In view of the fact that the enabling conditions of sec.41(1) are not fulfilled in this case, the A.0. had not brought any material on record to indicate that the appellant had obtained any benefit against the above said liabilities and these liabilities are still existing at the end of relevant assessment year in the books of accounts of the appellant, I am inclined to agree with the contentions of the Ld. A.R. Accordingly, addition of Rs. 1,36,76,461/- made by the A. 0. u/s 41(1) is ordered to be deleted. This ground of appeal is allowed.
The decisions by the apex court in the case of Vinay Cement Ltd. (supra) and Alom Extrusions Ltd. (supra) are admittedly with reference to section 43B and, further, qua the scope of the amendments thereto. The deductibility of the employee’s contribution is not regulated by section 43B.
Ground no.2 about the deduction in respect of property tax amounting to Rs. 2.03 lakh and ground no.3 against the confirmation of disallowance of Rs. 3,96,243 being various expenses incurred against the house property income were not pressed by the learned AR. Both these grounds stand dismissed.
Having heard the submissions of both the sides and on due consideration of the facts of the case, we are of the considered opinion that the transaction in respect of the share trading was duly disclosed at the time of filing of the return. Some of the income was shown as long-tern capital gain and part of the income was also shown as speculative business in shares/scripts trading.
We find that the AO has made disallowance on the basis of Rule 8D of the Income Tax Rules, 1962, but no disallowance can be made or sustained in excess of the expenses debited in the profit & loss account.
We find that the AO has not claimed that Shri Devang Shah, CA was authorised to receive any notice on behalf of the assessee-firm or was the representative of the assessee or that any power of attorney was executed by the assessee firm in favour of the said Chartered Accountant.
In the present set of facts, we have noted that the AO had considered the impugned repair expenditure as annual rent in the hands of the assessee which was without any basis. As far as the assessee was concerned, the deduction @ 30% is like a standard deduction as prescribed u/s.24(a) of IT Act, not necessarily incurred towards repairs of the house property as held in the case of JB Patel & Co. 118 ITD 556.
That argument was not acceptable to the AO and it was held that there was no evidence in support of the contention that the expenditure had actually been incurred directly by those persons. It was held that the assessee had shown the amounts in question as loans/deposits in his books of accounts.
In the light of the above decisions, once on identical facts, a view has already been taken in favour of the assessee on this issue, therefore respectfully following that view, we hereby hold that ld.CIT(A) has rightly allowed the claim. In the result, ground raised by the Revenue is hereby dismissed.
The learned counsel for the assessee submitted that the assessee has paid interest at the rate of 15% per annum to the creditors, whereas the Revenue has allowed interest at the rate of 12% and has added back the difference of 3% interest under Section 40A(2)(b) of the Act. He submitted that the interest paid at the rate of 15% to two coparceners of the assessee-HUF could not be called excessive. The learned DR has relied on the orders of the AO and the CIT(A).
