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TMI Blog2015 (3) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... ter referred to as "the Act") by the Assessing Officer (AO), and; (ii) the decision for directing cancellation of Rs. 12,10,000/-, disallowed on account of interest. 3. The assessee was carrying on the business of manufacturing of MS Alloys Steel Casting, including MS Ingots. It also used to trade in iron and steel. For AY 2007-08, it paid tax under Section 115JB of the Act on book profit of Rs. 18,31,207/-. It had claimed certain losses. In scrutiny assessment, it was discerned that the assessee had disclosed gross sales of Rs. 35,09,16,339/- as against a substantially lower amount in the preceding year. It also earned commission income of Rs. 36 lakhs which was higher than the preceding year's income. The overall Gross Profit Rate du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rate and the interest addition partly succeeded, in that on the latter question, the ITAT held that the assessee had sufficient interest-free funds, relying upon the Bombay High Court's decision in CIT v. Reliance Utilities and Power Limited 313 ITR 340 (Bom). In that case, it was held that wherever the assessee is possessed of sufficient interest-free funds, and it lends money, in the absence of other material, there is a presumption that such interest-free funds would be invested or advanced as interest-free loans or advances. 6. We have considered the submissions of the Revenue. The CIT(A), after noticing the facts, discussed the rationale and the justification of the AO's approach, in rejecting the books of account and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and the defects must be such that it was not possible to determine the income properly. (d) There is nothing on record to show that it was profitable for the assessee to manipulate the purchase/sell of goods with sister concern. 5.3.4 In view of the above, I hold that the action of the AO of rejecting the books of accounts is not justified on the facts of the legal pronouncement made from time to time. The ground no.2 relating to the rejecting of books of accounts of the appellant is, therefore, allowed." 7. The CIT(A) then considered in detail the various reported decisions with respect to the G.P. Rate and held that since the assessee had furnished complete particulars of transactions, various issues which in turn were an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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