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TMI Blog2015 (11) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... e has paid the rent of ₹ 60,000/- for the business premises for the whole year as against the rent amount of ₹ 30,000/- paid for the same premises in the immediately preceding year. In reply to a specific query from the Bench, learned counsel for the assessee submitted that the rent was revised after more than five years during the relevant period. The Revenue could not controvert the submissions of the assessee that the fair market rent of the business premises was still more than the amount paid by the assessee. In these facts of the case, we are of the view that there was no justification for sustaining the addition on account of rent paid and the addition made is deleted - Decided in favour of assessee. Disallowance of total customer welfare expenses - Held that:- The expenses under this head has increased two-fold in comparison to the immediately preceding assessment year. The disallowance sustained by the CIT(A) could not be said to be excessive and accordingly is confirmed - Decided against assessee. Disallowance of car expenses and car depreciation at 15% of the total expenses and depreciation claimed by the assessee could not be said to be excessive Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the assessee and thereby confirming the part addition of ₹ 1,03,270/- in the income of the assessee. He submitted that the Assessing Officer has applied a GP rate of 12% in this case which was found to be very excessive. Learned counsel for the assessee submitted that the assessee has made a surrender of ₹ 4.5 lakhs separately and the credit thereof has been allowed by the CIT(A) while determining the GP addition in this case. He submitted that during the year, the assessee has declared higher sales of ₹ 3.12 crores and the GP rate of 8.23% as against the sales of ₹ 2.05 crores and GP rate of 8.30% in the immediately preceding year. He submitted that there was no valid reason for sustaining any GP addition in this case. 4. Learned DR has opposed the submissions of the learned counsel for the assessee. He submitted that it was a survey case and the accounts were not found proper and Assessing Officer has given various reasons for making the GP addition by applying a GP rate of 12% on the declared sales of the assessee. He referred to the relevant portion of the assessment order in support of the case of the Revenue. 5. We have considered the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customer welfare expenses of ₹ 42,536/- were incurred wholly and exclusively for the purpose of business and therefore the ld.CIT(Appeals) has erred in law and on facts in confirming disallowance of ₹ 6,400/-. 10. We have heard the parties. We find that the learned CIT(A) has confirmed the disallowance of ₹ 6,400/- out of total customer welfare expenses of ₹ 42,536/-. We find that the expenses under this head has increased two-fold in comparison to the immediately preceding assessment year. The disallowance sustained by the CIT(A) could not be said to be excessive and accordingly is confirmed and ground No.3 of the assessee s appeal is dismissed. 11. Ground No.4 of the assessee s appeal is as under:- Because the disallowance of ₹ 5% of car expenses and car depreciation, on the ground of personal us, amounting to ₹ 21,000/- is highly excessive and keeping in view of the overall facts of the case the ld.CIT(Appeals) should have restricted the same to maximum 10%. 12. We have heard the parties. We find that the disallowance of car expenses and car depreciation at 15% of the total expenses and depreciation claimed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romotion expenses of ₹ 48,300/-, shop expenses of ₹ 65,428/-, packing expenses of ₹ 49,143/- and office expenses of ₹ 47,015/- totaling to ₹ 2,09,886/-. We find that learned CIT(A) has passed a well-reasoned order on this issue and his order does not deserve any interference. Accordingly, the order of learned CIT(A) on this issue is confirmed and ground No.7 of the assessee s appeal is dismissed. 19. Ground No.8 8.1 of the assessee s appeal read as under:- 8. Because the interest paid @ 15% to the family members was very reasonable and therefore the learned CIT(Appeals) was not justified in confirming the allowable interest rate @ 12% and thereby confirming the addition of ₹ 114315/-. 8.1 Because keeping in view of the facts of the case the learned CIT(Appeals) should have held that the interest rate of 15% paid to family members is reasonable keeping in view of the material placed on records. 20. Learned counsel for the assessee submitted that the assessee has paid interest at the rate of 15% to its family members which was very reasonable and therefore, learned CIT(A) was not right in confirming the allowable interest rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 2,59,998/- made by the Assessing Officer on account of various expenses by ignoring the fact that these expenses were either excessive or fully unvouched and unverifiable. 26. Learned DR has relied on the order of the Assessing Officer and learned counsel for the assessee has relied on the order of the CIT(A). 27. We have heard the parties. We find that learned CIT(A) has passed a well-reasoned order on this issue and the disallowance was partly deleted by the CIT(A) as was not found excessive in the facts of the case and was mainly verifiable. In these facts of the case, we hold that no interference is called for in the order of learned CIT(A). Accordingly, the order of learned CIT(A) on this issue is confirmed and ground No.2 of the Revenue s appeal is dismissed. 28. Ground No.3 of the Revenue s appeal is as under:- On the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of ₹ 10,72,891/- made by the Assessing Officer on account of unexplained trade creditors by ignoring the fact that the letters issued by the Assessing Officer were received back un-served, which makes it clear that the trade creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made through account payee cheques and the assessee was able to produce the bills and goods received notes before the Assessing Officer and the creditors have sent their confirmation letters to the Assessing Officer and that no defects in the confirmation of copies of accounts received from the aforesaid creditors have been pointed out by the Assessing Officer and that the creditors have confirmed the closing balance which could not be disputed by the Assessing Officer, we hold that the CIT(A) was justified in holding that there was no basis left for making the addition. Accordingly, the order of learned CIT(A) on this issue is confirmed and ground No.3 of the Revenue is dismissed. 31. Ground No.4 of the Revenue s appeal reads as under:- On the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of ₹ 70,000/- made by the Assessing Officer on account of low house hold expenses by ignoring the fact that the personal withdrawals shown by the assessee were considered to be low. 32. We have heard the parties. We find that the learned CIT(A) has passed a well-reasoned order on this issue. The CIT(A) has recorded that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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