2011 (4) TMI 1337 - AT - Income Tax

Summary

Issues involved:
1. Challenge to deletion of addition of notional interest on interest free deposit u/s 24
2. Challenge to deletion of addition on account of low gross profit

Issue 1:
The revenue challenged the deletion of addition of notional interest on interest free deposit u/s 24 by the Learned CIT(A). The assessee, an individual, declared total income for the assessment year 2003-04. The Assessing Officer added notional interest on an interest free deposit to the income from house property. The CIT(A) deleted this addition based on rent received being more than the Municipal ratable value, citing the decision in CIT vs. J.K. Investors (Bom) Ltd. The Tribunal upheld the CIT(A)'s decision based on similar precedents and dismissed the revenue's appeal.

Issue 2:
The revenue challenged the deletion of an addition made by the Assessing Officer on account of low gross profit. The assessee, engaged in trading Seasonal Apparels, showed a lower gross profit rate for the year under consideration. The Assessing Officer applied a higher G.P. rate resulting in a trading addition. The CIT(A) deleted this addition after finding the fall in G.P. rate satisfactorily explained and no material defects in the books of account. The Tribunal upheld the CIT(A)'s decision, emphasizing the requirement for specific and material defects in the books of account to reject the shown results.

In conclusion, the Tribunal upheld the CIT(A)'s decisions on both issues, dismissing the revenue's appeal.