TaxTMI 
TaxTMI 
2005 (1) TMI 366
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....ee's premises on 14th Dec., 1993. In the statement recorded, the assessee admitted excess stock of Rs. 5,95,388 and offered to include the same in business income for the year under consideration. In reply to question Nos. 13 and 14, the partner of the assessee-firm stated that excess stock found was purchased out of business income of the current year, i.e., the year in which survey took place. In pursuance of the income declared, the assessee credited the same in its P&L a/c and the book profit was increased accordingly. As the assessee was a partnership firm, claim for payment of remuneration to the partner was made by taking book profit which was inclusive of the profit declared by the assessee during the course of survey. However, ....
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....mpute the remuneration payable under s. 40(b) of such income. 7. On the other hand, learned Authorised Representative vehemently argued that excess stock found during the course of survey was purchased out of business income of the current year and a statement to this effect was also recorded by the survey party. He invited our attention to the reply of question Nos. 13 and 14, recorded during the course of survey in which the partners had explicitly stated that the excess stock found was purchased out of the business income of the current year, i.e., the year under which survey took place. He further submitted that assessee has also passed proper entry in the books of account by crediting the income earned in the business which were inves....
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....the course of survey was out of income of the current year which was not recorded uptil the date of survey. There is also no dispute to the fact that assessee had made proper entry in the books of account showing the alleged income as income from business and the book profit was increased accordingly. Thus, the partner of the assessee-firm not only explained the source of investment in the excess stock, but also credited the source of such investment being income from current year's business in its P&L a/c. The AO has not disbelieved the assessee's claim that investment was out of business income. If the Department was of the view that explanation furnished by the assessee regarding source of investment, which was out of current yea....