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TMI Blog2012 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds No.2.1 and 3.1 of the appeal. Therefore, the grounds not pressed by the learned AR are dismissed as not pressed. The relevant ground No.3.1 and 2.1 are reproduced herein below for our consideration: "3.1 The Ld. CIT(A) has grievously erred in law and/or on facts in upholding the rejection of books of account of the appellant. 2.1 The Ld. CIT(A) has grievously erred in law and/or on facts in confirming the following additions/disallowances: (a) Suppressed production Rs.13,21,439/- (b) Out of int. expenses Rs. 54,367/- (c) Out of electric expenses Rs.1,98,107/-." 2.1 The assessee is a firm engaged in the business of manufacturing of the products such as maida, soji, atta and reva etc. filed its return of income on 01-11-2004 decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for weighing wheat after reducing weight of bardan of 1 kg in case of 100 kg jute bardan and in case of 50 kg jute bardan was also not proper because weight of different bardan could vary. This variation, even though small, but when considering large quantity of wheat purchased, could make a big difference. (iv) In normal circumstances, production of maida should be 64% to 65% which in the case of the assessee appeared to be a maximum of 60% only. (v) On the other hand, production of bran was on higher side which is 26% to 28% when whole atta is not produced and up to 24% t0 25% when whole atta is produced. Thus, assessee's production of the main item which was of higher value had been suppressed. (vi) Due to the above mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod of accounting year after year for the last twenty five years and the same was also accepted by the department year after year. Further the assessee had maintained all the necessary books of account along with stock records etc. However, the learned AO without taking note of the actual facts being recorded in the books of accounts went ahead to make the additions on the basis of mere surmises and conjectures. It was, therefore, prayed that the order of the revenue authorities may be set aside. 7. The learned DR argued in support of the revenue and relied upon the orders of both the learned AO and the learned CIT(A) and prayed that the same may be sustained. 8. We have heard the rival submissions and carefully perused the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g addition of Rs.54,367/- made on account of interest expenses:- During the course of assessment proceedings it was noticed by the learned AO that the assessee had paid interest @15% and thus suffered expenditure of Rs.19,60,926/- for the loans received by it. It was further observed by the learned AO that the assessee had made advances to M/s. T. N. Associates @ 12%. On being queried as to why the assessee had advanced loan at a lower rate of interest than the interest expenses incurred by it for procuring such funds, the assessee came out with the following reasons: "We have taken loan from various depositors at 15% interest p.a. which is normal prevailing market rate. The cost of bank loan is also similar to the said rate. Moreover in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed which comes to Rs.54,367/-. Keeping in view the aforesaid facts and circumstances, it is abundantly clear that whereas the appellant pays interest @15% on the loans received by it, the interest charged by the appellant on the loans given to it is @12% with the result, as the appellant has advanced loan to M/s. T. N. Associates out of the funds obtained by the appellant on a higher rage of interest; the Assessing Officer has rightly disallowed the sum of Rs.54,367/- (i.e. interest expenses proportionate to the amount of loan given to M/s. T. N. Associates at a lower rate). In the given facts and circumstances, the action of the Assessing Officer on this ground is hereby confirmed. Hence the appeal is dismissed on this ground." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered revenue expenditure" and, therefore, allowed deduction of one fifth of the expenditure claimed amounting to Rs.49,527/- for the relevant assessment year and disallowed the balance portion of Rs.1,98,107/-. The learned CIT(A) concurred with the view of the learned AO and confirmed the addition. 14. Having heard both sides on this issue, we are not in agreement with the view taken by the revenue. The learned AO has arbitrarily allowed deduction of one fifth of the expenses for the relevant assessment year considering the expenditure incurred for cable charges to be in the nature of differed revenue expenses. The amount paid towards cable charges to the Electricity Department is not refundable and it is onetime payment. Non-payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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