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of <h1>Tax Appeal: Expenses upheld, additions deleted, interest re-computation ordered.</h1> <h3>Shri Ivan Versus The Asst. Commissioner of Income Tax, Circle 1 (1), Panaji</h3> Shri Ivan Versus The Asst. Commissioner of Income Tax, Circle 1 (1), Panaji - TMI Issues Involved:1. Principles of Natural Justice and application of mind by CIT(A).2. Classification of Plot/Site development expenses as capital or revenue expenditure.3. Treatment of advance against supply transactions.4. Validity of additions made under Section 68 of the IT Act, 1961.5. Confirmation of Sundry Creditors balances as income under Section 68.6. Disallowance of 1/10th of voucher expenses as non-business expenses.7. Benefit of telescoping for the additions made.8. Charging of interest under Sections 234A, 234B, and 234C.Summary:Issue 1: Principles of Natural Justice and Application of MindThe Assessee contended that the CIT(A) passed the order without complying with the principles of Natural Justice and without proper application of mind. This ground was considered general in nature and not specifically addressed in the judgment.Issue 2: Classification of Plot/Site Development ExpensesThe Assessee, engaged in iron ore logistics, claimed site development expenses as revenue expenditure. The AO and CIT(A) treated these expenses as capital expenditure, citing the creation of new assets. The Tribunal, however, found that the expenses were necessary for business operations and did not provide enduring benefits, thus classifying them as revenue expenditure. The disallowance was deleted.Issue 3: Treatment of Advance Against Supply TransactionsThe AO added Rs. 38,14,727/- to the income, considering the liabilities as non-existent. CIT(A) directed the AO to treat the amount as income in the year of receipt. The Tribunal held that CIT(A) exceeded jurisdiction by addressing a year not under appeal and deleted the direction.Issue 4: Validity of Additions Under Section 68The AO added Rs. 10,90,82,621/- under Section 68, questioning the existence of sundry creditors. The Assessee provided evidence of the creditors' existence and tax payments. The Tribunal admitted these as public documents and found no basis for the addition, deleting the amount.Issue 5: Confirmation of Sundry Creditors BalancesThe AO added Rs. 62,24,163/- as unclaimed sundry creditors. The Assessee failed to provide evidence or balance confirmation letters. The Tribunal upheld the addition due to the lack of supporting evidence.Issue 6: Disallowance of Voucher ExpensesThe AO disallowed 1/10th of Rs. 2,65,41,580/- in labour charges, citing cash payments and lack of proper accounting. The CIT(A) and Tribunal upheld the disallowance, noting the Assessee's acceptance of similar disallowance in the previous year.Issue 7: Benefit of TelescopingThis issue became infructuous as related grounds were allowed, and thus, it was dismissed.Issue 8: Charging of InterestInterest under Sections 234A, 234B, and 234C was deemed consequential. The AO was directed to re-compute the interest after giving effect to the order.Conclusion:The appeal was partly allowed, with significant deletions of disallowances and additions, and directions for re-computation of interest. The order was pronounced on 17.05.2013.
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