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2016 (5) TMI 276

Head Note / Extract:
Disallowance of purchases - Held that:- The assessee filed confirmations from both the concerns with their PAN and changed address. The assessee produced certificate from bank that the assessee made payments to those parties through account payee cheque, however could not produce the parties as the assessee was not having any business dealings during the assessment period, but the assessee requested the AO to enforce their attendance through section 133(6)/131 of the Act. The assessee also produced bills bearing the inward stamp of the proprietary concern, goods received note, fabric inspection reports in respect of purchases from those two parties. Thus, in our opinion, the assessee has demonstrated sufficient proof of genuineness of the purchases, and therefore the findings of the learned Commissioner of Income-tax( Appeals) on the issue in dispute are well reasoned and no interference on our part is required. - Decided against revenue

Disallowance of expenditure incurred on foreign travel by the employees of the assessee concern - Held that:- From the observation of the learned Commissioner of Income-tax (Appeals), we find that he has examined the expenses incurred under the head foreign travel expenses and sustained the disallowance, where the expenses were not found to be wholly and exclusively related to the business of the assessee in terms of section 37 (1) of the Act. In our view the finding of the learned Commissioner of Income-tax (Appeals) are well reasoned. Accordingly, we uphold his finding on the issue in dispute, hence the ground of the appeal is dismissed.- Decided against revenue

Disallowance of the salary/incentives under section 40A(2)(b) - Held that:- We find that the assessee submitted the qualification, experience and the services rendered by both the relatives of the assessee and demonstrated that the salary and incentive paid was not excessive or unreasonable having regard to the market value of the services and no finding were given by the Assessing Officer whether the payment was excessive or unreasonable having regard to the fair market value. We donít find any infirmity in the finding of the learned Commissioner of Income-tax(Appeals), on the issue is dispute, and thus, we uphold his finding on the issue in dispute - Decided against revenue

Disallowance on electricity and water expenses - Held that:- The fact of the tripartite agreement among the parties was not disputed by the ld DR and the Ledger account of the M/s Ess Aar essence confirmed that the party acted as contractor for fabrication of goods and washing and finishing of goods of the assessee and the assessee also deducted tax at source on the payments made to the party. In our view, the findings of the learned Commissioner of Income-tax( Appeals) on the issue in dispute are well reasoned and no interference on our part is required.- Decided against revenue

Addition on account of estimation of gross profit by the AO after rejecting books of accounts of the assessee - Held that:- The assessee has demonstrated the reasons for fall in gross profit rate and explained that there was no inconsistency in the inventory and also explained for non-maintenance of consumption of raw material as the assessee was engaged in production of garments for foreign buyers involving number of raw materials and multiple stages of production. The defects in respect of disallowance of unverifiable purchases, disallowances of electricity and water charges etc have already been rejected by us, and therefore in our considered opinion the rejection of books of accounts by the AO was not justified. The findings of the learned Commissioner of Income-tax (Appeals) on the issue in dispute are well reasoned and no interference on our part is required. - Decided against revenue


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