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2015 (5) TMI 120 - HC - Income TaxSuppression of production by showing excess scrap - ITAT deleted the addition - Held that:- When the Assessing Officer did not reject the books of accounts and / or did not point out any defects in the books of accounts regularly maintained by the assessee and when considering the fact that the Excise Department also fully verified and checked the records for the raw materials and the finished goods, the learned Tribunal has rightly deleted the additions made by the Assessing Officer on scrap generation at the rate of 15%. We are in complete agreement with the view taken by the learned Tribunal in so far as deleting the additions made by the Assessing Officer for the respective Assessment Years i.e. 1999-00, 2000-01 and 2001-02 on scrap generation at the rate of 15%. - Decided in favour of the assessee. Validity of assessment order under Section 143(3) - ITAT held the assessment as void ab initio by observing that notice under Section 143(2) of the Act was issued beyond the period of limitation i.e. beyond the period of 12 months - Held that:- It is required to be noted that the return was filed by the assessee on 31/12/1999 and notice under Section 143(2) of the Act was served upon the assessee on 25/08/2001. Under the circumstances, when notice under Section 143(2) of the Act was issued beyond the period of one year considering the decision of the Hon’ble Supreme Court in the case of Assistant Commissioner of Income Tax and Anr. Vs. Hotel Blue Moon reported in [2010 (2) TMI 1 - SUPREME COURT OF INDIA] question is held against the revenue - Decided in favour of the assessee. Penalty under Section 271(1)(c) - ITAT deleted penalty - Held that:- Tribunal has correctly observed that since the addition made by the Assessing Officer of the scrap generation at the rate of 15% has been deleted, there is no question of imposition of penalty arising - Decided in favour of assessee. Disallowance of interest expenses claimed under Section 36(1)(iii) - ITAT allowed claim - Held that:- Tribunal has observed that the assessee was having interest free funds available with it. Also that the advances were given by the assessee to various parties to the extent of ₹ 2,62,48,341/- during the Financial Year 1996-97. Even the assessee was having interest free funds to the extent of ₹ 3,93,65,572/- as on 31/03/2002. It is required to be noted that in the earlier preceding year no disallowance was made out of the interest claimed by the assessee. Considering the aforesaid facts and circumstances of the case, the learned Tribunal has rightly deleted the disallowance on interest expenses - Decided in favour of assessee. Addition under Section 40A(2)(b) - addition sustained is 1/3rd by CIT(A) & ITAT - Held that:- We are in complete agreement with the view taken by the learned CIT(A) confirmed by the learned Tribunal. As such, taking into account the larger business benefits accruing to the assessee and the connectivity between the assessee and the recipient, the learned CIT(A) has held that commission of ₹ 1 per kg would be reasonable and balance 0.5 per kg is considered as excessive withing the meaning of Section 40A(2)(b) of the Act.No substantial question of law arises so far as deleting the addition under Section 40A(2)(b) of the Act to the extent of 2/3rd of ₹ 10,78,930/- is concerned. - Decided in favour of assessee.
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