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2016 (3) TMI 1340 - AT - Income TaxDisallowance of alleged inflated purchases of birds, inflated and unproved expenses and alleged undervaluation of closing stock - Held that:- CIT(A) found that proper records of mortality has not been maintained to substantiate its claim of closing stock - the concrete evidence has not been furnished to disallow the ad-hoc addition towards unexplained expenses. Similarly, the basis for addition on account of undervaluation of closing stock is February and March purchases which invariably pertains to chicks less than 45 days old remaining unsold. The assessee has not offered any specific explanation on this aspect except mortality factor. CIT(A) has given partial relief after examining the remand report and the submissions of the assessee and restricted the disallowance to ₹ 5,00,000/- resulting in GP addition of ₹ 5,00,000/-. We find no infirmity in the process of reasoning in arriving at the aforesaid findings of the CIT(A) - decided against assessee Addition u/s 36(1)(iii) - assessee transferred a shed valuing to his brother’s account at the end of the year and shown the amount as a debtor without charging any interest - scope of amendment - Held that:- The contention of the assessee that the shed was constructed with a view to expand existing business remains uncontroverted. Section 36(1)(iii) as relevant for assessment year 2001-02 provides that the amount of interest paid in respect of capital borrowed for the purpose of business or profession. The interest paid for loan utilized whether in capital field or in revenue field is irrelevant consideration. A proviso to section 36(1)(iii) has been inserted by the Finance Act, 2003 w.e.f. 01.04.2004 whereby any amount of interest paid in respect of capital borrowed for acquisition of assets for expansion of existing business or profession upto the date on which such capital asset is first put to use shall not be allowed as deduction. The assessee has incurred the expenditure relevant to assessment year 2001-02 when such proviso was not present in the statute. Therefore, we find no justification in the action of the Revenue in resorting to the disallowance of interest expenses - Decided in favour of assessee Unexplained loan from brother - no proper evidence of availability of loan amount with brother has been brought on record - no records of sale proceeds of crop has been furnished in support of source of amount granted as loan - Held that:- No substance in the premise taken by the CIT(A) in sustaining the addition. The assessee has furnished the confirmation letter as well as 7/12 extracts concerning the agricultural land showing the agricultural activity. This, in our view, is plausible and reasonable evidence to support the source in the hands of the lender. It is common knowledge that the agricultural produce are sold in cash. The impugned loan is very small having regard to the agricultural land available for cultivation. Thus bonafides of loan of ₹ 75,000/- received from agriculturist brother deserves to be accepted - Decided in favour of assessee
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