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2014 (5) TMI 82 - AT - Income TaxPartial confirmation of addition u/s 250 of the Act – Confirmation of estimated gross profit – Held that:- There was no reason to uphold the additions on account of direct costs once the books of account has been rejected and the gross profit rate has been applied - there is no further requirement of disallowing the cost or purchases – the CIT(A) ought to have restricted the addition to the extent of estimate of gross profit when she has found that books of account are to be rejected and the trading results as a whole shown by the assessee are not reliable – Relying upon This proposition is duly supported by the decision of Gujarat High Court in CIT v/s Dheeraj R. Rungta [2014 (4) TMI 711 - GUJARAT HIGH COURT] thus, the AO is directed to apply the gross profit rate of 5% as applied by the CIT(A) on sales - The balance additions under various heads of purchases or cost against commission and AMC income cannot be interfered – Decided partly in favour of Assessee. Disallowance of expenses under various heads – Held that:- The disallowance of 1/5th portion of expenses under the heads “motorcar expenses”, “interest on car loan” and “depreciation” , it should be restricted at 1/10th, as the element of personal nature of expenses has not been rebutted - With regard to the amount disallowed under the professional charges after invoking the provisions of section 40(a)(ia), WC tax and professional tax are concerned, the order of the CIT(A) is upheld – Decided partly in favour of Assessee. Disallowance of Expenses - General expenses, travelling and conveyance expenses and advertising conference and sales promotion expenses – Held that:- The disallowance has been made on the ground that some of the expenses relates to gifts and obligations for the doctors for which there is no quantification of such expenses from the bills which were produced - the reasons for disallowance by the AO as well as the CIT(A) are justified - the major expenses which relates to advertisement, travelling and sales promotion, conveyance, wherein no such quantification has been done either by the assessee – thus, the disallowance of 10% under the heads would sustained – Decided partly in favour of Assessee.
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