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2016 (9) TMI 1243 - AT - Income TaxDetermination/estimation of commission income u/s. 144 r.w.s. 148 and 145 - Held that - Assessee had already offered the same for taxation purpose but with rider of allowability of certain expense against same. Hence, the rate of 6% adopted by Assessing Officer was highly one. Hence, the commission income was to be taken @ 0.6% of sales turnover Allowability of the deduction of rebate u/s.88 - additional ground - Held that - According to assessee, as per Section 88, assessee being individual is eligible for claiming the deduction @ 20% of contribution made in PPF LIC premium and other. Assessing Officer while computing total income escaped the said rebate without any comment. Hence, requested that the rebate claimed by assessee required to be allowed as per law. Lower authorities had no occasion to adjudicate this issue being taken as additional ground. In the interest of justice, this issue is restored to Assessing Officer with direction to allow the same as per fact and law. Allowability of deduction u/s.24(b) of the Act on account of interest paid on housing loan - Held that - This issue has been raised by way of addition ground before us. As stated above, this issue was taken before Assessing Officer who escaped the above deduction while computing the total income of assessee and even not given any comment for the same on merit. Being legal issue, it can be raised before us. It is maintainable, so, same is entertained at this stage. Since on facts there is no finding of lower authorities, so, this issue is restored to Assessing Officer with direction to decide the same as per fact and law after giving opportunity of hearing to assessee. Nature of loss - business v/s capital loss - Held that - The Explanation to section 37 of the Act has really nothing to do with the instant case as it was not a case of business expenditure, but of business loss. Business losses were allowable on ordinary commercial principles in computing profits. Once it was found that heroin seized formed part of stock-in-trade of assessee, it followed that the seizure and confiscation of such stock-in-trade had to be allowed as a business loss. Loss of stock-in-trade has to be considered as a trading loss. Thus we hold that addition is unjustified. Same should be allowed as business loss Disallowance of long term capital gain - Held that - Revenue authorities held that assessee failed to file the details. Hence, Assessing Officer treated gain as trading business income. In this regard, the stand of assessee has been that all details were submitted before Assessing Officer and long term capital gain cannot be treated as share trading activity. During year, assessee earned long term capital gain. Assessee has not given details, so, Revenue authorities were justified in disallowing the claim of assessee. Treating the speculative income as normal income and accordingly not giving the set off of carry forward speculation loss - Held that - Assessing Officer held that assessee failed to file the details. So, he treated the speculative income as normal income. During year, assessee earned the speculative profit of ₹ 10,073/-. Assessee has not given details, so, Revenue authorities were justified in disallowing the claim of assessee Not allowing the short term capital loss - Held that - Assessee filed the details. Assessee stated that loss was taken place which is not in dispute, but, Assessing Officer got confused whether it is a short term capital loss or trading loss or speculative loss. But, Assessing Officer failed to consider that shares were always shown by assessee as investment and assessed in past also as investment activity. Hence, gain is required to be allowed as short term capital loss. According to assessee, Assessing Officer cannot deny the loss because of confusion. Now, as per CBDT Circular No.6 of 2016 dated 29.02.2016 investment in short term capital gain be assessed as short term capital gain. Being legal issue raised before us in the light of CBDT Circular, we admit this ground and restore this issue to the file of Assessing Officer to decide the same as per fact and law Addition on account of claim of housing loan interest - Held that - Assessee claimed interest on house loan u/s.24(b) which is already disallowed by Assessing Officer, hence, by disallowing the interest debited in capital account lead to double taxation which is against the law of taxation. Hence, requested that disallowance made by Assessing Officer be deleted. According to the contention of assessee, when expenses were not claimed at all, then same could not be disallowed. Agreeing to the contentions of assessee we do not find that addition in question is not justified. Same is directed to be deleted. Treating the dividend income as taxable income - Held that - In present case, Assessing Officer has not disputed that the income was dividend. He just wants the details which were already in his possession. According to Revenue authorities, one thing is clear that assessee had invested in shares and securities which were not in dispute and all the shares were listed shares of company. Hence, it cannot be imagined that dividend received from Indian company was taxable. Therefore, it was requested to allow the exemption u/s.10(33) of the Act and treated the dividend income as exempt.In this background, we are of the view that this issue needs to be analysed in the facts of the case as prayed by assessee
Issues Involved:
1. Addition of commission income on sales. 2. Rejection of books of account under Section 145. 3. Deduction of expenses on an ad-hoc basis. 4. Allowability of deduction under Section 88. 5. Estimation of commission income. 6. Allowability of housing loan interest under Section 24(b). 7. Treatment of business losses and speculative income. 8. Allowability of deductions under Chapter VI-A. 9. Treatment of dividend income as taxable. Issue-wise Detailed Analysis: 1. Addition of Commission Income on Sales: The primary issue was the addition of commission income based on accommodation bills. The Assessing Officer (AO) estimated the commission at 6% of the turnover, which was contested by the assessee, who claimed a 1% commission. The Tribunal found that the AO's estimation was based on the facts and circumstances of the case, including the survey findings and the assessee's statements. The Tribunal ultimately held that a commission rate of 0.6% on the turnover was reasonable, considering similar cases and market practices. 2. Rejection of Books of Account under Section 145: The AO rejected the books of account under Section 145, citing discrepancies and the nature of the assessee's business, which involved issuing accommodation bills. The Tribunal upheld the rejection, noting that the assessee failed to provide verifiable evidence for the transactions recorded in the books. 3. Deduction of Expenses on an Ad-hoc Basis: The AO allowed an ad-hoc deduction of 5% of the commission income for expenses. The assessee contested this, seeking actual expenses. The Tribunal upheld the AO's decision, stating that the ad-hoc deduction was reasonable given the lack of detailed evidence from the assessee. 4. Allowability of Deduction under Section 88: The assessee claimed deductions under Section 88 for investments in PPF and LIC premiums. The AO did not address this in the assessment order. The Tribunal restored the issue to the AO for verification and allowance as per the law. 5. Estimation of Commission Income: The AO estimated the commission income based on a 6% rate, while the assessee argued for a 1% rate. The Tribunal considered precedents and market practices, concluding that a 0.6% commission rate was reasonable. This decision was applied consistently across multiple assessment years for various appellants. 6. Allowability of Housing Loan Interest under Section 24(b): The assessee claimed deductions for housing loan interest, which the AO disallowed due to a lack of evidence. The Tribunal restored this issue to the AO, directing verification of the claims and allowance as per the law. 7. Treatment of Business Losses and Speculative Income: The assessee claimed business losses from share transactions and sought set-off for speculative income. The AO treated these as normal income due to insufficient details. The Tribunal restored these issues to the AO for re-examination and proper classification based on the facts and evidence provided. 8. Allowability of Deductions under Chapter VI-A: The assessee claimed various deductions under Chapter VI-A, which the AO did not allow. The Tribunal restored these issues to the AO for verification and allowance as per the law, ensuring that eligible deductions were granted. 9. Treatment of Dividend Income as Taxable: The AO treated dividend income as taxable due to a lack of details from the assessee. The Tribunal restored this issue to the AO, directing verification of the nature of the dividend income and allowance of exemption under Section 10(33) if applicable. Conclusion: The Tribunal's judgment provided a detailed analysis of each issue, often restoring matters to the AO for re-examination and verification. The consistent application of a 0.6% commission rate on turnover and the allowance of housing loan interest and other deductions as per law were key outcomes. The judgment emphasized the importance of verifiable evidence and adherence to statutory provisions in tax assessments.
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