TMI Blog2016 (3) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... was increase in the license fee therefore there cannot be comparison of the profit from the earlier years. The reasons given by the assessee have not been rebutted by the AO in his comments before the Ld. CIT(A). No inflation of purchases or suppression of sales were found. AO has not pointed out if any expenses have been inflated by the assessee. Mere low gross profit is not a ground to reject the books of account of the assessee. The submission of the assessee since have not been rebutted by AO at the appellate stage and no specific defects have been pointed out in maintenance of the books of account, therefore whole addition was unjustified which was correctly deleted by the Ld. CIT(A)- Decided against revenue Addition on account of additional license fee - Held that:- The certificate by Excise And Taxation Officer (Excise) Jalandhar and Gurdaspur to prove that additional license fee has been paid by the assessee as directed by the Excise And Taxation Department. Since the additional license fee is paid as per direction of the State Government for running of the business, therefore, the amount was spent wholly and exclusively for the purpose of business and as such allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riculture income of ₹ 21,25,607/- which was added by the AO on account of income from other source. The addition was challenged before the Ld. CIT(A) and detailed submissions were made. Ld. CIT(A) accepted the earning of agricultural income @ ₹ 10,000/- per acre and allowed the appeal of the assessee deleting the addition of ₹ 14,20,000/- and rest of the amount of ₹ 7,05,607/- was confirmed. The Revenue is now challenging deletion of addition of ₹ 14,20,000/- and assessee in the C.O. challenged the part addition sustained by the Ld. CIT(A) in a sum of ₹ 7,05,607/-. Ld. Representative of both the parties submitted that the issue is identical as have been argued by them in Cross Objection No. 26 27/Chd/2015 for Assessment year 2009-10 2010-11. It is therefore submitted that the order in this C.O. may be followed in the present matter. 5. On consideration of the fact of the case and submissions of the parties we find that the issue is same as have been considered in preceding Assessment year 2009-10 and 2010-11 in C.O. No 26 27/Chd/2015, in which vide order dt. 10/03/2016, we have accepted the earning of agricultural income @ ₹ 15,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itability in the trade depends upon many factors like demand and supply, place, competition in the market, availability of finances etc. There was a cut throat competition in the business in order to maintain sale and to compete in the market one has to lower down his profits for regular circulation of finances. The assessee has to rely on the staff and employees therefore comparison from the earlier year was factually wrong. The license fee has also increased as compare to the last year and additional license fee was also charged which were the factor for low gross profit. There is increase in the expenditure as compare to earlier year. All the transactions are carried out through the Excise Department therefore, without any evidence of suppression of sale, the addition was wholly unjustified. It was also submitted that assessee has surrendered income of ₹ 2.25 Crores which has been duly reflected in the profit and loss account and even if there was any discrepancy the same would stand covered by the income surrendered. The submissions of the assessee were forwarded to the AO for his comments in which the AO reiterated the facts stated in the assessment order. 8. Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had debited an amount of ₹ 41,30,937/- as additional license fee which is charged on account of non or low payment of license fee. The AO considered it to be penalty in nature and disallow the same. The assessee submitted before the Ld. CIT(A) that AO has never confronted the assessee on this issue and it was submitted that additional license fee has been imposed by the Excise and Taxation Department, Government of Punjab on every purchase made under the Atta Daal Scheme introduced in the Assessment year under appeal. It was wrong to say that additional fee is charged on account of non or late payment of license fee. It has to be paid for every purchase as the purchase permit is issued on payment of additional license fee. Since expenses was made during the course of the business therefore it should not be disallowed. 12. The Ld. CIT(A) considering explanation of the assessee and material on record found that additional license fee is not in the nature of penalty and there was no opportunity given by the AO to explain this issue. The assessee produce sufficient material on record to prove that additional license fee has been imposed by the Excise and Taxation Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 8.41 crores debited as per Annexure-VI under the head loans and advances of audited balance sheet and out of this a sum of ₹ 1.06 crores relate to payment of security and balance with Revenue authority and further the sum of ₹ 4.33 crores are old ones as per details separately annexed. All these advances are opening brought forward balances. The AO has not established that the amount borrowed on interest has been advanced as interest free in the year under assessment. No addition can be made when the advances were opening brought forward balance from the last year. The assessee relied upon several decisions in support of its contention. The rest of advances also do not have any direct nexus with interest bearing loans. The Revenue has nowhere established that the loan has been given only for personal purpose. However the loan has been given on account of commercial expediency. AO has wrongly disallowed the amount of interest. There were huge amount of credit balance in the account of unsecured loans i.e; ₹ 36,99,500/- and creditors ₹ 5,95,89,498/-etc. to whom no interest has been paid by the assessee. Furthermore there is a credit of ₹ 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion would arise that investment would be out of the interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investments . 19. Considering the facts and circumstances noted above and the findings of the facts arrived at by the Ld. CIT(A), we do not find any merit in this ground of appeal of the Revenue and the same is accordingly dismissed. 20. On Ground No. (e), the Revenue challenged the deletion of addition of ₹ 10,00,000/- on account of excessive freight charges. The AO compared the freight charges with the preceding Assessment year and found that disproportionate increase in the expenditure and accordingly made the addition. 21. The assessee submitted before the Ld. CIT(A) that the liquor was purchased from Wholesale Licensees, Distilleries with their depots / dumps which are situated at far and near places from the place of business. Assessee has given reasons for increase in the expenditure due to increase in the purchases therefore, addition was wholly unjustified which have been correctly deleted by the Ld. CIT(A). Therefore, this ground of appeal of the Revenue is dismissed. 22. On Ground No. (f), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o explain the source of the investment in these jewellery. However, adult family members was allowed exemption of 500gms of jewellery and in case of minor it was allowed at 100 gms of jewellery. The AO therefore allowed exemption of 2900 gms of jewellery as against the possession of 6711.900 gms of jewellery and made the above addition. 31. It was submitted before the Ld. CIT(A) that during the search 6711.900 gms of jewellery valuing at ₹ 1,58,55,503/- was found at residence and lockers in bank of the assessee and his family members. The assessee and his family members are regularly assessed to Wealth Tax and they have filed their returns of Wealth declaring the quantity and value of the Jewellery as on valuation date held by them. The chart of the same was submitted before the Ld. CIT(A) and it was submitted that assessee and his family members have declared 8610.300 gms of jewellery which was much more than found at the time of search, therefore, whole addition is unjustified. The claim of assessee was not rebutted by the AO in his comment before the Ld. CIT(A). 31.1 Ld. CIT(A) found that assessee and his family members are filing Wealth Tax Return (WTR) in which the ..... 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