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2016 (7) TMI 906 - ITAT AHMEDABADAddition made on account of low GP - sole objection of the AO was that the assessee has not been maintaining stock register and also order placement registers - Held that:- According to the ld.CIT(A), the assessee has been maintaining stock register on-line. Its accounts are subject to inspection under direct control of drug authorities, which could not be conducted without maintenance of proper stock records. As far as fall in GP is concerned, the ld.CIT(A) was satisfied with the explanation given by the assessee. After taking into consideration all these facts and circumstances, do not find any reason to interfere in the order of the ld.CIT(A) on this issue. Addition u/s 40A(2)(b) - Held that:- Section 40A(2)(b) contemplates that if persons by virtue of their relationship or position with the management persuade the assessee to pay a higher amount of remuneration in lieu of services, then such higher amount of remuneration could be disallowed. In other words, if those services could be availed from the open market at a lower rate, then, excess payment is to be disallowed. In the present case, the assessee has paid commission to four persons. The objection of the AO is that they are simple graduates and they could not earn this much of income. But I failed to understand the reasoning of the AO, because, he has not given any basis for doubting the capability of all four persons. AO has not referred any material as to how services rendered by them could be availed at a lower rate from the market. The ld.CIT(A) has rightly deleted the addition Addition on loss due to flood - CIT(A) deleted the addition - Held that:- FAA did not concur with this conclusion of the AO on the ground that, if this type of plea is being accepted, then, there could not be any loss to any concern. The acceptance of the insurance company could not be a guiding factory for gauging the loss of any assessee. After taking into consideration the finding of the CIT(A), do not find any reason to interfere in it. Disallowance of misc. expenses - CIT(A) deleted such disallowance on the ground that misc. expenses claimed by the assessee are only 0.16% of the turnover - Held that:- CIT(A) was satisfied that the assessee has not debited any personal expenditure or other expenditure, which are not linked with the business in the misc. expenses. After considering the smallness of the expenditure and the reason assigned by the ld.CIT(A) no reason to interfere with the order of the ld.CIT(A) on this issue Disallowance of Keyman Insurance premium - Held that:- The assessee is entitled for deduction of the premium paid on the KIP for the partner. The ld.CIT(A)has rightly deleted the impugned addition Revenue appeal dismissed.
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