on the books of accounts - the deletion of the CIT(A) of profits estimated based on applying G.P. rate of 6% by AO and consequent addition is upheld - the assessee has not come up in appeal against the addition of Rs 10,00,02,125 - the CIT (A) has not confronted the AO with the details of transactions furnished by the assessee with the sister concern – thus, the matter is remitted back to the AO for fresh verification – Decided in favour of Revenue. Disallowance on account of interest paid – Held that:- The assessee has sufficient interest free funds - When there are both interest free funds and borrowed funds, it has been held CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - when interest free funds are available, then the presumption would be that such interest free funds were invested or advanced as interest free loans/advances - If the presumption is applied to the facts of this case then no disallowance can be made - the borrowing were a cash credit against stock - the presumption would be that the funds borrowed from the bank was utilized for the purposes for which it is sanctioned by the bank – thus, the disallowance is set aside – Decided in favour of assessee.
|