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TMI Blog2015 (3) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 40A(2)(b) was restricted to that sum. The ITAT confirmed this but required the AO to give effect to the order. At the same time, it remitted the matter on certain limited aspects as Ld. CIT(A) has not confronted the AO with the details of transactions furnished by the assessee with sister concern. Under the circumstances, we are of the considered opinion that in the interest of justice the issue should be set aside to the file of the AO for fresh verification. No question of law arises. - Decided against revenue. Disallowance of interest - ITAT decision for directing cancellation of disallowance - Held that:- ITAT recorded that the assessee had sufficient erest-free funds. Consequently, the application of Reliance (2009 (1) TMI 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 35,09,16,339/- as against a substantially lower amount in the preceding year. It also earned commission income of ₹ 36 lakhs which was higher than the preceding year's income. The overall Gross Profit Rate during the year was 0.8% as against (-)17.23% and the NP Rate of 0.54% as against 2.07% in the preceding year. The assessee had claimed bank interest of ₹ 19,25,169/- in the Profit and Loss Account. The AO found that the assessee had given advance of ₹ 55 lakhs to SVP Builders (India) Limited which was repaid in the same year. However, no interest was claimed. The AO added ₹ 12,10,000/- on the basis that the assessee's contention of commercial expediency or nexus for using borrowed funds for business purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as interest-free loans or advances. 6. We have considered the submissions of the Revenue. The CIT(A), after noticing the facts, discussed the rationale and the justification of the AO's approach, in rejecting the books of account and the application of 6% G.P. Rate. The relevant discussion is follows: 5.3 I have gone through the submissions of the appellant findings recorded by the ld. AO as well as case laws relied upon by the appellant. It has been noticed from the assessment order that the ld. AO rejected the Audited books of accounts of the appellant invoking the provisions of Section 145(3) solely on the ground that the appellant had made purchases and sales from/to its sister concern, i.e. M/s. Mahavir Steel Rolling Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the appellant is, therefore, allowed. 7. The CIT(A) then considered in detail the various reported decisions with respect to the G.P. Rate and held that since the assessee had furnished complete particulars of transactions, various issues which in turn were analysed and the purchases made from its sister concern as compared with other parties had resulted in excess payment of ₹ 10,02,125/-. The addition under Section 40A(2)(b) was restricted to that sum. The ITAT confirmed this but required the AO to give effect to the order. At the same time, it remitted the matter on certain limited aspects: ...............At the same time we also note that the Ld. CIT(A) has not confronted the AO with the details of transactions furni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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