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2015 (7) TMI 994 - AT - Income TaxAddition under section 41(1) on account of cessation of liability - CIT(A) deleted the addition - Held that:- The addition was deleted by CIT(A) on the basis that if these additions are made, the net profit rate of the assessee will be 2.38% as against 1.46% from year to year exhibited in books of account duly audited u/s 44AB and accepted by the Department. We fail to understand this logic of learned CIT(A) that when addition is made u/s 41(1) in respect of cessation of old trading liability, it is not an addition on account of current year’s income but it is on this basis that the liability shown by the assessee in earlier years has ceased to exist in the present year and therefore, it amounts to income of the present year u/s 41(1) of the Act. Under these facts, we feel that the order of CIT(A) is not sustainable on this issue. We, therefore reverse the same and restore that of the Assessing Officer. - Decided in favour of revenue. Disallowance of conveyance and telephone expenditure - possibility of making personal/non business purposes', 'possibility leakages/ inflation', 'absence of supporting evidence', 'not properly vouched' are the reasons for these disallowances - Held that:- The disallowance made by the Assessing Officer is reasonable and not excessive and since the partners of the assessee firm are not having separate personal telephone and vehicles, it is reasonable to assume that the telephone and vehicles were partly used for personal purposes also and therefore, on this issue also, the order of CIT(A) is not sustainable. We reverse the order of CIT(A) and restore that of the Assessing Officer.- Decided in favour of revenue.
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