TMI Blog2016 (12) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee could not point out from the record. However, he submitted that requisite evidence was placed before the AO. In the absence of the contract, it cannot be inferred that the FDRs were made by the assessee was out of commercial expediency. We, therefore, deem it in the interest of justice to restore this issue to the file of the AO to verify whether the FDRs receipts made by the assessee were out of commercial expediency. The AO observed that the assessee was required to make the FDRs with the banker for getting the performance guarantee/ bank guarantee as to the contract executed by the assessee. Thus, he would treat interest as income from business receipt, if the assessee fails to establish the nexus between the contract and the FDRs, in that event, no relief would be granted.- Decided in favour of assessee for statistical purposes. Disallowance on account of sales and administrative expenses incurred at the petrol pump of the assessee - Held that:- The AO did not produce the relevant bills and vouchers as to the above sales and administrative expenses. Hence, the AO disallowed 20% of total expenses of ₹ 13,78,700/- which comes to ₹ 2,75,740/-. Before the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the sake of convenience and brevity, these appeals are being disposed off through a common order. 2.1 First of all, we take up the cross appeals for the assessment year 2009-10 wherein the grounds raised by the assessee and Revenue are as under:- A.Y. 659/JP/2014 Assessee -A.Y. 2009-10 1. That the lower authorities have erred in law and on the facts in rejecting the books of account u/s 145(3) of the I.T. Act. 2. That the ld. CIT(A) grossly erred in lower authorities and on the facts in directing to apply net profit rate @ 9.75% on contract receipts of the assessee subject to interest depreciation but subject to income declared by the assessee 3. That the lower authorities grossly erred in law and on the facts in treating the gross interest received on FDR NSC of ₹ 29,29,387/- as income from other sources instead of business receipts. 4. That on the facts and circumstances of the case the ld. CIT(A) grossly erred in disallowing a sum of ₹ 1,37,870/- on account of sales and administrative expenses incurred at the petrol pumps of the assessee. AY. 673/JP/2013 Revenue -A.Y. 2009-10 On the facts and in the circumstances of the case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged these findings of the ld. CIT(A) by filing the separate appeals. 3.4 In the present appeal, the assessee challenged the findings of the ld. CIT(A) for making benefit of depreciation and interest subject to income declared by the assessee. 3.5 The ld. Counsel for the assessee reiterated his submissions as made in the written submission and submitted that the ld. CIT(A) was not justified in subjecting the benefit of the depreciation and interest to the income declared by the assessee. The ld. Counsel for the assessee submitted that similar addition was also made in earlier year and the matter traveled upto this Tribunal in ITA No. 524 525/JP/2010 pertaining to assessment year 2005-06 and 2007-08. The Coordinate Bench was pleased to uphold the net profit rate of 9.75% subject to depreciation and interest. He submitted that facts are identical in this case and the issue is squarely covered by the decision of Jaipur Bench. 3.6 On the contrary, the ld. DR has opposed the submission of the ld. Counsel for the assessee and supported the orders of the authorities below. 3.7 We have heard the rival contentions and gone through the orders of the authorities below. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the contract, it cannot be inferred that the FDRs were made by the assessee was out of commercial expediency. We, therefore, deem it in the interest of justice to restore this issue to the file of the AO to verify whether the FDRs receipts made by the assessee were out of commercial expediency. The AO observed that the assessee was required to make the FDRs with the banker for getting the performance guarantee/ bank guarantee as to the contract executed by the assessee. Thus, he would treat interest as income from business receipt, if the assessee fails to establish the nexus between the contract and the FDRs, in that event, no relief would be granted. Thus Ground No. 3 of the assessee is allowed for statistical purposes. 5.1 The Ground No. 4 of the assessee is against confirming the disallowance of ₹ 1,37,870/- on account of sales and administrative expenses incurred at the petrol pump of the assessee. 5.2 The ld. Counsel for the assessee reiterated the submissions as made in the brief note. The ld. Counsel for the assessee stated that only expenses are verifiable from the books of account maintained by the assessee. He further submitted that the expenses are to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the ld. CIT(A) has estimated the disallowance @ 10% which appears to be reasonable. Therefore, the Ground No. 2 of the Revenue is dismissed. 9.1 The Ground No. 3 of the Revenue is against restricting the allowance out of sales and administrative expenses to 10% as against made by the AO at 10%. It is noted that this issue has already been dealt with in ITA No. 659/JP/2013 in assessee's own case wherein the action of the ld. CIT(A) has been confirmed. Hence, we find no infirmity in the order of the ld. CIT(A) on this issue. Thus Ground No. 3 of the Revenue is dismissed. 10.1 The Ground No. 4 of the Revenue is against deleting the addition of ₹ 2,44,645/- u/s 69B of the Act without making any reference to the Valuation Officer s valuation report dated 18-12-2008. 10.2 During the course of hearing, the ld. DR supported the order of the AO and submitted that the ld. CIT(A) was not justified in deleting the addition. 10.3 On the contrary, the ld. Counsel for the assessee supported the order of the ld. CIT(A). 10.4 We have heard the rival contentions and gone through the orders of the authorities below. We find that the ld. CIT(A) has deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) may be modified to the extent of that the AO would be at liberty to verify claim of the assessee in relevant assessment year. We therefore, modify the findings of the ld. CIT(A) to the extent that the AO would be at liberty to verify the claim of the assessee in the relevant assessment year. Thus Ground No. 5 of the Revenue is disposed off in terms of the above direction. 12.1 Now we take up the appeal of the assessee in ITA No. 217/JP/2015 for the assessment year 2010-11 wherein the assessee has raised the following grounds of appeal. 1. The ld. CIT(A) erred in law as well as on the facts of the present case in sustaining the rejection of books of account of the assessee and also sustaining net profit rate of 5% without allowing interest and depreciation. 2. The ld. CIT(A) erred in law as well as on the facts of the present case in sustaining of assessment of the interest income as income from other sources instead of business income as declared by the assessee. 3. Without prejudice to above, the ld. CIT(A) erred in law as well as on the facts of the present case in not allowing set off of interest expenses out of interest income. 4. The ld. CIT(A) err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's appeal. Thus Ground No. 1 of the assessee is partly allowed. 14.1 The grievance of the assessee in Ground No. 2 and 3 is as under:- 2. The ld. CIT(A) erred in law as well as on the facts of the present case in sustaining of assessment of the interest income as income from other sources instead of business income as declared by the assessee. 3. Without prejudice to above, the ld. CIT(A) erred in law as well as on the facts of the present case in not allowing set off of interest expenses out of interest income. 14.2 We have heard the rival contentions and gone through the orders of the authorities below It is noted that similar issue has been dealt by us in assessee's own case for the assessment year 2009-10 wherein the similar issue has been restored to the file of the AO with following directions. We, therefore, deem it in the interest of justice to restore this issue to the file of the AO to verify whether the FDRs receipts made by the assessee were out of commercial expediency. The AO observed that the assessee was required to make the FDRs with the banker for getting the performance guarantee/ bank guarantee as to the contract executed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en claimed. Kindly refer PB 16 where the sales tax expenses have been claimed. But while applying the n.p. rate, no separate deduction is allowed on account of such sales tax paid by the assessee and hence, in corollary income can also not be assessed separately. Considering the above facts and circumstances of the case, the separate addition of sales tax refund need to be deleted and appeal of the assessee is prayed to be allowed accordingly. 15.3 The ld. DR relied on the orders of the authorities below. 15.4 We have heard the rival contentions and gone through the orders of the authorities below. It is noted from the records that the assessee received sales tax refund of ₹ 1,89,225/- which the AO treated the same as income from other sources. The ld. CIT(A) did not allow the relief to the assessee with following observations. the sales tax refund was not related to current year and therefore, the same cannot be treated as included in current year s income. However, the same as part of business in view of Section 41(1) of I.T. Act. It is clarified that this income was not included in the income computed from current year s business (as computed in Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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