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2015 (9) TMI 1002 - AT - Income TaxAddition on account of job charges income - fall in N.P. rate for job charges income - CIT(A) allowed part relief - Held that:- The Assessing Officer has applied the average net profit rate of 76.23% being average of last two years. In this regard, it was the claim of the assessee before learned CIT(A) that the assessee has not maintained the books of account of job work separately and selling of parts separately. Regarding the reason for fall in net profit rate, it was explained before the Assessing Officer that the assessee has not segregated the travelling and other expenses incurred during providing maintenance services of diesel engine and parts selling business. It is also very important to consider the nature of business of the assessee which is selling and service of diesel engine. In servicing of diesel engine, in the initial years, income may be high because the break-down are less but as the engine grows old, break-down are more resulting into fall in profit of the service provider. Apart from pointing out fall in net profit rate, the Assessing Officer has not pointed out any specific defect in the books of the assessee. It is not the case of the Assessing Officer that the expenses are not supported by bill and vouchers. Considering these facts, we are of the considered opinion that no interference is called for in the order of learned CIT(A) on this issue - Decided against revenue. Addition made on account of disallowance of Commission - CIT(A) allowed part relief - Held that:- A clear finding has been given by CIT(A) that the genuineness of the transaction is justified by the statement of the authorized persons who appeared on behalf of the commission agent. He has also noted that a statement on oath u/s 131 of the Act has been recorded by the Assessing Officer of the Accountant of the commission agent and he has confirmed the services rendered. The present director of the commission agent also appeared before the Assessing Officer but he could not throw any light on this aspect because he was not the director of the commission agent during the period when the transaction took place and the persons who were directors during the relevant period were not available, when te A.O. asked to appear. It is also noted by the Assessing Officer that the payment has been made under an agreement by way of account payee cheque after deducting TDS and the director of the commission agent company as well as accountant of that company have appeared before the Assessing Officer and the transaction was confirmed and no adverse material or adverse statement of these persons is the basis of the action of the A.O. Considering all these facts, we do not find any reason to interfere in the order of CIT(A) on this issue also. - Decided against revenue. Disallowances made under different heads of expenditure debited - CIT(A) allowed part relief - Held that:- Disallowance under the heading ‘travelling expenses’ was deleted by CIT(A) on the basis that nowhere in the order of the Assessing Officer, he has said that the expenses have either not been incurred for business purposes or are personal in nature or capital in nature and therefore, the same are allowable u/s 37 of the Act. We do not find any infirmity in the order of CIT(A) on this issue because there is no specific objection of the A.O. as has been noted by CIT (A) and this finding of CIT (A) could not be controverted by learned DR of the revenue. - Decided against revenue. Disallowance out of conveyance expenses was also deleted by CIT(A) by making the same observation. Similarly the disallowance under the head ‘repairs and maintenance’ was also deleted by CIT(A) by making the same observation. For the same reasons, we do not find any infirmity in the order of CIT(A) on these issues also. Hence, we decline to interfere in the order of CIT (A) on these issues also.- Decided against revenue. Disallowance under the heading repairs and maintenance – others expenses was deleted by CIT(A) by making same observation on page 10 of his order. So is the case regarding disallowance under the head office maintenance expenses. Similarly, the disallowance under the head sales promotion expenses was also deleted by CIT(A) by making same observation. For the same reasons, we do not find any infirmity in the order of CIT(A) on these issues also. Hence, we decline to interfere in the order of CIT (A) on these issues also.- Decided against revenue. Disallowance out of interest expenses made by the Assessing Officer by invoking the provision of ₹ 40A(2)(b) was deleted by CIT(A) on the basis that the interest rate paid by the assessee was 21% for 4 months and 15% for 8 months and it is noted by the Assessing Officer also that even the rate of interest allowable on partner’s capital u/s 40b was 18% up to 01/06/2002, which clearly gives an indication that the rates paid by the assessee did not give any excessive benefit to the person covered u/s 40a(2)(b) of the Act. On this issue also, we do not find any infirmity in the order of CIT(A).- Decided against revenue.
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