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TMI Blog2016 (7) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee are allowable as deduction . Ld. CIT(A) has categorically held that expenditure towards electrical work, wooden flooring, AC fittings and other professional charges, which are of revenue nature and no advantage of enduring nature, has been obtained by the assessee as these are routine expenditure. On verification of expenditure by CIT (A), he has deleted the disallowance. Revenue did not controvert or could not point out specifically any expenditure resulting in to capital assets. In view of this we do not find any infirmity in the order of the Ld. CIT(A) and we confirm the order of the Ld. CIT(A) in deleting the disallowance - Decided in favour of assessee Addition on account of lower GP - Held that:- Addition has been deleted because of the reason that assesee is maintaining regular books of accounts and no defects could be pointed out by the AO. Furthermore in case of the payment of job work charges assessee has submitted the details showing the name, address, permanent account number of the job workers and the payment made to them is through banking channels. Furthermore, out of the four job workers two job workers responded and confirmed the transactions. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 47,60,195/- increase in GP @ 9.5%. with reason that the assessee has provided all the detail of the job work. Decision of the CIT(A) is not accepted deleting the addition of ₹ 47,60,195/- in respect increase in GP rate i.e. 9.5%. The assessee has not given any concrete reason for fall in the GP rate. The AO has increased the GP on an average basis for the last two years and one next year. 4. On the facts and in the circumstances of the case, Id.CIT(A) has erred in deleting the addition of Rs.l,14,700/- un-secured loan with the reason that this loan does not relate the A.Y. under consideration, the addition of this amount cannot be made in this year. The decision of the CIT(A) deleting the addition of ₹ 1,14,700/- of unsecured loans from Ms. Anita is not accepted. The assessee has stated that this unsecured loan is outstanding for many years. Inspite of, assessee was given the opportunity to file confirmation but the assessee could not produce confirmation and evidence in support of her claim. 5. The appellant craves leaves to add, alter or amend any/all the grounds of appeal before or during the course of hearing of the appeal. 2. The brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of the Ld. CIT(A) in deleting the disallowance of ₹ 150419/-. Further the expenditure stated by the Ld. AO in para No. 2 of the order is also arithmetically inaccurate as the total of such expenditure comes to ₹ 113914/-. In view of this, we dismiss ground No. 1 of appeal of the revenue. 5. Ground No. 2 of the appeal of the revenue is against deletion of disallowance of ₹ 32,24,435/- being repairs and maintenance of three new shops. During the year, assessee has set up three new shops at Khar, Mumbai, Emporio, Delhi and at Jodhpur. For setting up of these shops it is incurred certain expenditure and claimed the same as repair expenditure. AO has held that all these expenditure towards repairs and maintenance are to be treated as capital expenditure because new assets for new showrooms are created. He also held that the new shops are opened and expenses are incurred before commencement of business and as these expenses are disallowable as capital expenditure. On appeal before Ld. CIT(A), the above addition was deleted. Ld. CIT(A) has held that all these shops are taken on lease and are for the purpose of business and the expenses incurred to make the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decrease in GP that buyers are demanding discount due to recession as well as cost cutting by hotels where assessee makes major sales. However, AO rejected the reason and stated that the turnover of the assessee has increased due to opening of three new shops and further he also doubted the job work expenditure. He issued notice u/s 133(6) of the Income Tax Act to job workers for their verification. However out of four parties, in case of two parties confirmation could not be received. In view of this he adopted the average GP of last three years of 40.77% and compared it with current year GP of 31.33% and made addition @ 9.5% on sales of ₹ 5.03 crores amounting to ₹ 47,60,195/-. 8. Against this addition assessee preferred an appeal before Ld. CIT(A), how deleted the addition because the assessee has been maintaining regular books of accounts and there are no defects pointed out in the books of accounts by the AO. During the course of assessment proceedings, we found that all the necessary details of the parties showing their names, address and permanent account number have been provided. The assesee has also made payment to the job workers by cheques. Ld. CIT(A) fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding for a long time the addition has rightly been made by the AO. Ld. AR submitted that this amount is old outstanding as unsecured loan and as it did not relate to the assessment year same has rightly been deleted by the Ld. CIT(A). 11. We have carefully considered the rival contentions. We agree with the views of the Ld. CIT(A) that merely because the outstanding unsecured loan is carrying in the books of accounts for many years same cannot be added to the income of the assessee during this year. Further the arguments of the Ld. DR that provisions of Section 41(1) of the Income Tax Act are applicable can also not be accepted by us and it is not reason for which addition has been made by the AO and further it is also not the cessation of any trade liability for which deduction in earlier years have been granted to the assessee. In view of this we confirm the finding of the Ld. CIT(A) in deleting the addition of ₹ 1,14,700/-. In the result ground No. 4 is dismissed. 12. Ground No. 5 is general in nature. Hence dismissed. 13. In the result appeal of the revenue is dismissed. Order pronounced in the open court on 16/06/2016. - - TaxTMI - TMITax - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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