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2016 (5) TMI 1096 - AT - Income TaxRejection of books of account - addition made on account of undervaluation of closing stock - Held that:- The books are rejected by the Assessing Officer solely on the basis of the fact that stock register has not been maintained by the assessee. The assessee is in the business of making sweets, etc. and he has given a plausible explanation as regards non-maintenance of stock register, without rebutting his explanation, the Assessing Officer has rejected the books. As regards inter branch transfer of stock, we are in agreement with the explanation of the assessee that since income of all the branches are assessed in the hands of the assessee, it does not make any difference as to which rate these stocks are transferred. Similarly, the expenses like packing material, consumables and air conditioning charged to Profit & Loss Account and not to trading account does not actually make any difference to the income taxable in the hands of the assessee, unless the Assessing Officer is able to bring on record any manipulation on G.P. rate of the assessee, which in this case, he has not been able to do. Rather, he has not even able to contradict the comparative G.P. rates as provided by the assessee even after taking into consideration these expenses as a part of trading account. Above all, the explanation of the assessee that all these expenses have nothing to do with the manufacturing of the products and are essentially a part of Profit & Loss Account, is also a correct explanation. Another glaring feature of the assessment order is that the Assessing Officer after rejecting the books of account preferred to make disallowance on account of these expenses only. We do not find this act of the Assessing Officer as per law. In a way he has accepted the books results shown by the assessee and had only disallowed the expenses. This shows the illusioned mind of the Assessing Officer - Decided against revenue Non- deduction of TDS under section 40(a)(ia) - Held that:- The undisputed facts are that the assessee has got certain packing material printed. The raw material for printing was not supplied by the assessee. The definition of contract as provided under section 194C, clause (vi) of the Act was introduced in the Statute to be applicable w.e.f. 11.10.2009. In view of this, no addition under section 40(a)(ia) can be made in this regard.- Decided against revenue Addition under section 36(1)(iii) - Held that:- No infirmity in the order of the learned CIT (Appeals) as it is a fact that the Assessing Officer has not doubted the genuineness of the agreements entered into with these two parties. The payments have been made in terms of the clauses of these agreements. The agreements have been entered into out of commercial expediency. Therefore, no addition under section 36(1(iii) of the Act can be made - Decided against revenue
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