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2017 (11) TMI 791 - ITAT KOLKATADisallowance of bogus purchase - disallowance equal to gross profit @ 15% of gross turnover - Held that:- As Ganesh Rice Mills vs CIT [2005 (3) TMI 95 - ALLAHABAD High Court] find that the substantial question of law considered was as to whether the tribunal was right in coming to the conclusion that the purchases claimed by the assessee were not genuine ignoring the quantitative account available before the Tribunal. The Hon’ble Allahabad High Court confirmed the findings of the Tribunal that the purchases in question were bogus. There was no occasion for Allahabad High Court to consider whether the entire purchase should be added or income on sales estimated in the given circumstances. We are therefore of the view that the decision relied upon by the ld. DR will not support the plea of the ld. DR before the Tribunal. On the other hand, we find that the decision of Hon’ble Jharkhand High Court in the case of Amitabh Construction P.Ltd. (2011 (5) TMI 821 - Jharkhand High Court) clearly supports the conclusion arrived at by CIT(A). We, therefore, find no grounds to interfere with the order of CIT(A). Consequently ground no.1 raised by the revenue is dismissed. Disallowance on account of interest payment as penal in nature - whether interest was paid by the assessee for delayed payment of excise, income tax and sales tax was liable to be disallowed - Held that:- According to the AO the aforesaid payment was in the nature of penal for infraction of law. Therefore it cannot be allowed as deduction in view of the Explanation 1 to section 37(1) which provides that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business and no deduction on such expenses shall be allowed. The CIT(A) deleted the addition on the ground that the payment in question was not penal in nature but only compensatory for delayed payment and therefore cannot fall within the ambit of Explanation 1 to section 37. We are of the view that the conclusion of CIT(A) on this issue are correct and calls for no interference - Decided against revenue Disallowance on account of ROC expenses on increased authorized capital - addition which was a fee paid to the registrar of companies for increase in share capital of the assessee on the ground that the same was capital in nature and cannot be allowed as deduction in computing the income from business - Held that:- Before us it is not disputed that the said sum was not claimed in the profit and loss account as deduction while computing income from business. In such circumstances we are of the view that the CIT(A) was right in deleting the addition made by the AO and his action is just and proper and calls for no interference. Accordingly ground no.3 raised by the revenue is dismissed.
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