9911796707
|
Home
Issues:
1. Addition of Rs. 5,000 during the assessment years 1968-69 and 1969-70, and Rs. 2,500 during the assessment year 1970-71 due to failure to produce vouchers. 2. Addition of Rs. 3,000 as cash credit during the assessment year 1968-69 and disallowance of interest thereon. 3. Disallowance of interest of Rs. 4,000, 4,400, and Rs. 4,000 in three years respectively for diverted borrowed funds. Analysis: 1. The first issue pertains to the addition of Rs. 5,000 and Rs. 2,500 during specific assessment years due to the assessee's failure to produce vouchers. The Income-tax Officer and the Appellate Asstt. Commissioner both questioned the absence of vouchers, leading to the additions. However, upon further examination, it was revealed that the assessee did produce both books of accounts and vouchers before the Appellate Asstt. Commissioner. As no defects were found in the books or vouchers, the additions were deemed unjustified and subsequently deleted. 2. The second issue revolves around the addition of Rs. 3,000 as a cash credit during a particular assessment year and the subsequent disallowance of interest. Initially, the Income-tax Officer treated the cash credit as undisclosed income due to the absence of a confirmation letter from the creditor. Despite the creditor's statement confirming the loan and interest earned, the Appellate Asstt. Commissioner upheld the addition. However, upon a detailed review of the creditor's statement and circumstances, it was concluded that the loan was genuine, leading to the deletion of the addition and allowing the interest paid. 3. The final issue concerns the disallowance of interest on borrowed funds diverted for building construction over three assessment years. The Income-tax Officer disallowed the interest payments as the funds were not entirely used for business purposes. The assessee argued that while the borrowed funds were diverted for construction, they should still be eligible for deduction under the Income Tax Act. After careful consideration of the fund diversion and domestic expenses, it was determined that the interest disallowance was partly incorrect. The assessee's explanation and evidence led to the direction to allow deduction for interest from property income under the relevant Act section. In conclusion, the appeals were partly allowed based on the detailed analysis and findings for each issue raised by the assessee, resulting in the deletion of certain additions and the allowance of deductions where justified under the Income Tax Act.
|
