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TMI Blog2015 (11) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... d any such coupons or payments nor the same are reflected in his books of accounts or bank statements. The fact that these payments are made by coupons and vouchers etc. can also not be put against the assessee since the assessee never received the same and there is no evidence to the contrary. Apparently, entire confusion has started from the fact that, perhaps as a measure of abundant caution, Vodafone deducted tax at source in respect of the vouchers etc and, for whatever reasons, stated, the name of distributor as collective recipient of entire sum. On these facts, in our considered view, learned CIT(A) was quite justified in deleting the impugned addition. We approve his conclusions, and decline to interfere in the matter. - Decided in favour of assessee. Addition made on account of low G.P.- discrepancies in the stock register - CIT(A) deleted the addition - Held that:- The specific discrepancy pointed out by the AO has already been explained by the assessee and the Assessing Officer has in remand proceedings, accepted the explanation. The stock re cords were produced before the AO as well, and, therefore, an adverse remark b y the tax auditor ceases to be much relevant an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove his action on this point as well, and decline to interfere in the matter. - Decided in favour of assessee. - I.T.A. No. 4679/Del/2012 - - - Dated:- 31-3-2015 - Pramod Kumar AM and C M Garg JM Y Kakkar for the appellant Salil Agarwal Shilesh Gupta for the respondent ORDER Per Pramod Kumar: 1. This appeal, filed by the Assessing Officer, is directed against the order dated 18 th June, 2012, passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2009-10. 2. In the first ground of appeal, the Assessing Officer has raised the following grievance : 1. On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred in law and facts in deleting the addition of ₹ 58,78,256/- made on account of suppressed receip ts relying upon the submission of the assessee that the payment has been made directly to the539 retailers by the company whereas as per OLTAS information, 26AS details and also per TDS form 16A the amount has been credited to the account of the assessee by the company. Further as per statement of the Authorized signatory of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee from M/s. Vodafone during the year under consideration. On the other hand, the enquiries made by the AO during the assessment proceedings and the remand proceedings reveal that M/s Vodafone made the payment of ₹ 58,78,256/- directly to various retailers. The only basis for the AO to make the impugned addition was the entries in Form 26AS. The entries in Form 26AS give prima faci e indication to the AO regarding the receipts which have been subject to T DS. The AO has to make further enquiries and bring material on record to conclude that the assessee has in fact received the amounts stated inform 26AS . The evidence collected by the AO point to the fact that the amount of ₹ 5 8,78,256/- has in fact been received by the retailers as per the promotional scheme of M/s. Vodafone while making the payments directly to the retailers has resorted to deduction of TDS in the hands of the assessee as they were not having the PAN of various retailers. In view of the above, the addition made by the AO of ₹ 58,78,256/- is deleted and the grounds of appeal are allowed. 4. The Assessing Officer is aggrieved of the relief so given by the CIT(A) and is in appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in law and facts in deleting the addition of ₹ 9,28,230 made on account of low G.P. on the grounds that the discrepancies in the stock register has been arrive d before appreciating the way of stock register whereas discrepancies in the stock register has been arrived at after detailed examination and book version of the assessee has rightly been rejected by applying the provisions of section 145 of the Act. 9. During the course of the assessment proceedings, the Assessing Officer noted that as against GP rate of 1.90% in immediate ly preceding assessment year, the assessee has shown only 1.45% as gross profit. When the assessee was called upon to explain the fall in gross profit, he submitted that he is maintaining quantitative and qualitative stock tally and the entire purchases and sales are vouched . The assessee further pointe d out that the fall in GP in tax free goods account is due to the reason that there was a phenomenal increase in sales in comparison to F.Y. 2007-08 . However, the Assessing Officer was not satisfied with these explanations. He noted that the assessee had not produced the stock register though he has given quantitative details. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 12. We have noted that the specific discrepancy pointed out by the AO has already been explained by the assessee and the Assessing Officer has in remand proceedings, accepted the explanation. The stock re cords were produced before the AO as well, and, therefore, an adverse remark b y the tax auditor ceases to be much relevant any way. In any case, there is nothing to show incorrectness of accounts and just because gross profit rate this ye ar is lower the books of accounts cannot be rejected. In these circumstances , the conclusions arrived at by the CIT(A) do not require to be interfered with. We approve the same and decline to interfere in the matter. 13. Ground No. 2 is also dismissed. 14. In ground No. 3, the Assessing Officer has raised the following grievance : 3. On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred in law and facts in deleting the addition of ₹ 16,31,500/- made on account of excessive salary in comparison to the preceding year on the findings that the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since no material has been brought on record by the AO regarding the excess claim of salary expenses and further as the impugned addition has been made purely on estimate basis, the disallowance made by the AO is deleted and the ground of appeal is allowed. 16. The Assessing Officer is aggrieved of the relief so given by the CIT(A) and is in appeal before us. 17. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 18. We find that there is no dispute that the salary expenditure is properly supported by necessary evidences and vouchers, but yet the AO had disallowed a part of increase in salary because it was not proportionate to increase in sales. This approach proceeds on fallacious assumption that increase in an expense must correspond to increase in benefit by that increase in expenses. It is only elementary that relationship between an expense and the benefits arising from such an expense can never be so linear and static. The allowance for deduction, in any case, is not dependent on the result it prod uces. As long as expenses are supported by evidences and there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by which, Assessing Officer is in appeal before us. 22. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 23. We find that so far as disallowance of interest u/s. 14A and interest for personal use of borrowed funds is concerned, CIT(A) has given a categorical finding that borrowed funds are not used for any of these purposes. No material is brought before us to controvert these findings. Accordingly, we see no reasons to disturb conclusion arrived at by the CIT (A) in respect of these disallowance. The same is the position with respect to addition on account of low drawings. The AO had estimated annual household expenses at ₹ 1,20,000but then admittedly drawings of assessee and his wife, put together, are ₹ 1,58,000. No addition is called for in respect of this addition for low household drawings either. Similarly, disallowances on account of shop expenses, telephone expenses, sales promotion expenses and car expenses etc are purely on adhoc basis without any specific reasons. Learned CIT(A) rightly deleted the same. We approve his action on this point as well ..... X X X X Extracts X X X X X X X X Extracts X X X X
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