TMI Blog2005 (1) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... and offered to include the same in business income for the year under consideration. In reply to question Nos. 13 and 14, the partner of the assessee-firm stated that excess stock found was purchased out of business income of the current year, i.e., the year in which survey took place. In pursuance of the income declared, the assessee credited the same in its P L a/c and the book profit was increased accordingly. As the assessee was a partnership firm, claim for payment of remuneration to the partner was made by taking book profit which was inclusive of the profit declared by the assessee during the course of survey. However, during the course of assessment under s. 143(3), the AO computed the deduction under s. 40(b), in respect of remuner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative vehemently argued that excess stock found during the course of survey was purchased out of business income of the current year and a statement to this effect was also recorded by the survey party. He invited our attention to the reply of question Nos. 13 and 14, recorded during the course of survey in which the partners had explicitly stated that the excess stock found was purchased out of the business income of the current year, i.e., the year under which survey took place. He further submitted that assessee has also passed proper entry in the books of account by crediting the income earned in the business which were invested in the stock as found during the course of survey. As per learned Authorised Representative, under the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also no dispute to the fact that assessee had made proper entry in the books of account showing the alleged income as income from business and the book profit was increased accordingly. Thus, the partner of the assessee-firm not only explained the source of investment in the excess stock, but also credited the source of such investment being income from current year's business in its P L a/c. The AO has not disbelieved the assessee's claim that investment was out of business income. If the Department was of the view that explanation furnished by the assessee regarding source of investment, which was out of current year's business income, was found to be not acceptable, the AO should have given reason to dispute the assessee's version as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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