ITAT Jodhpur Judgments — January 2021

The Tribunal held that the assessee had discharged its burden by submitting a statement of nexus between interest received and paid, along with confirmations from lenders. The lower authorities did not dispute the genuineness of the creditors or the fact that interest was earned on advances.

The Tribunal condoned the delay, citing a liberal approach for substantial justice. It also directed that the profit rate cannot exceed the declared rate and allowed the deduction of interest paid to third parties from the net profit.

The Tribunal condoned the delay, citing a liberal approach for substantial justice. It also directed that the profit rate cannot exceed the declared rate and allowed the deduction of interest paid to third parties from the net profit.

The Tribunal held that the AO exceeded the scope of limited scrutiny by making additions related to long-term capital gains without obtaining prior approval to convert it to comprehensive scrutiny. Therefore, the assessment order was quashed.

The Tribunal held that the cost of improvement claims should be fully allowed as substantial renovation work was evident. It also ruled that the addition under Section 50C was unsustainable as the difference between the stamp duty valuation and sale consideration was within the 5% tolerance limit.

The Tribunal held that a lower GP rate compared to previous years, especially when turnover has increased, is not a sufficient ground to reject books of account. The Tribunal found that the assessee maintained complete books and quantitative details, and the AO did not point out any specific defects. Therefore, the addition made by the AO and sustained by the CIT(A) was not justified.