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2015 (3) TMI 806 - DELHI HIGH COURT

2015 (3) TMI 806 - DELHI HIGH COURT - TMI - Rejection of books of accounts - application of 6% G.P. Rate - transactions with sister concern are liable to be examined as per the provisions of sec 40A(2) - Held that:- CIT(A) to hold that the action of the AO of rejecting the books of accounts is not justified and 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 .....

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cumstances, we are of the considered opinion that in the interest of justice the issue should be set aside to the file of the AO for fresh verification. No question of law arises. - Decided against revenue.

Disallowance of interest - ITAT decision for directing cancellation of disallowance - Held that:- ITAT recorded that the assessee had sufficient erest-free funds. Consequently, the application of Reliance (2009 (1) TMI 4 - HIGH COURT BOMBAY) cannot be faulted. Being a finding of fa .....

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, there is no appearance on behalf of the assessee. 2. The revenue is aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) dated 17.04.2014 in ITA 3283/Del/2011. It urges two questions, i.e. (a) as to the correctness of the ITAT's opinion with respect to rejection of books of accounts under Section 145(3) of the Income Tax Act, 1961 (hereafter referred to as "the Act") by the Assessing Officer (AO), and; (ii) the decision for directing cancellation of ₹ 12,10,00 .....

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so earned commission income of ₹ 36 lakhs which was higher than the preceding year's income. The overall Gross Profit Rate during the year was 0.8% as against (-)17.23% and the NP Rate of 0.54% as against 2.07% in the preceding year. The assessee had claimed bank interest of ₹ 19,25,169/- in the Profit and Loss Account. The AO found that the assessee had given advance of ₹ 55 lakhs to SVP Builders (India) Limited which was repaid in the same year. However, no interest was c .....

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4. The assessee's appeal to the CIT(A) succeeded. The CIT(A) held that the rejection of books was unwarranted. Likewise, the applicability of 6% G.P. Rate was set aside. The addition on interest of ₹ 12,10,000/- was, however, confirmed. We may also notice that the CIT(A), having set aside the rejection of books by the AO and also the application of 6% G.P. Rate to determine income, remitted the matter for further giving effect to the appellate order after restricting the profits to &# .....

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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 application of 6% G.P. Rate. The relevant discussion is follows: "5.3 I have gone .....

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purchase bills and sale bills were produced during the course of assessment proceedings however, the Assessing Officer has not printed out any particular defect in the books of the appellant. 5.3.2 The transactions with sister concern are liable to be examined as per the provisions of sec 40A(2). The law does not give right to the AO to reject the Audited books of accounts of the appellant without legally justifying the action. 5.3.3 The AR furnished details in accordance with the provisions of .....

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