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TMI Blog2016 (2) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... was left with no other option but either to accept the offer or to determine the N.P. on the basis of comparable material on record or on the basis of past history. - Decided against assessee Addition on account of interest income from FDRs - Held that:- We are in agreement with the ld. A/R for the assessee that the FDRs were required to furnish performance guarantee to get a contract awarded in assessee’s favour and to procure said guarantee, it had kept amount in fixed deposit. Therefore, the income earned on this account cannot be treated as Income from other sources. The contention of the assessee are supported by various judgments relied on by ld. A/R. We find that the decisions cited by ld. CIT (A) are not applicable to the facts of the assessee’s case. We, therefore, taking into consideration various judgments mentioned above, deleted the additions made by the AO. - Decided in favour of assessee Addition on account of taxi plying, on estimate basis - Held that:- AO has not given any basis for making this addition. Therefore, we do not find any justification in the order of the AO for making this addition. The addition is thus deleted.- Decided in favour of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that the assessee is a civil contractor, derives income from construction work awarded by PWD and other government departments, and also income from interest. The assessee filed his returns of income for the assessment years 2007-08 and 2009-10 on 31.10.2007 and 30.09.2009 respectively. The case was scrutinized under section 143(3) of the I.T. Act. 2.1. In respect of ground no. 1 2, the relevant para of the assessment order is as under :- 9. The matter was discussed with the assessee and the ld. A/R for the assessee, who agreed for the rejection of books of accounts and application of 9% N.P rate on contractual receipts (subject to depreciation and interest) and non-imposition of penalty. In this regard, following was made clear to the assessee and his A/R : On 9% N.P. rate, depreciation would be allowed but any interest would not be allowed. Penalty proceedings are the separate proceedings and proper judicious decision in this regard shall be taken separately at the appropriate time. Finally, the assessee his A/R agreed that assessment may be completed @ 9% N.P. on gross receipts (subject to depreciation) after the rejection of book version (in form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced and Stock Register has also not been produced. Thus, the stock, cash, exp. etc. cannot be verified. The claim of creditors can also, at bet, be partly correct. Though, one thing has been praiseworthy on assessee s part that he did not try to furnish fake books in spite of getting sufficient time. This shown good intention of assessee. Thus, on the basis of acts on record, there re valid reasons to be dissatisfied regarding the correctness and completeness of assessee s socalled audited books version of the assessee is to be rejected u/s 145(3) and this case is to be treated as No Account Case . Since there are valid reasons to be dissatisfied regarding completeness and correctness of accounts, the books of accounts of the assessee (Books version in form of Audited account) are hereby rejected u/s 145(3) and the assessment is being completed in the manner provided u/s 144 of I.T. Act, 1961. The matter was discussed with the assessee and his A/R who agreed for the rejection of books of accounts and application of 9% N.P. rate on contractual receipts (subject to depreciation intt.) and nonimposition of penalty. 4.3. We have heard rival contentions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 3,53,932/- and ₹ 12,24,814/- on account of interest income from FDRs. 5.1. The AO made the addition taking into consideration that the assessee is not in the business of money lending. The AO was of the view that assessee is a civil contractor and, by any standards, interest on bank FDR is to be assessed as Income from Other Sources only. 5.2. The ld. CIT (A) confirmed the addition on the ground that interest income can be treated as business income only if assessee was engaged in the business of money lending, or when interest is charged on business transaction i.e. interest on delayed payment by buyers. 6. Now the assessee is before us. 6.1. The ld. A/R for the assessee submitted that the FDRs were required for the purpose of giving security to awarders, against margin money for bank guarantees to be furnished to awarders, earnest money etc. It is not that the assessee has utilized surplus money which was deposited to earn interest but on the contrary, the activity of depositing money was incidental to the business of the assessee and there was inextricable nexus with securing contracts. Therefore, he requested that the income earned by way of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the AO is based on surmises and conjectures and is not justified on any legally sustainable foundation. Therefore, he prayed that the addition may kindly be deleted. 8.2. The ld. D/R supported the orders of the authorities below. He requested that the addition be confirmed. 8.3. We have heard rival contentions and perused the material on record. We find that the AO has not given any basis for making this addition. Therefore, we do not find any justification in the order of the AO for making this addition. The addition is thus deleted. 9. Ground no. 4 in assessment year 2009-10 is in respect of disallowance of ₹ 26,232/- on account of non business use of cars. 9.1. The AO made the disallowance on the ground that the assessee was asked to file documentary evidence in support of his claim, but, in spite, could not furnish any evidence to rule out non-business use of these cars by the assessee or his family members. Therefore, on estimate basis, he AO disallowed ₹ 26,232/- i.e. 1/5th of the expenses of ₹ 1,31,159/- claimed by the assessee. 9.2. The ld. CIT (A) confirmed the disallowance by observing as under :- Personal use of vehicles/car ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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