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TMI Blog2018 (1) TMI 1720X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and the assessee has furnished the tax audit report to which no adverse inference was drawn by the AO. We find that the CIT(A) has dealt on the issue and relied on various judicial pronouncement on this matter and estimated the net profit @ 2.75% of gross contract receipts and sustained addition - Hence, we uphold his order and dismiss the ground of appeal of the revenue. Disallowance out of interest expenses made by the AO on account of interest on fund diverted for non-business purposes - assessee firm has advanced various amounts to different parties, therefore, the assessee was required to explain the mode of advance - CIT(A) deleted the disallowance by observing that the AO has not brought on record any evidence to demonstrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. The relevant facts of the case are like this. The assessee is a partner firm deriving income from civil contract business. The Assessing officer noticed that the assessee has shown net profit before interest and remuneration at 2.39% on the turnover of Rs. 19.22 crores, whereas on comparable cases, the net profit was much higher. He observed that the assessee has failed to produce books of account but the books have been audited, therefore, they are not rejected and no net profit is estimated in view of comparable cases. In absence of bills and vouchers, the Assessing officer estimated adhoc disallowance ranging from 5 to 10% of the total claim and determined the addition at Rs. 53,95,151/-. 4. On appeal, the assessee submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 6,77,080/- as against Rs. 53,95,151/- made by the Assessing officer. 6. Being aggrieved, the revenue is in appeal before us. 7. Ld D.R. submitted that the Assessing Officer has referred comparable cases and made addition and the CIT(A) is not justified in restricting the same to Rs. 6,77,080/-. 8. We have heard ld D.R. and perused the materials available on record. Before us, ld D.R. could not point out any mistake in the order of the CIT(A). We find that the books of account of the assessee are audited and the assessee has furnished the tax audit report to which no adverse inference was drawn by the Assessing officer. We find that the CIT(A) has dealt on the issue and relied on various judicial pronouncement on this matter and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial pronouncements including the decision of Hon ble Supreme Court in the case of S.A. Builders, 288 ITR 1 (SC), wherein, it was held that interest on borrowed funds cannot be disallowed if the assessee has advanced interest free loan to a sister concern as a measure of commercial expediency. The assessee has adopted the alternative of borrowing money from the market instead of liquidating its own assets. 13. After considering the material on record and the arguments of ld D.R, we find that except relying on the order of the Assessing Officer, ld .D.R. could not point out any specific error in the order of the CIT(A) and could not controvert the findings of the CIT(A) by bringing any positive material on record that the advances were no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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