TMI Blog2016 (4) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... account can be made. Consequently, we are of the view that the interest paid to third parties are liable to be allowed and further addition made by the Assessing Officer on account of the interest paid to third parties stands deleted. Interest received from the bank on FDs - Held that:- As noticed that the interest income of the assessee from fixed deposit is not “business income” of the assessee. It is liable to be assessed under the head “income from other sources”. The business of the assessee is not making any Fixed Deposit and deriving interest there from. Further, the assessee has also not been able to show as to how the bank interest was in any way intrinsically connected to the business activity of the assessee for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 6,58,09,000/- instead of 7% applied by the Assessing Officer. In the assessee s appeal, the assessee has challenged the action of the learned CIT (A) in confirming the rejection of books of account and in applying the net profit rate of 6% as against the declared rate of 5.30% in grounds No.2 and 3. In ground No.4 of the assesee s appeal the assessee has challenged the action of the learned CIT(A) in confirming the addition made by the Assessing Officer representing the interest paid to parties especially when the books of account has been rejected and the net profit rate has been estimated. In ground No.5 of the appeal the assessee has challenged the action of the learned CIT (A) in holding the interest received by the assessee from F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and so also cost of steel had increased substantially. It was a submission that the learned CIT (A) had also taken into consideration the fact that the Value Added Tax rate (VAT tax rate) has increased from 2% to 12.5% during the relevant assessment year. Consequently, the learned CIT (A) had directed the Assessing Officer to adopt net profit rate at 6%. It was a submission that the assessee was not pressing his ground No. 2 3 of the appeal against the action of the learned CIT (A) in estimating the net profit rate at 6%. 5. We have considered the rival submissions. Admittedly, the learned CIT (A) has upheld the rejection of assessee s books of account. The assessee has not been able to rebut the findings given by the learned CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een rejected, the interest paid to third parties falls under the head business expenditure which is liable to be deducted while computing the net profit. In the present case, as the net profit itself has been estimated no further addition to the same by picking and choosing items from expenditure account can be made. Consequently, we are of the view that the interest paid to third parties are liable to be allowed and further addition made by the Assessing Officer on account of the interest paid to third parties stands deleted. 8. In respect to the issue of interest received from the bank on FDs, it is noticed that the interest income of the assessee from fixed deposit is not business income of the assessee. It is liable to be assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y preceding assessment year the assessee has declared 8.95% net profit. This being so, we are of the view that the findings of the learned CIT (A) in confirming the estimation of net profit rate at 8% as made by the Assessing Officer is in right footing and does not call for our interference. 10. In respect of the disallowance of interest paid to third parties, on identical grounds we have deleted the addition for assessment year 2007-08 in ITA No.361/Jodh/2010 (supra). On identical reasons the addition made by the Assessing Officer and confirmed by the learned CIT (A) stands deleted. As a result, the appeal of the assessee stands partly allowed. 11. In the result, the appeal of the Revenue is dismissed and both the appeals of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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