2015 (7) TMI 1017 - AT - Income Tax

Tribunal allows stock adjustment, denies repair expenses claim due to lack of evidence.

M/s. Amin Silk Mills Pvt. Ltd. Versus The Addl. CIT Range-I, Surat

M/s. Amin Silk Mills Pvt. Ltd. Versus The Addl. CIT Range-I, Surat - TMI Issues Involved:1. Addition of difference in opening and closing stock of work-in-progress.2. Disallowance of expenditure on repairs and maintenance of plant and machinery.Analysis:Issue 1: Addition of difference in opening and closing stock of work-in-progress- The assessee appealed against the addition of Rs. 5,98,461 as the difference in opening and closing stock of work-in-progress for AY 2008-09.- The Tribunal directed the Assessing Officer to allow the closing stock of the preceding year as the opening stock of the current year based on a previous ruling in the assessee's favor for AY 2007-08.- The Tribunal found no change in circumstances to warrant a different decision for the current year, thus allowing the appeal on this ground for statistical purposes.Issue 2: Disallowance of expenditure on repairs and maintenance of plant and machinery- The second ground of appeal was related to the ad-hoc disallowance of 10% of the expenditure on repairs and maintenance of plant and machinery.- The Assessing Officer observed that the assessee failed to provide sufficient evidence to prove that the expenditure was incurred wholly and exclusively for business purposes.- The Tribunal upheld the decision of the authorities below, stating that mere submission of ledger accounts without supporting bills or vouchers was insufficient to substantiate the expenditure claim.- As the assessee did not present any additional evidence to support the claim, the appeal on this ground was dismissed.Conclusion:- The appeals for AY 2008-09 and AY 2009-10 were partly allowed for statistical purposes based on the Tribunal's directions regarding the treatment of opening stock and the lack of evidence to support the expenditure claims.