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2020 (10) TMI 989 - AT - Income TaxAddition of low gross profits after rejecting the books of accounts u/s 145(3) - HELD THAT:- AO cannot reject the books of accounts for the reasons where the assessee does not maintain the stock register. Accordingly, we note that the reasons which were based by the AO for rejecting the books of accounts are not sufficient enough and cogent. Books of accounts of the assessee are not liable to be rejected as per the provisions of Section 145(3) of the Act. Accordingly, we conclude that once the books of accounts of the assessee are not liable to be rejected then its book profit should be accepted in the given facts and circumstances. No infirmity in the order of the Learned CIT (A) and direct the AO to delete the addition made by him. Disallowance of interest expenses u/s 36(1)(iii) - assessee has acquired a machinery loan which was put to use only after 2ndJuly 2007 - AO was of the view that the interest paid by the assessee up- to the date i.e. 2ndJuly 2007 when the machinery was put to use should be capitalized under Section 36(1)(iii) - HELD THAT:-On perusal of the installation report placed we note that the machine was installed on 2ndJune 2007 which implies that it was ready to use on that date. Therefore, the disallowance of the interest expenses should be limited to the extent pertaining to two months only. Assessee has also utilized its own funds in the purchase of machineries in addition to the borrowed fund from the bank. Accordingly, CIT (A) excluded the amount of own fund utilized by the assessee while working out the amount of interest expenses to be capitalized. These facts, have not been disputed by the Learned DR at the time of hearing - No infirmity in the order of the Learned CIT (A). Hence, the ground of appeal of the Revenue is dismissed.
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