9911796707
TMI Blog2012 (7) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... utilization of capacity – Held that:- Unless and until it is proved that there was full capacity utilization, but the same has been suppressed before the department then only there would be a case with the AO for rejection of books of account. Excess consumption of power – Held that:- Fuel and power expenses are directly related to the running of cold storage, some cold storage might run for longer time than the others particularly in view of the fact that rent is relatable to whole year and is not charged on day to day basis - AO was not justified in invoking the provisions of sec. 145(3) of the Act Addition on account of interest income earned on the loans given to farmers – alleged that other cold storage of Agra and nearby locality are also showing income on this account – Held that:- Assessee has given advance to farmers to keep their potato in cold storage of the assessee. The assessee did not charge interest on such advance given to farmers - such interest free advances to the farmers is in accordance with commercial expediency – Addition deleted – In favor of assessee Addition on account of payment made to National bank Handling Corporation – alleged that payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O by disallowing the payment made to National bank Handling Corporation, Mumbai ignoring the fact the payment for acquiring the membership was given once for all and is of capital nature. 5. That the ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the addition of Rs.15,600/- shown to have paid as interest on the loans taken from concerns of Ganga Ram Group ignoring the fact that this group is famous for giving accommodation entries on commission basis and the assessee could not prove the genuineness of these loans in AY 1998-99. 6. That the order of ld. Commissioner of Income Tax (Appeals), Agra being erroneous in law and on facts deserves to be quashed and that of the AO deserves to be restored. 7. That the appellant craves leave to add or alter any or more ground or grounds of appeal as may be deemed fit at the time of hearing of appeal. 2. At the out set, the Ld. Authorised Representative submitted that ground nos. 1, 2 5 are covered in favour of the assessee vide order of I.T.A.T. in assessee s own case for Assessment Year 2006-07 in ITA No.268/Agr/2011 order dated 28.12.2011. It is also submission of the ld. Authorised Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of Rs.40/- and accordingly addition of Rs.11,62,210/- was made. The CIT(A) deleted the addition observing as under :- (CIT(A) paragraph no.3.1) 3.1 While deciding ground nos.1 to 3, I have held that the AO was not right in rejecting the books of account of the assessee by invoking the provisions of sec. 145(3) of the Act. There is nothing on record to suggest that the receipts shown by the assessee on account of rent of cold storage are less than what the appellant actually received. The addition made by the AO is based on suppositions and conjectures and not on any credible evidence to support the case of the AO. Therefore, the addition made by the AO cannot be sustained and the same is deleted. Ground is allowed. 5. The CIT(A) also held that books of account can not be rejected. The finding of the CIT(A) is as under :- (CIT(A) paragraph no.2.1) 2.1 I have gone through the assessment order and submission of Ld. AR. I agree with the AO that it is unusual first to raise the bill of Rs.40 per bag and then allow rebate of Rs.5. But, this itself cannot be a reason for rejection of books of account. This could have alerted the AO to make further enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vances given to the farmers, the assessee has in fact received some interest. It was for the assessee in its discretion keeping in view the business expediency to give interest free loans to the farmers, even when some of its competitors were giving interest bearing advances to the farmers. Therefore, to my mind the addition has been made by the AO without any justification and without bringing any material on record to justify the same. If the AO had strong suspicion that the advances were not interest free loan he was free to have summoned some of the farmers to verify the claim of the assessee. No such exercise was carried out by the AO. Therefore, the addition made by the AO is deleted. Ground is allowed. 8. We have heard the ld. Representatives of the parties and records perused. We find that the assessee has given advance to farmers to keep their potato in cold storage of the assessee. The assessee did not charge interest on such advance given to farmers. We find that the CIT(A) has rightly appreciated the fact and found that such interest free advances to the farmers is in accordance with commercial expediency. Under such circumstances, charging of interest on advance g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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