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2021 (6) TMI 1020 - AT - Income TaxDisallowance of 10% out of total expenses incurred - HELD THAT:- We see no reason to discredit the findings given by the CIT(A) and restore the action of the AO as demanded by Revenue. The reasons given by the CIT(A) are that the expenses incurred are comparable and there is no allegation that expenses are bogus from the AO. Having regard to past history and in the absence of any specific defect, the CIT(A) rightly concluded that the action of the AO is unsustainable on facts. Merely because the expenses incurred appears excessive qua the corresponding business activities, it cannot be a ground for ad hoc disallowance as long as the expenses incurred are commercially expedient. We thus see not merit in the grievance of the Revenue in this regard. Addition being 10% out of sundry credits - HELD THAT:- CIT(A) found force in the claim of assessee for reversal of additions on the ground that there is no mismatch or non-tallying with figures of sundry creditors. Revenue could not point out any specific defect in the order of the CIT(A) in its rebuttal before us. We totally fail to understand the rationale for disallowance of ad-hoc sum out of existing sundry creditors in this manner. Hence, we decline to interfere. Estimation of interest income towards notional interest @12% on loans and advances - HELD THAT:- We notice from the order of the CIT(A) that the AO has not found any justification in low income in comparison to corresponding high loans/advances/investment in shares. CIT(A) reversed the action of the AO towards addition of notional interest income on the ground that income arising from advances are duly recorded in the books and the position is to be viewed in the peculiar facts of the case i.e. the cancellation of banking license of the assessee and settlement of the advances is under one time settlement Scheme (OTS) etc. The ad-hoc estimation of income on OTS of doubtful advances, in any case, is against the doctrine of real income and thus cannot be countenanced. We thus see no perceptible reason to dislodge the conclusion drawn by the CIT(A) in favour of the assessee.
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