TMI Blog2016 (5) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... manipulation on G.P. rate of the assessee, which in this case, he has not been able to do. Rather, he has not even able to contradict the comparative G.P. rates as provided by the assessee even after taking into consideration these expenses as a part of trading account. Above all, the explanation of the assessee that all these expenses have nothing to do with the manufacturing of the products and are essentially a part of Profit & Loss Account, is also a correct explanation. Another glaring feature of the assessment order is that the Assessing Officer after rejecting the books of account preferred to make disallowance on account of these expenses only. We do not find this act of the Assessing Officer as per law. In a way he has accepted the books results shown by the assessee and had only disallowed the expenses. This shows the illusioned mind of the Assessing Officer - Decided against revenue Non- deduction of TDS under section 40(a)(ia) - Held that:- The undisputed facts are that the assessee has got certain packing material printed. The raw material for printing was not supplied by the assessee. The definition of contract as provided under section 194C, clause (vi) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese are measured in kg. The Assessing Officer further noted that certain expenses like fancy packs, generator expenses and consumables, etc. have been debited to the Profit Loss Account, while these items pertain to trading account. The assessee replied that these expenses are being treated by him in same manner for the last many years. Based on all this, the Assessing Officer rejected the books of account of the assessee. He made addition of ₹ 54,45,107/- on account of expenses on fancy packs, generator and consumables being claimed in the Profit Loss Account rather than the trading account. 4. Aggrieved by this order, the assessee went in appeal before the learned CIT (Appeals). As regards the rejection of books of account, it was submitted that the books of account were maintained in the regular course of business and are audited. Non-maintenance of stock register cannot be the sole basis for rejecting the books of account. The details of opening closing stock are maintained and purchases and sales are fully vouched. For the proposition that merely because stock register is not being maintained, the books cannot be rejected, reliance was placed on a number of jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y infirmity in his order. The books are rejected by the Assessing Officer solely on the basis of the fact that stock register has not been maintained by the assessee. The assessee is in the business of making sweets, etc. and he has given a plausible explanation as regards non-maintenance of stock register, without rebutting his explanation, the Assessing Officer has rejected the books. As regards inter branch transfer of stock, we are in agreement with the explanation of the assessee that since income of all the branches are assessed in the hands of the assessee, it does not make any difference as to which rate these stocks are transferred. Similarly, the expenses like packing material, consumables and air conditioning charged to Profit Loss Account and not to trading account does not actually make any difference to the income taxable in the hands of the assessee, unless the Assessing Officer is able to bring on record any manipulation on G.P. rate of the assessee, which in this case, he has not been able to do. Rather, he has not even able to contradict the comparative G.P. rates as provided by the assessee even after taking into consideration these expenses as a part of tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the findings of the authorities below and considered the material available on record. The undisputed facts are that the assessee has got certain packing material printed. The raw material for printing was not supplied by the assessee. The definition of contract as provided under section 194C, clause (vi) of the Act was introduced in the Statute to be applicable w.e.f. 11.10.2009. In view of this, no addition under section 40(a)(ia) can be made in this regard. The ground No.3 raised by the Revenue is dismissed. 11. The ground No.4 raised by the Revenue is against the action of the learned CIT (Appeals) in deleting the addition of ₹ 30,98,957/- made by the Assessing Officer under section 36(1)(iii) of the Act. 12. Briefly, the facts of the case are that during the year, the assessee had given following amounts under the head loan advances : (i) Sampuran Estates Pvt. Ltd. Rs.3,18,60,035/- (ii) Hari Gopal Singh HUF Rs.1,17,21,715/- Rs.4,35,81,750/- 13. The assessee has charged interest to the tune of ₹ 3,14,850/- only. Rejecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments are made in terms of agreement which has not been doubted by the A.O. It is also not the case of the A.O. that the payments made are unreasonable. On the other hand, the appellant has duly submitted that properties are taken on rent for the purpose of business as per agreements executed and also justified the payment made which are not rebutted by the A.O. The properties are taken on rent and are being used by the appellant for-the purpose of business. Thus, there is business expediency involved in the transaction and for that reason, in my opinion, ratio of M/s Abhishek Industries is not applicable. Rather the issue is supported by the ratio of decision in the case of S.A. Builder Ltd. 288 ITR 1. Thus, looking into the entirety of facts of the case, the addition made by the A.O. is deleted. 17. We do not find any infirmity in the order of the learned CIT (Appeals) as it is a fact that the Assessing Officer has not doubted the genuineness of the agreements entered into with these two parties. The payments have been made in terms of the clauses of these agreements. The agreements have been entered into out of commercial expediency. Therefore, no addition under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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