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2016 (4) TMI 385 - AT - Income TaxDisallowance of manufacturing expenses under the head “Manufacturing material and chemicals” - Held that:- AO has doubted the genuineness of the transactions recorded in the books of accounts in support of expenditure claimed under the head Manufacturing Material and Chemical Expenses nor any adverse or incriminating materials have been placed on record by the A.O. so as to show that the purchases are bogus. The AO has also not doubted the authenticity of the books of accounts which was produced before him during the assessment proceedings. In fact the AO., has not doubted the genuineness of the books of accounts and the authenticity of the transactions recorded therein. Moreover, AO has also not recorded any justification for arriving at a figure of ₹ 25 lacs for ad-hoc disallowance under this head. Thus, the AO has also failed to specify any specific items of expenditure comprising total ad-hoc disallowance of ₹ 25 Lacs as above. It was also found that that as per record that the AO did not issue any show cause notice in this regard while making this addition and to that extent agree that it amounts to breach of principles of natural justice. In view of above discussions, we find that there was no no justification for adhoc disallowance of ₹ 25 lacs under the head “Manufacturing Material and Chemical Expenses”, hence, the same was rightly deleted by the Ld. CIT(A). - Decided in favour of assessee Disallowance of accrued interest not paid in respect of secured / unsecured loans taken from various institutions of UP Government - CIT(A) allowed the claim - Held that:- CIT(A) has rightly held that the UP State Government itself and also its institutions namely UP Sahakari Chini Mill Sangh Limited and Sakkar Vikash Nikdhi are not covered by the definition of Public Financial Institutions / State Finance Institutions/ State Industrial Finance Institutions as defined u/s. 4A(2) of the Companies Act, 1956 and therefore provisions of section 43B(d) of the I.T. Act are not attracted in this case. Accordingly, disallowance made on this account was rightly deleted by the Ld. CIT(A). - Decided in favour of assessee
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