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TMI Blog2013 (8) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... rties on total work receipt as against the NP rate of 12.50% applied by AO. 2. That on the facts and in the circumstances of the case the ld. CIT(A) erred in sustaining the addition made by the ld. AO by treating the FDR interest as income from other sources. 3. That the petitioner may kindly be permitted to raise any additional or alternative ground at or before the time of hearing. 4. The petitioner prays for justice & relief. 2 The grounds No.3 & 4 are general in nature, so do not require any comment on our part. While ground No.1 relates to NP rate sustained at 7% subject to the depreciation and interest to the third parties. 3. Facts related to this issue in brief are that assessee filed return of income on 30/09/2009 declaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following orders of the Hon'ble jurisdiction of High Court:- 1) CIT Vs. Inani marbles Pvt. Ltd. (175 Taxman 56). 2) CIT Vs. Suresh Marbles Pvt. Ltd. (18 DRT 118). 3) CIT Vs. Shri Sindhuja Foods Pvt. Ltd. (16 DTR 278). The ld. CIT (A) after considering the submissions of the assessee observed that specific details called for by the AO to support the financial results shown by the assessee were not furnished and the assessee conceded non-production of supportive details. He, therefore, held that the books of accounts were rightly rejected by the AO. Ld. CIT(A) was of the view that the best guide for estimation of the trading results after rejecting the books is either the past history of the assessee or any other comparable case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In his rival submissions, ld. D.R. strongly supported the impugned order passed by the ld . CIT(A). 6. We have considered the submission of both the parties and carefully gone through the material available on record. In the present case, it is an admitted fact that certain discrepancies were pointed out by the AO in the books of accounts maintained by the assessee in his regular course of business. Therefore, the provisions of Section 145(3) of the Act were applicable and the books were liable to be rejected. When the books were rejected, the only way left to determine the income is estimation by applying the GP rate or NP rate. In the present case, the AO applied NP rate of 12.5%, which was reduced to 7% by the ld. CIT(A). The said est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of FDR was not a business income of the assessee. The reliance was placed on the following decisions of the Hon'ble Supreme Court:- 1) CIT Vs. Sterling Foods (237 ITR 579). 2) Padian Chemicals Vs. CIT (262 ITR 278) 3) Tuti Courin Alkalies and Fertilizer Ltd. Vs. CIT (227 ITR 172). Ld. counsel for the assessee submitted that FDRs were purchased for the purpose of business i.e for obtaining contract work from PHED authorities. Therefore, the interest income earned on such FDRs was part and parcel of the business income. The reliance was placed on the decision of this bench of the tribunal dated 07/03/2013 in ITA No. 191/JU/2012 for the assessment year 2008-09 in the case of Lal Chand Choudhary Vs. ACIT, Circle-1, Barmer and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the assessee's agreement with the supplier. It was on the money so deposited that some interest has been earned. This is, therefore, not a case where any surplus share capital money which is lying idle has been deposited in the bank for the purpose of earning interest. The deposit of money in the present case is directly linked with the purchase of plant and machinery." Hence, any income earned on such deposit is incidental to the acquisition of assets for the setting up of the plant and machinery." 10. In the present case also, it is not the case of the department that the FDRs were purchased by the assessee from surplus money, which was lying idle and had been deposited in the bank for the purpose of earning interest. On the con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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