TaxTMI 
TaxTMI 
2000 (5) TMI 169
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....ators (P) Ltd. (hereinafter referred to as "CFPL"). It was contended that the assessee had not undertaken the manufacture of such a big plant of 50,000 bread capacity earlier and it was involved in the machines of smaller capacity ranging from 8,000 loaves per day to 25,000 loaves per day. It was further contended that the proprietor of the firm being a non-technical person, it was absolutely essential that these big equipments must be designed as well as fabricated for the first time by an expert and these drawings should then confirm the basis for making big plants in future. Keeping in view the interests of the business, the work was assigned to M/s NBEFS and it is in this connection that the payment was made to the said concern. The AO disallowed the assessee's claim by observing that the assessee had supplied ovens to two other parties at higher prices prior to making the sales to M/s CFPL. It was thus concluded by the AO that the description of ovens supplied to M/s CFPL was identical with those supplied to other parties before making sale to the CFPL with minor deviations here and there. Before the first appellate authority, it was contended on behalf of the assessee that th....
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....ideration to M/s NBEFC in consideration of designing machines of higher capacity which were to be supplied to M/s CFPL. There is no dispute that the payment was made to a private limited company which had on its Board Shri B.M. Lal as the M.D. of the company, who is husband of the proprietor of this concern. Simply because the amount was paid to a concern in which the assessee had interest, it did not mean that any payment made to the said concern is excessive or unreasonable and falls within the ambit of 40A(2). The Tribunal in asst. yr. 1985-86 has accepted the qualifications of Shri Lal and allowed the assessee's claim in that regard. Respectfully following the precedent, we are of the considered view that the assessee deserves to succeed on this ground. 4. Next ground relates to disallowance made by the AO under s. 40A(3) of a sum of Rs. 1,28,601. The AO during the course of assessment proceedings noted that the assessee had made payments to M/s Bombay Poona Rodways (Regd.) on different dates totalling to Rs. 43,600 in cash towards freight which were in excess of Rs. 2,500. In the like manner seven payments were found by the AO to have been made in contravention of s. 40A(3)....
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....es were not filed. Respectfully following the precedent, we allow partial relief to the assessee on this ground to the extent of Rs. 43,600 only. 7. The next ground relates to the alleged profit on sale of machines. The AO estimated the profit on sale of machinery at Rs. 20,000, which according to him must have been sold at such a profit as against the profit of Re. 1 shown by the assessee on its sale. The learned CIT(A) confirmed the order of AO for the reason that the assessee had failed to furnish the details of machinery for which the investment allowance amounting to Rs. 17,300 had been transferred to P&L a/c or the sale of the price of the machinery sold. Before us, the learned counsel for the assessee contended that the assessee was not asked to furnish the details in respect of machinery sold. It was further submitted that the addition has been made by the AO on estimate basis, without considering the relevant material on record. On the other had, the learned Departmental Representative supported the order of the CIT(A) on this issue. 8. Having heard the rival submissions in the light of material placed before us, we are of the considered view that this issue needs fr....
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.... further relief to the assessee, as claimed in this regard is admissible. 14. Ground No. 2 reads as under: (2) "That the learned CIT(A) has erred in failing to adjudicate upon the following ground of appeal raised before him in the memos of the appeal (ground No. 3). The learned Dy. CIT(A) has erred in adopting a lower rate of depreciation @5 per cent on factory building against the rate @10 per cent prescribed under the IT Act, 1961 for the relevant assessment year. He has further erred in adopting a lower capitalised value on factory building than shown in the balance sheet., and P&L a/c. Therefore, further reducing the amount of depreciation eligible to the assessee. He has further erred in restricting the depreciation to 40 per cent of the eligible amount to the assessee against the facts of the case and law on the subject." From the order of the CIT(A) at p. 4, it is obvious that he has not adjudicated upon the grounds raised before him, rather the same has been set aside to the AO with a direction to verify whether the rate of depreciation is 5 per cent or 10 per cent. 15. Since the grievance of the assessee is not coming out of the order of the CIT(A), wherein....