TaxTMI 
TaxTMI 
TaxTMI 
2011 (9) TMI 1018
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.... held that the books of accounts are not acceptable on account of following reasons though the results declared by the assessee are better as compared to the preceding year. a. There is variation in monthwise yield of mustard oil and mustard cake. b. Despite fall in sales, there is increase in packing, sales promotion and loading & unloading charges. c. Closing stock is worked out on the basis of G P rate which is nothing but managing the gross profit declared. d. Royalty charged from Deepak Vegpro Pvt. Ltd. and Saurabh Agrotech (P) Ltd. should be based on quantity of oil sold instead of charging a fixed amount which is nothing but the modus operandi of the assessee not showing the actually royalty received. e. Records of quality of mustard seeds purchased and crushed is not maintained. f. No daily quantitative consumption records are maintained in respect of consumable store, viz. coal, wood. These claims are not subject to verification. g. The assessee's basis of valuation of closing stock is not fully verifiable. h. Genuineness of purchases from sister concerns is not verifiable. i. In case of sister concern GP rate of 9.12% has been declared. The assessee was not able ....
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....d are required to be disallowed. Accordingly he disallowed interest and other expenses @ 13.5% of the alleged funds diverted i.e. Rs. 11,26,190 (83,42,160 * 13.5%) u/s 14A. 4.4 The CIT (A) has directed the A O to rework out the disallowance by giving following findings:- "It is seen that the A O is justified in invoking the provision of section 14A of the Income Tax Act, 1961 under the given circumstances on the grounds as mentioned in the assessment order. However while making the disallowance, he ought to have brought clarity regarding the income earned and expenditure made for earning such income. On the other hand the AR ought to have assisted the A O in clarifying the position for determining whether disallowance needed to be made u/s 14A of the I. T. Act. The AR shall furnish the complete information to the A O. After examining the same the A O shall work out the disallowance u/s 14A of the I. T. Act. This ground of appeal is partly allowed." 4.5 During the course of hearing, the ld. AR of the assessee submitted as under:- 1. At the outset, it may be pointed out that from the investment made in building at Hanuman Nagar assessee has declared rental income of Rs. 2,....
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....ss Ltd. 52 DTR 005 order dt. 16.12.2010 In this case CIT(A) deleted the disallowance on the ground that assessee had maintained that interest expenditure was incurred in respect of borrowing on cash credit limits utilized for normal business purpose of the assessee & no part of borrowed funds has been utilized for making investment in tax free bonds & that the AO had not established any nexus between the borrowed funds & the investment in tax free bonds. These findings of CIT(A) was held justified & it was held that where funds are mixed & it is not possible to ascertain as to whether investment in tax free bonds was out of assessee's own fund, the AO did not establish nexus between borrowed funds & the investment in tax free bonds, in such cases apportionment on pro rata basis was improper in the absence of any thing brought by the AO to rebut the assessee's stand that the investment in tax free bonds had been made out of the funds of the shareholders. 4.7 The ld. AR of the prayed that in view of above, the AO may be directed to invoke 14A only if relationship of expenses with exempt income is established. If there is no exempt income or no relationship of expenses with e....
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....mitted through its written submission as under:- ''1. Section 23 'Annual Value how determined' (relevant extract) be read as under: (1) For the purpose of section 22, the annual value of any property shall be deemed to be - (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or ------------- ------------- There is no dispute that in the present case the assessee has acquired the building for a sum of Rs. 64.65 Lacs for which interest free loan of Rs. 50 Lacs is given by one of the Tenant M/s. Vijay Solvex Ltd (PB 17). Hence investment of assessee's own funds is only to the extent of Rs. 14.65 Lacs. On this amount rent of Rs. 2,16,000/- gives a return of 15% p.a. Considering the prevailing market rate of return on investment, rent received @ 15% is in excess of the sum for which the property might reasonably be expected to let from year to year. Hence the sum received is the annual value of the property owned by the a....
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....rinciples given by Hon'ble Delhi High Court in determining the ALV. Hence, this issue is restored back on the file of the AO. 6.1 The 6th ground of appeal of the assessee is that the ld. CIT(A) has erred in sustaining a sum of Rs. 1.00 lac out of disallowance of packing material expenses. 6.2 The third ground of appeal of the revenue is that the ld. CIT(A) has erred in restricting the disallowance to the extent of Rs. 1.00 lac as against Rs. 6,30,218/- made by the AO on account of packing material expenses. 6.3 The assessee claimed packing material expenses for the year at Rs. 26,30,218/-. The AO observed that packing material expenses claimed is on higher side as compared to preceding year despite the fact that during the year under consideration volume of turnover has decreased. He further held that the assessee could not furnish any record which can represent the consumption of packing material as well as goods remained in stock. The reply of the assessee regarding comparatively more sale of oil in packed condition in this year is not supported with the records maintained. The AO accordingly allowed packing material expenses to Rs. 20,00,000/- and disallowed the ba....
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..... 2,32,140/- keeping in view the percentage of expenses claimed in the preceding year. 7.4 The ld. CIT (A) confirmed the reasoning given by the AO for making the disallowance but restricted the disallowance to Rs. 50,000/- to meet the ends of justice after finding that there is substance in the submission of assessee and by considering the disallowance on higher side. 7.5 During the course of hearing, the ld. AR of the assessee through his written submission submitted as under:- ''Copy of ledger account of Loading & Unloading expenses is at PB 33-34. All expenses are fully vouched. The AO did not point out any discrepancy in the details submitted before him. The expenses have been incurred on day to day basis. The assessee has deducted the tax upon the payment of Rs. 16,66,347/- which has been paid to the contractors. On account of sale of finished goods in small packing, the expenses under this head has gone up, which facts have remained uncontroverted. In regard to the justification for the increase in the loading and unloading expenses, it is submitted that in terms of amount there is an increase in the loading and unloading expenses. However with reference to total number of....