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2014 (1) TMI 1932 - ITAT RAJKOTAddition u/s 40A(2)(b) - addition was made on the ground that interest paid by the assessee @ 24% to various persons covered u/s 40A(2)(b) is too excessive, and therefore, AO allowed the interest @12% - CIT-A restricted the addition - HELD THAT:- After appreciating the facts that the cost of loan to be taken from the bank is high because of legal charges, document charges etc., and therefore, unsecured loans at higher rate of interest has been taken keeping in view the business expediency. The view taken by the ld. CIT(A) in restricting the disallowance of interest u/s 40A(2)(b) need to be upheld. The ground No.2(i) of the assessee’s appeal and ground No.1 of Revenue’s appeal are dismissed. Disallowance credit card expenses paid by the assessee are not open for verification - HELD THAT:- Neither before both the authorities below nor before us, the assessee has produced the supporting evidences; therefore, the view taken by the ld. CIT(A) confirming the disallowance of Rs.18,000/- is upheld. This ground of appeal is rejected. Disallowance of computer expenses - assessee failed to produce relevant bills - HELD THAT:- As assessee fairly admitted that the same is not traceable. In this view of the matter, we decline to interfere. This ground of appeal is rejected. Disallowance of interest - Interest free advances - assessee was paying interest, but has advanced interest free loan to the same person to whom interest has been paid in the proprietary concern and in one case, same was claimed to be advance to a friend of the assessee but no interest has been charged on the same - HELD THAT:- DR has not disputed the availability of interest free advance in personal books of accounts of the assessee as on 31.03.2005. The advance to Falguni A Shah and Anup A Shah (HUF) were made by the assessee out of capital balance available in the personal books of accounts and therefore no disallowance is called for. The advance to Online Business System Rs.205000/- is a business advance given to obtain franchisee. Therefore, on this advance also no notional interest can be charged. We are convinced that there was no necessity to work out the notional interest and made disallowance - The view taken by the ld. CIT(A) in the impugned order in this regard is upheld and ground of this appeal is rejected. Addition on account of low Gross Profit by rejecting the books of accounts u/s 145(3) - HELD THAT:- The books of accounts of the assessee are audited u/s 44AB. The assessee has also filed confirmation of all the parties to whom notices u/s 133(6) of the Act remain unserved. Q-tally and confirmations could not be filed on account of non availability of sufficient opportunities as the case was getting time-barred. Be that it may be, since no remand report was submitted by the AO on additional evidences furnished, we are of the view that it will meet the end of justice if GP addition is restored to the file of the AO with the direction that the Assessing Officer will re-examine the books of accounts in the light of additional evidences furnished before the ld. CIT(A) and re-adjudicate the GP addition afresh after allowing adequate opportunity of being heard to the assessee. Addition on account of low household withdrawal - addition was made on the ground that the assessee failed to furnish the bill of electricity of his residence - CIT(A) has deleted the addition - HELD THAT:- As it is pertinent to note that this addition has been made on doubts and suspicion; therefore, the view taken by the ld. CIT(A) in this regard is upheld. This ground of appeal is rejected.
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