2011 (7) TMI 1167 - AT - Income Tax

Summary

Issues involved: Appeals against the order of Commissioner of Income Tax (Appeals)-XX, Ahmedabad u/s 143(3) of the Income Tax Act, 1961 regarding deletion of addition made on account of excess stock and disallowance of remuneration/salary paid to partners.

ITA No.2210/Ahd/2008 (Revenue's appeal):
The Revenue appealed against the deletion of addition on account of excess stock of Rs. 19,65,223/- based on a survey where physical stock exceeded the stock shown in the books. The assessee explained that the excess stock calculation was based on estimates and errors in the survey team's working. The CIT(A) deleted the addition, noting the discrepancies in the survey team's calculations and the lack of veracity in the documents. The Tribunal upheld the CIT(A)'s decision, emphasizing the absence of mistakes in the assessee's excess stock calculation and the proper working of stock reconciliation.

ITA No.2215/Ahd/2008 (Assessee's appeal):
The assessee appealed against the disallowance of Rs. 4,53,836/- from remuneration/salary paid to partners, contending that the AO unjustly reduced the excess stock from the profit of the business when calculating partners' remuneration. The Tribunal observed that the entire business income declared by the assessee was accepted by the AO, and no income was assessed under "Income from Other Sources." Therefore, the disallowance of remuneration to partners was unjustified, and the Tribunal deleted the disallowance.

In conclusion, the Revenue's appeal was dismissed, and the assessee's appeal was allowed, with the Tribunal upholding the CIT(A)'s decision on the excess stock issue and deleting the disallowance of remuneration to partners.