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2016 (7) TMI 1130 - AT - Income TaxUndisclosed investment in stock under the head ‘income from other sources - Held that:- Commissioner of Income-tax(Appeals) has accepted the trading result of the assessee without surrendered stock, which is a loss and thus even if the surrendered excess stock as directed by the learned Commissioner of Income-tax (Appeals) is assessed under the head ‘income from other sources’ , the net result will be the same as loss under the head profit and gains of business will be eligible for adjustment against the ‘income from other sources’ as per the provisions of section 71 of the Act. The learned Commissioner of Income-tax (Appeals) has not mentioned as why the excess stock declared by the assessee should be assessed under the head income from other sources. In our opinion the excess stock was as a result of business activity of the assessee and there was nothing wrong in adding the same with the closing stock of the business and therefore the direction of the learned Commissioner of Income-tax (Appeals) in assessing the surrendered stock under the head income from other sources is not justified and accordingly, we direct to assess the same under the head profit and gains of business and give benefit to allow carry forward this stock as opening stock of the succeeding year. Addition under the head other sources - Held that:- We find that without the excessive stock of ₹ 3,81,13,064/-, the trading result of the assessee was a loss of ₹ 64,41,401/- which was rejected by the Assessing Officer and assessed into profit of ₹ 20, 65, 885/-thus making the total addition of ₹ 85,07,286/-. The learned Commissioner of Income-tax (Appeals) in the impugned order has accepted the trading results of the assessee, however, directed to delete the addition of ₹ 20,65,885/-. In our opinion, once the trading results of the assessee have been accepted, the entire addition of ₹ 85,07,286/- was required to be deleted by the learned Commissioner of Incometax (Appeals). Accordingly, we direct to delete the addition of ₹ 64,41,401/- - Decided in favour of assessee. Disallowance under section 14A read with Rule 8D Held that:- We find that there is no dispute on the fact that no exempt income was earned by the assessee during the year. Thus,the disallowance made by the Assessing Officer and sustained by the learned Commissioner of Income-tax(Appeals) is directed to be deleted. - Decided in favour of assessee.
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