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2016 (4) TMI 1324 - AT - Income TaxGenuineness of remuneration paid to Managing Director - extra-ordinary increase the remuneration - Disallowance u/s 40A(2)(b) as excessive and unreasonable amount paid - Held that:- section 40A(2)(b) disallowance is not to be invoked when the payees already stand assessed at maximum rate. The Central Board of Direct Taxes has also issued a circular on 06-07-1968 directing the assessing authority not to invoke the impugned disallowance in absence of any tax evasion being noticed. - Decided against the revenue. Rejection of books of accounts - Estimation of income - reduction of GP @44.1% as compared to 49.46% in the previous year - Held that:- assessee had responded to all of the scrutiny show cause notices. The Revenue does not point out either any mis- reading of evidence or perversity in the lower appellate findings under challenge. We do not find any error in the CIT(A)’s action under challenge deleting the impugned addition. - Decided in favor of assessee. Addition of notional income - Notional versus actual interest on delayed refund of security deposits placed with its associate enterprise - deposited in lieu of availing usages rights on industrial land for carrying out manufacturing activities. - The assessee did not pay any rent except this lumpsum refundable amount. - Held that:- he assessee has already received its security amount latest by 23-08- 2007 relevant for assessment year 2008-09 only and not to the impugned assessment year 2009-10. We hold in these facts that the deemed interest addition could not have been made in the impugned assessment year as no such interest accrues or arises in financial year 2008-09. We accept assessee’s arguments against this interest addition and reject those raised at Revenue’s behest. - Decided in favor of assessee. Restriction on depreciation claim - bifurcation of value of the land - AO observed in assessment order that the building/bungalow was very old. No deprecation is allowable on the plot land - Held that:- Both the lower authorities discuss the location factor of the land and dilapidated state of the bungalow/building in question in arriving at the impugned value. There is no material placed on record dispelling the same - Decided against the assessee.
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