TaxTMI 
TaxTMI 
2016 (3) TMI 1340
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....der no disallowance was called for. The sustained ad-hoc addition of Rs. 5,00,000/- be quashed. 2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the addition of Rs. 2,66,982/- made by the A. O. under S. 36(1)(iii) of the Act. The appellant having substantial interest-free funds and there having no evidence that the borrowed funds were utilized for nonbusiness purposes during the year under appeal then disallowance was not called for. The sustained addition be deleted. 3) On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the addition of Rs. 75,000/- made by the A. O. under S. 68 of the Act. The assessee having proved beyond doubt the financial capacity of the lender i.e. his brother Shri Sunil Bharati and his source for such advancement and genuinity of the transaction also was proved then no addition was called for under S. 68 of the Act. The assessee had discharged the liability that lay upon him. The addition be deleted. 4) On the facts and circumstances of the case and in law the Ld. CIT(A) was obliged to carry out the directions given by the Hon'b....
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....ssing Officer concerning the Ground No.1 are tabulated as under :- Particulars of addition as per Assessment Order Amount (Rs.) 1) Difference between inventory and trading account figure of purchase of birds treated as inflated purchases. 8,50,861 2) Under valuation of closing stock considering purchases in February and March, 2001. 2,30,000 3) Excessive and unproved expenses alleging that books of accounts are not properly maintained and labour expenses are not fully vouched and labour expenses are debited in direct expenses as well as in indirect expenses debited to P&L A/c. 6,50,000 6. The CIT(A) after considering the written submissions and the remand report received from the Assessing Officer as narrated in paras 5 and 6 of the CIT(A) order restricted the disallowance at an estimated amount of Rs. 5,00,000/-. 7. We have examined the issue in the light of observations made by the CIT(A). It is contended by the assessee before the CIT(A) that it has maintained books of account and has audited the same. In the course of assessment proceedings, the assessee submitted 'computer generated stock summary' which reflected different figures such as purchases of birds at Rs....
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....tity of closing stock. In this regard the appellant has claimed that he has actually counted the closing stock of birds etc. at the year end and hence the addition made by the A.O. on this count is not justified. In support of this contention the appellant has pointed out that he has not claimed mortality of birds in the profit and loss account and has not claimed any expenditure in this regard as he has considered actual closing stock. The contention of the appellant is found to be correct as no such expenditure is separately debited in the profit and loss account and in the business of poultry the mortality rate of chicks is substantial. The Hon'ble ITAI has also noted the fact that the submission of the appellant and the report of the A.O. in the appellate proceedings have not been considered by my predecessor and hence set aside the order of my predecessor with the direction to pass speaking order after considering and discussing submission of the assessee and report of the AO on the said submission. While it is true that CIT(A)-II, Nashik did not consider the remand report of the AO while deciding the appeal, it is an undisputed fact from the reports of the A.O. and Addl. ....
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....lained expenses. Similarly, the basis for addition of Rs. 2,30,000/- on account of undervaluation of closing stock is February and March purchases which invariably pertains to chicks less than 45 days old remaining unsold. The assessee has not offered any specific explanation on this aspect except mortality factor. We find that the CIT(A) has given partial relief after examining the remand report and the submissions of the assessee and restricted the disallowance to Rs. 5,00,000/- resulting in GP addition of Rs. 5,00,000/-. We find no infirmity in the process of reasoning in arriving at the aforesaid findings of the CIT(A). Therefore, we are not inclined to interfere with the order of the CIT(A) on this issue. Accordingly, Ground No.1 is dismissed. 9. Ground No.2 relates to addition of Rs. 2,66,982/- made by the Assessing Officer under section 36(1)(iii) of the Act. 10. The relevant facts concerning the issue are that the assessee transferred a shed valuing Rs. 17,53,740/- to his brother's account at the end of the year and shown the amount as a debtor without charging any interest. The assessee contended that substantial interest free loan available at the disposal of the assess....
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....2004 whereby any amount of interest paid in respect of capital borrowed for acquisition of assets for expansion of existing business or profession upto the date on which such capital asset is first put to use shall not be allowed as deduction. The assessee has incurred the expenditure relevant to assessment year 2001-02 when such proviso was not present in the statute. Therefore, we find no justification in the action of the Revenue in resorting to the disallowance of interest expenses. No disallowance is thus called for under section 36(1)(iii) of the Act. In the result, Ground No.2 of appeal of the assessee is allowed. 12. Ground No.3 concerns the addition of Rs. 75,000/- on account of unexplained loan from brother Shri Sunil Bharati. The Assessing Officer alleged that no proof was given regarding the source of funds with the brother i.e. the lender Shri Sunil Bharati. The assessee submitted before the CIT(A) that the aforesaid amount was received towards the running business transactions as the assessee has transferred the shed to his brother. These transactions are co-related to each other. The assessee also reiterated before the CIT(A) that his brother is having agricultural ....