1988 (11) TMI 145 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 19,755 to trading results
2. Disallowance of Rs. 1200 from shop expenses
3. Disallowance of Rs. 600 from travelling expenses
4. Rejection of claim under s. 80G for donation to Gaushala
5. Charge of interest under s. 215

Analysis:

1. Addition of Rs. 19,755 to trading results:
The assessing officer added Rs. 19,755 to the trading results due to a lower Gross Profit rate declared by the assessee. In appeal, the addition was upheld. However, the assessee argued that the comparable case used by the assessing officer was not truly comparable, citing differences in capital employed, turnover, and yield on capital. The tribunal found that even with a slight fall in Gross Profit rate, the assessee had declared more income in the return, indicating a focus on maximizing net profit. Comparing turnover/capital ratio and yield on capital, the tribunal concluded that there was no justification for the addition and deleted it.

2. Disallowance of Rs. 1200 from shop expenses:
The second ground involved the disallowance of Rs. 1200 from shop expenses claimed by the assessee. The tribunal noted that no basis was provided by the authorities for the disallowance. Considering the turnover and activities of the assessee firm, the tribunal found the total expenditure claimed to be reasonable and deleted the disallowance.

3. Disallowance of Rs. 600 from travelling expenses:
Regarding the disallowance of Rs. 600 from travelling expenses, the assessing officer made the disallowance as the break-up of expenses according to IT Rules was not submitted by the assessee. The tribunal declined to interfere with this disallowance, considering the history of the case.

4. Rejection of claim under s. 80G for donation to Gaushala:
The assessee claimed a deduction under s. 80G for a donation to Gaushala. However, the claim was rejected by the assessing officer due to the lack of appropriate receipt clarifying the charitable purpose of the receiving trust. The tribunal found the decision of the Commissioner(A) to be fair in directing the assessing officer to allow the claim upon submission of appropriate evidence under s. 154 of the Act.

5. Charge of interest under s. 215:
The last ground involved the charge of interest under s. 215, which was deemed consequential. The tribunal stated that no order was necessary in this regard. The order passed by the Commissioner(A) was modified, and the assessing officer was directed to pass appropriate orders in the case of the assessee and partners. Overall, the appeal was allowed in part.