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TMI Blog2014 (7) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A). - Decided in favour of revenue Addition in respect of paddy yield - Held that:- The AO has recorded a finding that assessee's books are examined on test check basis. When the books are accepted then the yield cannot be estimated without any material. It is a known fact that depending upon the machinery, quality of the seeds, moisture in paddy, monsoons etc. marginal fluctuation in yield is allowable. Therefore in the absence of rejection of books of account, the yield cannot be estimated. Besides, the AO at the most could have considered the addition on account of valuation of stock in case it was found that qualitywise day-to-day production was not maintained by the assessee deliberately. This is not met out by the AO. In view thereof, we find no infirmity in the order of the ld. CIT(A) deleting the addition in respect of paddy yield.- Decided in favour of assessee - ITA No. 1122/JP/2011 - - - Dated:- 25-7-2014 - SHRI R.P. TOLANI AND SHRI T.R. MEENA Appellant by: Shri D.C. Sharma Shri A.K. Khandelwal Respondent by : Shri Tanuj Agarwal ORDER PER R.P. TOLANI, JM This is an appeal filed by the Revenue against the order of the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from person to person. Regarding interest payment to Shri Bhagat Ram Darak, it submitted that interest paid is very blow of fair market value. However, it is beyond imagination that when funds are available at just 6% then why interest payment will be made at three times that rate of interest. The assessee neither justified interest payment to Shri Bhagat Ram Darak much below the fair market value nor justified interest payment to persons covered u/s 40A(2)at the more the fair market value. Therefore, interest payment @ 18% is considered to be excessive and unreasonable. Payment is allowed @ 15% and balance amount of ₹ 6,17,878/- is added to total income of the assessee. The ld. DR contends that the AO was more than reasonable inasmuch as the comparable case of payment of interest in assessee's case was at 6%. Therefore, application of the provision of Section 40A(2) as to interest payment to related parties should have been restricted to 6% and not at 15% applied by the AO. 4.2 The ld. CIT(A) without appreciating the comparable case in assessee's case deleted the disallowance by following observation. 4. 62 ..For disallowance u/s 40A2(b), the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee failed to justify the manufacturing results. Further for the following reasons, these manufacturing results are also not acceptable. 5.2 The ld. CIT(A) deleted this addition by following observation. 4.72 . I have gone through the AO s finding and assessee's submission. The assessee has shown yield of 64.18% during the year. During the last 3 years the assessee has shown yield 64.49%, 64.29% and 64.67%. In the case of assessee in assessment year 2006-07 my predecessor CIT(A) has deleted the addition on this issue. The fact being similar the addition on account of low yield is directed to be deleted. 5.3 The ld. DR contends that every year is an independent unit of assessment and without mentioning the reasons of then ld. CIT(A) for the assessment year 2006-07, the ld. CIT(A), Kota has deleted the addition. Thus the order of the ld. CIT(A) on this issue is without cogent reason. 6.1 Apropos Ground no. 1, the ld. Counsel for the assessee contends that the AO has failed to appreciate that the interest paid by the assessee was not on personal loan but it was on CC Limit. The ld. CIT(A) has deleted the addition of ₹ 57,330/- vide para 4.52 of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ostponement of profit may arise. In any case, the AO has not adopted this course and made the addition on account of yield which is not justified. However, the order of the ld. CIT(A) is relied on this issue.. 9.1 We have heard the rival contentions and perused the materials available on record. From the fact, it emerges that there was no payment of interest on personal account. The interest of ₹ 57,330/- was paid on C.C. Limit utilization for assessee's business. Therefore, the ld. CIT(A) has rightly deleted this addition. Thus ground no. 1 of the Revenue is dismissed. 9.2 Apropos Ground No. 2, the AO has invoked the provision of Section 40A(2)(b) of the Act, finding that the payment of interest to unrelated party was at 6% whereas the assessee paid interest @ 18% to the relatives. According to the Department, the AO gave comparable cases from the assessee's books only whereas the ld. CIT(A) has erroneously held that no comparative instances have been given. There is some merit in the arguments of the ld. DR to this effect. The assessee has not disputed in paying interest @ 6% to Shri Bhagat Ram Darak and unrelated party. However, at the same time, we find t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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