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TMI Blog1979 (11) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken from the Bank on the amount diverted to M/s Sky Line Industries. The ITO observed that the account of this firm showed a debit balance of Rs. 77,863.24 and Rs. 97,670 respectively and no interest had been charged from this firm by the assessee although it paid huge amount of interest to the bank on its own borrowings. Therefore, he disallowed proportionate amounts of interest paid to the Bank i.e. Rs. 7,538 Rs. 11,720. 3. On appeal it was argued before the AAC that the assessee had only differed the receipts of interest from the other firm and the loan advanced to that firm was not an interest free loan. The AAC accepted this contention but maintained the interest on the ground that the assessee was maintaining its books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therefrom. The name by which a method is called is an immaterial consideration and it is equally immaterial whether the system adopted by the assessee conforms to the requirements of a known method of accounting. Conversely, even if the method regularly adopted by the assessee is a well recognised method of accounting, e.g. the Life or Last-in-first out system or the 'base stock system', it should still be rejected by the ITO if it does not afford a true picture of the profits in any one year of charge. What the ITO has to consider is not the system of accounting followed by the assessee as regards a particular business transaction in respect of which proper entries may not have been made in the regular accounts but the system of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nveyance and vehicle expenses and depreciation. The proprietors of the concern are two ladies, namely, Mrs. Champa Jaiswal and Mrs. Suraj Mukhi Jaiswal and they are not maintaining any conveyance. In the earlier years 50 per cent of the conveyance and depreciation was being disallowed on account of personal use of the car maintained by the firm and the same practice has been followed in the two years in question. The counsel for the assessee stated that the mere fact that he did not agitate this matter in the past does not debar him from doing so now. The practice of this bench has been to normally disallow 1/3rd of the expenses incurred on a conveyance maintained by a partnership concern on the ground of personal use and apparently there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve no alternative but to send the file back to him for a fresh decision over this addition. Similarly, there is a claim for Rs. 5,913 under s. 80-J of the IT Act for this year. The ITO disallowed this claim on the ground that the assessee firm did not manufacture or produce any article. It simply mixed two or three articles which it purchased and the details of the wages account furnished by it did not indicate that it employed 10 or more workers in the process carried on age of with the aid of power or 20 or more workers without aid. He, therefore, disallowed the claim altogether. On appeal the AAC opined that there was no working at all in the records of the assessee as to how this claim had been worked out. Neither before the ITO, nor be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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