2015 (6) TMI 1258

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....circumstances of the case, the learned CIT(A) was justified in deleting the addition of Rs. 4,77,000, made by the A.O. on account of low gross profit; "2. Whether in law and on facts and in the circumstances of the case, the learned CIT(A) was justified in deleting the addition of Rs. 2,83,897, made by the A.O. by invoking the provisions of section 40A(2)(b) of the Act on account of interest paid; 3. Whether in law and on facts and in the circumstances of the case, the learned CIT(A) was justified in deleting the addition of Rs. 5.07.090, made by the A.O. by invoking the provisions of section 40A(2)(b) on account of commission paid by invoking provisions of section 40A(2)(b) of the Act; and 4. Whether in law an....

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....s, we are in agreement with the observation of the learned CIT(A) that the Assessing Officer has not brought on record any cogent material in support of the claim that assessee's books of account are liable to be rejected. A very slight decline in gross profit ratio cannot give rise to rejection of books of account in this case. There is no rule that the gross profit ratio should follow a constant ratio with mathematical precision. We further note that there has been a huge and over 100% increase in the turnover as compared to preceding year. Hence, the explanation that increase in turnover has affected margin cannot be brushed aside. In these circumstances, we uphold the order of the learned CIT(A) and delete the addition of Rs. 4.77 lakh....

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....st has been paid by the assessee in other assessment years which has been accepted by the Revenue. The instance of Shri Trilochan Singh Chawla, has been suitably distinguished by the learned Counsel. In these circumstances, in our considered opinion, the rate of interest paid by the assessee to the persons specified under section 40A(2)(b) cannot be considered to be excessive. Accordingly, we uphold the order of the learned CIT(A). Ground no.2, is dismissed. 11. Apropos ground no.3; on this issue, the Assessing Officer noted that the assessee had paid commission to two persons namely Shri Ashok Kumar Arora and Shri Inerpal Arora, who are the persons specified under section 40A(2) of the Act. When confronted, the assessee submitted that b....