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2022 (7) TMI 165 - AT - Income TaxAddition on gross profit - Reduction in gross profit - Rejection of books of accounts - CIT- deleted the addition - HELD THAT:- With regard to allegation of the AO that the assessee was repeatedly asked to produce the bill and the internal audit report, but assessee failed to produce Internal Audit Report and proof of payment for internal audit,we find that same has been replied Vide letter dated 29.12.2016, details of provision made for internal audit fees were submitted to the AO. The entire details of complimentary expenses have been mentioned in the order of the ld. CIT(A) giving the complete details of the particulars, designation, cost price of the complimentary and also the various divisions. With regard to service charges, the entire details and the method of accounting charges, and the amount of the services charges paid of Rs.1.23 Cr. have been duly mentioned at para 31 & 32 of the order of the ld. CIT(A). With regard to the internal audit fees, the details have been filed by letter dated 29.05.2016. Copy of the ledger has been submitted before the AO as verified by the ld. CIT(A). The reasons for declining the gross profit along with rooms available, rooms occupied, percentage of room rate, room revenue and F&B revenue [page 25 & 26 of the order of the ld. CIT(A)] has been duly furnished substantiating the decline in receipts, incurring expenses of direct receipts such as electricity, water, staff, music and entertainment which have been and to be provided irrespective of the percentage of occupancy. Thus, having gone through the entire facts, we hereby decline to interfere with the reasoned order of the ld. CIT(A). Addition on account of Deemed Dividend - CIT- deleted the addition - HELD THAT:- The provisions of section 2(22)(e) of the Act are not applicable in the present case as the assessee is not a shareholder in the companies from which advance has been received during the year. As evident from the aforesaid table showing shareholding pattern, the assessee is not a shareholder in M/s AIPL & M/s GSL. In case of GSL, viz., GSHPL do not hold shares in assessee company, clearly bringing it outside the scope of Section 2(22) (e) of the Act. - both the advances could not have been added in the hands of assessee company, being not the registered shareholder of AIPL or GSL.- Decided in favour of assessee.
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