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Showing 281 to 300 of 1247 Records
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2012 (9) TMI 978
CENVAT credit - input services - courier service - bus hire service - tour operator service - catering service - rent a cab service - clearing and forwarding service - Held that: - as per the definition of Rule 2(l) of CCR, 2004, the intent of the legislature is that any input service availed by the assessee in the course of their business of manufacture is entitled to input service credit - appellants are entitled to avail input service credit - appeal allowed - decided in favor of appellant-assessee.
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2012 (9) TMI 977
Issues involved: Appeal against order allowing deduction u/s.80IB on disclosed income of Rs. 50,00,000 treated as business income.
Facts: The assessee firm engaged in construction had a survey u/s.133A and a search u/s.132 conducted, during which Rs. 50,00,000 was declared as unaccounted income from on-money received for booking flats. The Assessing Officer disallowed the deduction u/s.80IB, stating the amount did not represent business income.
Appellant's Argument: The appellant had no other income except from the housing project eligible for deduction u/s.80IB. The amount represented sale consideration from booking flats and was pleaded as business income, citing relevant case laws.
First Appellate Authority's Decision: The CIT(A) held that the income was disclosed under the head of business income and was eligible for deduction u/s.80IB as it had a direct connection with the construction business. Citing legal precedents, the deduction was allowed on the additional income of Rs. 50,00,000.
Revenue's Argument: The Revenue contended that the amount was disclosed as miscellaneous income, not business income, and should not qualify for deduction u/s.80IB. The nature of the receipt being cash component was highlighted to support disallowance.
Final Decision: The Tribunal confirmed the CIT(A)'s finding, stating that the disclosed amount had a direct connection with the construction business and was eligible for deduction u/s.80IB. Citing a relevant case, the appeal of the Revenue was dismissed.
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2012 (9) TMI 975
Allowability of depreciation u/s 32 on the commercial right of ‘marketing network’ - Held that:- Assessee acquired the marketing network of Jyothi Industries by which the assessee got access to the marketing network of Jyothi Industries consisting of representative, infrastructure, customer lists, marketing strategies etc. Considering the commonality of the facts of the issue, assessee’s acquisition of distribution network is eligible for depreciation u/s 32 of the Act and therefore, the issue under consideration stands covered in favour of the assessee.
Allowability of depreciation on the goodwill - Held that:- It is a settled position that the ‘goodwill’ is an intangible asset entitled for the depreciation. Considering the above said nature of the issue, we are of the opinion that the assessee is entitled for depreciation u/s 32 in respect of the goodwill acquired by the assessee vide the agreement dated 1.3.2000 placed at page 39 of the paper book. Accordingly, ground no. 2 is allowed.
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2012 (9) TMI 974
Disallowance of loss on revaluation of the securities - when the taxpayer valued the securities on the basis of the realizable value could it be allowed as loss in the absence of the copies of the balance-sheet of the respective company? - Held that:- The RBI issued guidelines to value to unsecured shares on the basis of YTM, i.e. yield to maturity method adopted for valuation of securities. The Kerala High Court has also found that YTM rates have been put out by the PDAI / FIMMDA at periodical intervals. Therefore, when the taxpayer revalued the asset on the basis of the guideline issued by the RBI at realizable value i.e. YTM method suggested by RBI, the taxing authority cannot find fault with taxpayer.
As observed by Kerala High Court, the assessing authority has not come out with any suggestion / formula for computation of market value of unquoted shares. It is also not the case of the revenue that the guideline issued by the RBI for valuation is irrational. In these facts and circumstances, this Tribunal is of the considered opinion that the law laid down by the jurisdictional High Court in the cases of Nedungadi Bank Ltd (2002 (11) TMI 29 - KERALA High Court) and Lord Krishna Bank Ltd (2010 (10) TMI 860 - Kerala High Court) is applicable in the case of the present tax payer also. Directed to allow the notional loss claimed by the taxpayer on revaluation of the securities as deduction while computing the total income.
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2012 (9) TMI 973
Disallowance of interest u/s. 36(1)(iii) - Held that:- It is not disputed that the assessee firm has a total capital of ₹ 212 crores. It is also an undisputed fact that for the year under consideration, the net profit available for appropriation was to the tune of ₹ 30.41 crores whereas the amount given as interest free loan is only to the tune of ₹ 21.95 crores. In our considerate view, the ratio laid down by the Hon’ble Jurisdictional High Court in the case of Reliance Utilities & Power Ltd.,(2009 (1) TMI 4 - BOMBAY HIGH COURT) squarely apply on the facts of the case. We, therefore, reverse the findings of the Ld. CIT(A) and direct the AO to delete the addition
Disallowance of expenses as Brand Development expenses and professional fees for Brand Development - Held that:- We find that the assessee has not created any tangible or intangible assets of enduring nature by incurring such Brand development expenses. In our considerate view, such expense is an integral part of the profit earning process of the assessee firm and not for an acquisition of an asset or a right of permanent in nature. Respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Empire Jute Co. (1980 (5) TMI 1 - SUPREME Court), the Brand development expenses incurred by the assessee firm are revenue in nature therefore we direct the AO to allow the same
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2012 (9) TMI 972
Issues involved: Cross appeals filed by the assessee and the department against the order of CIT(A)-I, Thane, dated 15.11.2009 regarding denial of deduction u/s 80IB(10).
Issue 1 - Denial of deduction u/s 80IB(10):
- The AO denied deduction due to project being approved as commercial-cum-residential, lack of Occupation Certificate, existence of commercial space, and built-up area exceeding 1000 sq. ft.
- Assessee argued project was approved as a housing project, completion certificate not necessary, and project approved before 31.03.2004.
- AR cited various decisions supporting non-requirement of completion certificate for projects approved before 31.03.2005.
- ITAT held that denial based on lack of completion certificate was not valid as per Third Member decision relating OC back to application date.
- Directed AO to allow deduction as claimed, setting aside CIT(A) order.
Issue 2 - Flats exceeding 1000 sq. ft.:
- Department raised issue of some flats exceeding 1000 sq. ft., including balcony measurements.
- Citing precedents, ITAT dismissed department's appeal as old law applied for projects approved before 01.04.2005.
- Decision based on exclusion of balcony measurements for determining flat size.
- Department's appeal dismissed accordingly.
In conclusion, the ITAT allowed the assessee's appeal regarding denial of deduction u/s 80IB(10) due to lack of completion certificate, directing the AO to allow the deduction. The department's appeal on flats exceeding 1000 sq. ft. was dismissed based on exclusion of balcony measurements. The appeals were decided in favor of the assessee and against the department.
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2012 (9) TMI 971
TDS u/s 194A - Held that:- It is for the petitioners to establish their status as Primary Agricultural Credit Societies by obtaining and producing the relevant certificate from the competent authority, as mentioned hereinbefore. It is also open for the petitioners to opt to produce the relevant records before the Income Tax authorities as well, to establish their status and credentials, that there is no lapse in fulfilling the objective as Primary Agricultural Credit Societies so as to absolve from further proceedings at the hands of the Income Tax Department, in relation to Section 194A and Section 200(3) of the Act.
So as to enable the petitioners to pursue such exercise, further proceedings shall be kept in abeyance for a period of three months from the date of receipt of a copy of the judgment. If the petitioners fail to produce the certificates in the manner as specified hereinbefore (with reference to the 'second proviso' to Section 2(oa) of the Kerala Co-operative Societies Act), it will be open for the respondents to proceed with further steps in connection with the requirements of Section 194A and Section 200(3) of the Act.
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2012 (9) TMI 970
Issues Involved: Appeal u/s 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (Tribunal) pertaining to the block period 1.4.1995 to 21.3.2002.
Issue (e): The Tribunal's decision on the assessability of disclosed income u/s 132(4) of the Income Tax Act, 1961 regarding a liability of Rs. 40,02,180/- for the block period.
The expenditure of Rs. 40,02,180/- was incurred in the financial year 1992-1993 and claimed as deductions during that year. However, as the amount was not paid, it was shown as a credit balance. The Assessing Officer (AO) held the expenditure in assessment year 1993-1994 as bogus and the liability was wiped out during the block period, thus liable to tax u/s 41(1) of the Act. The CIT(A) ruled that the bogus expenditure incurred in assessment year 1993-1994 can only be taxed in that year, as section 41(1) applies where a cessation of liability occurs for any allowed expenditure in earlier years. As the expenditure was deemed bogus, it can only be taxed in the assessment year 1993-1994, falling outside the block period, and hence cannot be taxed. The Tribunal concurred, stating that if the expenditure is considered bogus, it can only be taxed in the year it was claimed, i.e., assessment year 1993-1994, which is outside the block period of 1.4.1995 to 31.3.2002. Both the CIT(A) and the Tribunal found no material during the search to suggest the liability had ceased, and since the alleged bogus purchase was made outside the block period, it cannot be taxed in a block assessment covering the period in question. Therefore, the issue does not raise any substantial question of law and is dismissed.
Issue (f): The issue was not pressed and hence not discussed in the judgment.
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2012 (9) TMI 969
Unexplained investment in purchase - Addition on the basis of Seized sale agreement - addition made only a photo copy and also not signed by the assessee - Held that:- No addition can be made on conjectures and surmises. As seen from the assessment order, the AO has adopted value of the property at the ₹ 7000/- per sq. yard on the date of transaction. For adopting such a valuation, the AO has not conducted any enquiry or brought any materials on record to show that the value of the property on the date of transaction was actually ₹ 7000 per sq. yard. On the other hand, the assessee has demonstrated with supporting evidence that the value of the land on the date of transaction was the rate mentioned in the registered sale deed and for which the property was sold.
The assessee has also produced sufficient evidence to show that there was dispute going on regarding the legal right over the property which also had an effect on the fair market value of the property. It is also pertinent to mention here that the assessee had filed his return f income for the assessment years under dispute much prior to the date of search declaring the purchase of land in question at the consideration mentioned in the registered sale deeds.
So far as the AO’s observations on the loose sheets recovered from the residence of Smt. Nalini Devi are concerned, the CIT (A) after duly examining them has given a conclusive finding that the assessee’s name has no where been mentioned in those documents nor the amount of ₹ 109.48 lakhs represents the expenditure incurred by Smt Nalini Devi. However, the amount was found to be the summary of the balance of various accounts operated by the family members of Smt. Nalini Devi. We find that the CIT (A) in his elaborate and well reasoned order has dealt with all these aspects and came to a finding on fact that the AO has made the addition purely on conjectures and surmises and not on the basis of any material or evidence brought on record. - Decided against revenue
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2012 (9) TMI 968
Disallowance u/s 14A r.w.r 8D - Held that:- Disallowance made by AO was based on hyper technical approach and also ignoring the essence of Section 14A(1). AO also ignored this fact that the assessee has capitalized substantial amount of interest paid on loans taken for investment and the same was not claimed as business expenses by the assessee. Therefore, the apportionment on a pro rata basis was improper in the absence of anything brought by the Assessing Officer to establish a nexus between the expenses incurred and the exempted income earned on the investment which was a paramount requirement for making a disallowance u/s 14A(1).
Commissioner of Income Tax(A) rightly held that the disallowance made by the Assessing Officer was not proper and justified and he limited the disallowance to the extent of ₹ 68,385/-. We are unable to see any reason to interfere with the impugned order.
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2012 (9) TMI 967
Levy penalty u/s 271(1)(c) - applicable rate on capital gain - Held that:- Assessee has committed an inadvertent error in the return of income to charge the tax @ 10% in stead of applicable rate of tax @ 30% on short term capital gains shown by the assessee as assessee has not paid STT on share transactions. Hence, assessee has not concealed its income or furnished wrong particulars of facts. Accordingly, provisions of section 271(1)(c) of the Act on the facts and in the circumstances of the case, are not applicable. - Decided in favour of assessee
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2012 (9) TMI 966
Issues involved:
The judgment involves issues related to the levy of interest under section 201(1A) for non-deduction of TDS on payments made for the purchase of premises by the assessee, as well as the admissibility of additional grounds of appeal regarding jurisdiction of the Assessing Officer.
Levy of Interest u/s 201(1A):
The assessee purchased premises in Hyderabad from a non-resident seller, and the Assessing Officer held that interest under section 201(1A) was chargeable for the period until advance tax was paid, despite no demand being raised under section 201(1) due to subsequent tax payment. The interest amount was calculated at 1% on the tax amount, totaling to Rs. 19,68,283.
Grounds of Appeal:
The assessee appealed the order, contending that the interest levy was contrary to law and facts, the order was not a speaking order, the Assessing Officer did not consider the Supreme Court decision in Hindustan Coca Cola Beverages case, and that non-residents are not liable for tax on capital gains under section 115E(a)(ia).
Admissibility of Additional Grounds:
The assessee's counsel filed an additional ground of appeal regarding the jurisdiction of the Assessing Officer, which was initially withdrawn during the hearing due to confusion. However, the counsel later requested to restore the ground, but the Tribunal found the petition signed by the counsel to be not maintainable as per legal requirements.
Decision:
The Tribunal allowed the appeal for statistical purposes, directing the matter back to the CIT(A) to consider the ground related to the liability of non-residents under section 115E(a)(1) which was not addressed in the earlier proceedings. The Tribunal refrained from delving into other grounds raised by the assessee, emphasizing the need for proper consideration of all relevant issues.
Conclusion:
The judgment highlights the importance of adherence to legal procedures in filing appeals and presenting additional grounds before the Tribunal. It also underscores the necessity for thorough consideration of all grounds raised by the parties involved in tax assessment disputes to ensure a fair and just outcome.
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2012 (9) TMI 965
Unexplained credits - Held that:- Capital account shown in the statement of affairs was only a balancing figure. Even if the assessee’s version that three bank accounts had to be excluded for reconciling his capital account, is accepted, there is still a difference of ₹ 6,68,954/-. As pointed out by the learned D.R., there is also an anomaly with regard to total of the balance in the bank account. We are, therefore, of the opinion that the matter requires a re-visit by the A.O. A.O. has to consider the statements of affairs as on 31.3.2006 and 31.3.2007 for arriving at any deficit or introduction in the capital account during the relevant previous year, taking into account the profit for the year. Assessee shall co-operate with the A.O. and file details of the work-out for arriving at the correct difference, if any, in capital account.
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2012 (9) TMI 964
Issues involved: Application for stay of outstanding demand u/s Transfer Pricing adjustment and disallowance u/s 10A.
Transfer Pricing Adjustment: The assessee applied for stay of outstanding demand of Rs. 5,05,21,028/- arising from Transfer Pricing adjustment and disallowance u/s 10A. The assessee had favorable orders by the ITAT in A.Y. 2006-07 and claimed deduction u/s 10A from assessment year 2001-02. The Tribunal found a prima facie case in favor of the assessee and granted stay of demand, directing the assessee to pay Rs. 50 lakhs by a specified date and stay the balance till the disposal of the appeal or six months, whichever is earlier.
Decision: The Tribunal allowed the stay application of the assessee, considering the prima facie case in favor of the assessee and the outstanding amount involved. The assessee was directed to make a partial payment and the balance was stayed till the appeal's disposal or six months, whichever is earlier. The appeal was scheduled for a future date, and notice issuance was dispensed with as both parties were informed in the open court. The order was pronounced in the open court on 7th September 2012.
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2012 (9) TMI 963
Reopening of the assessment proceedings - Error in allowing the assessee’s claim of exemption u/s 10(23C)(iiiab) - Held that:- In the instant case, as mentioned earlier, in the assessment framed u/s 143(3), the issue of 10(23C)(iiiab) had been gone into and the AO, only initiated the reassessment proceedings, because he had taken a divergent view on the allowability of exemption. Since the issue was discussed in regular assessment proceedings and the AO did not stumble upon any evidence/material, which was not placed before him, the initiation cannot be sustained - Decided in favour of assessee.
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2012 (9) TMI 962
Issues Involved:
The appeal concerns the disallowance of interest u/s. 14A by the ld. CIT (A)-III, Ahmedabad for the Assessment Year 2004-05.
Details of Judgment:
Issue 1: Disallowance of Interest u/s. 14A
- The assessee, an Individual engaged in the business as Jewellery valuer, also traded in shares, securities, and mutual funds, with income from share business.
- The Assessing Officer (A.O.) disallowed interest expenses of Rs. 6,50,456 paid to Kotak Mahindra Investments Pvt. Ltd., as the investments made were with a motive to earn exempt dividend income u/s. 10(33).
- The CIT (A) upheld the disallowance, stating that the interest expenditure was directly attributable to earning exempted income and thus covered by section 14A.
- The assessee contended that the interest paid on borrowed capital for business purposes should be allowed u/s. 36(1)(iii) as it was for acquisition of units integral to the business.
- The Tribunal found that the assessee was engaged in the business of trading shares, securities, and mutual funds, and the interest expenses were for business purposes, following precedents like Yatish Trading Co. (P.) Ltd. and Laxmi Agents (P.) Ltd.
- Relying on the decision of the Hon'ble High Court, the Tribunal allowed the appeal, directing the deletion of the disallowance made by the A.O.
Conclusion:
The Tribunal allowed the appeal of the assessee, overturning the disallowance of interest u/s. 14A, considering the business nature of the activities and the purpose of the borrowed funds.
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2012 (9) TMI 961
Issues Involved:
1. Classification of properties as investment or stock-in-trade.
2. Treatment of gains on sale of properties as long-term capital gains or business income.
3. Deduction of fair market value of apartments from the sale consideration.
4. Addition of 'on-money' to the turnover and its implications.
Summary:
Issue 1: Classification of Properties as Investment or Stock-in-Trade
The assessee contended that certain properties were held as investments, not stock-in-trade. The Tribunal upheld the AO's decision, noting that the intention at the time of purchase was to sell the properties at a profit. Therefore, the properties were held as stock-in-trade, and the sale proceeds were to be treated as business income.
Issue 2: Treatment of Gains on Sale of Properties
The assessee argued that gains from the sale of properties held for more than three years should be treated as long-term capital gains. The Tribunal rejected this, affirming that the properties were held as stock-in-trade, thus the gains were business income. The Tribunal also addressed the sale of flats obtained through a joint development agreement, treating them as business income and not capital gains.
Issue 3: Deduction of Fair Market Value of Apartments
The assessee sought to deduct the fair market value of apartments received under a joint development agreement from the sale consideration. The Tribunal remanded the issue to the AO to verify the cost from the developer and adjust the trading account accordingly. The cost of the remaining flats was to be added to the closing stock.
Issue 4: Addition of 'On-Money'
The AO added Rs. 83,60,865 as 'on-money' to the turnover based on discrepancies in the trading account. The Tribunal found no evidence supporting the receipt of this amount and criticized the AO's selective reliance on the trading account. The Tribunal directed the AO to reduce the sales figure by Rs. 83,60,865 and recast the trading, profit & loss account accordingly.
Conclusion:
The assessee's appeal was partly allowed, with directions to the AO for recalculating the trading account, while the revenue's appeal was dismissed.
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2012 (9) TMI 960
Addition of freight payments u/s. 40(a)(ia) - amounts which have already been paid during the course of relevant previous year without deducting tax at source - Held that:- The assessee has filed a statement before us in both the cases, wherein the details of freight debited, freight paid and freight payable are given. In our view these facts require verification at the end of the Assessing Officer. Accordingly, we set aside the orders passed by the Ld. CIT(A) in the hands of both the assesses and restore the matters back to the file of the Assessing Officer with a direction to verify the statement furnished by the assessee before the Bench and decide the issue by following the decision of the Special Bench of ITAT, Vishakapatnam in the case of Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM].
In the result, the appeals of the assesses are treated as allowed for statistical purposes.
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2012 (9) TMI 959
Unexplained gifts - Held that:- We are of the view that genuineness of the gifts has been accepted by the Commissioner of Income Tax (Appeals) as well as Appellate Tribunal. The identity and creditworthiness of the donors have also been accepted by both the authorities. These are questions of facts and there is a concurrent finding of fact by both the authorities below and no illegality or perversity in the finding recorded by both the authorities below has been pointed out by the learned counsel for the Revenue. The said finding of fact of both the authorities below cannot be interferred with by this Court.
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2012 (9) TMI 958
Issues Involved:
1. Treatment of surrendered amount of Rs. 4,00,000/- as additional income under sections 69 & 69A of the Income-tax Act.
2. Rejection of the trading account and addition of Rs. 1,07,278/-.
3. Non-telescoping of the two additions of Rs. 1,07,278/- and Rs. 4,00,000/-.
4. Disallowance of interest amounting to Rs. 19,630/- and reasonableness of interest rate.
5. Reliance on the judgment of Abhishek Industries.
Issue-wise Detailed Analysis:
1. Treatment of Surrendered Amount:
The primary issue was whether the surrendered amount of Rs. 4,00,000/- during the survey should be treated as business income or deemed income under sections 69 & 69A of the Income-tax Act. The assessee argued that the amount should be considered as income from regular business, while the Assessing Officer (AO) treated it as deemed income due to unexplained cash/stock and investment. The Tribunal upheld the AO's decision, relying on the Gujarat High Court's judgment in Fakir Mohd. Hazi Hassan v. CIT. The Tribunal noted that the assessee failed to provide a satisfactory explanation for the source of the additional income, leading to its classification as deemed income under sections 69, 69A, and 69B. Consequently, the corresponding deductions applicable to business income were not allowed.
2. Rejection of Trading Account and Addition:
The assessee contested the rejection of the trading account and the addition of Rs. 1,07,278/-. The AO had rejected the books of account due to discrepancies in stock, invoking Section 145(3) of the Act. The Tribunal noted a declining trend in the Gross Profit (GP) and Net Profit (NP) rates over the years, supporting the AO's decision. The Tribunal upheld the findings of the CIT(A), agreeing that the discrepancies in stock constituted a specific defect, justifying the rejection of the books of account and the addition made by the AO.
3. Non-Telescoping of Additions:
The assessee argued for the telescoping of the two additions of Rs. 1,07,278/- and Rs. 4,00,000/-. The Tribunal dismissed this argument, reiterating that the additional income of Rs. 4,00,000/- was rightly treated as deemed income arising from sources other than business income. Therefore, the trading addition due to low GP could not be adjusted against the additional income declared during the survey.
4. Disallowance of Interest:
The assessee challenged the disallowance of interest amounting to Rs. 19,630/-, arguing that interest at 15% was reasonable. The Tribunal examined the interest rates paid to both related and non-related parties, noting that the assessee paid interest at both 12% and 15% without discrimination. Consequently, the Tribunal concluded that there was no definitive evidence that the assessee paid a higher rate to relatives. Therefore, the Tribunal reversed the CIT(A)'s findings and allowed the assessee's appeal on this ground.
5. Reliance on Abhishek Industries Judgment:
The assessee contended that the CIT(A) wrongly relied on the judgment of Abhishek Industries. However, this issue was not separately adjudicated as it was considered general in nature and not requiring specific analysis.
Conclusion:
The Tribunal partly allowed the assessee's appeal, upholding the AO's and CIT(A)'s decisions on the treatment of surrendered income and the rejection of the trading account while reversing the disallowance of interest paid to relatives. The appeal was dismissed on other grounds considered general in nature. The order was pronounced in open court on 25th September 2012.
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