9911796707
TMI Blog1981 (8) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... ot verifiable, rejected the book results and estimated the gross profit rate of 35% on the estimated turnover of Rs. 2,00,000 and Rs. 2,75,000 for the asst. yrs. 1974-75 & 1975-76. He, therefore, took the additional profits of Rs. 45,346 and Rs. 18,730. The additional profit for the asst. yr. 1976-77 was taken by him at Rs. 60,000. 3. The assessee came in appeal before the AAC and contended that the profit estimated by the ITO was highly excessive. The AAC was partially convinced with the arguments of the assessee, and he, therefore, applied the gross profit rate of 30% for all the years. He estimated the turnover at Rs. 1,95,000. Rs. 2,10,000 for the asst. yrs. 1974-75 and 1975-76. Consequently, the additions were restricted to Rs. 33,846 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss profit rate of 25% may be applied in these years and, accordingly, the additional income for the purposes of the additions may be calculated. 6. The next point is about the additions of Rs. 14,400 and Rs. 21,000 out of interest in the asst. yrs. 1975-76 and 1976-77. The assessee was running a hotel in the building owned by one of the co-owners, Smt. Gulabi Devi. The assessee during the years under appeal raised loan from the Central Bank of India and advanced Rs. 1,20,000 to the owners of the building for the construction of the 4th and 5th floors on the ground that 4th and 5th floors would also be let out to the assessee without enhancing the rent and the amount advanced by the assessee shall be adjusted against the rent payable by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence the disallowance of interest should be confirmed. 9. The assessee is a hotelier and had needed more accommodation for its hotel purposes. Consequently, the advance of Rs. 1,20,000 was made to the owners of the building on the condition that the additional space constructed by the owners shall be provided to the assessee and the assessee may not be asked to pay the additional rent for the additional space. If these two factors are taken into consideration, it is clear that the advance was made by the assessee to the owners of the building for the purposes of its business. The assessee has made this advance in course of its business and has got the benefit of the additional space without paying the additional rent. Under the above circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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