TaxTMI 
TaxTMI 
2011 (2) TMI 10
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.... deleting the addition of Rs.1,16,029/- being expenditure related to capital asset by observing that the aseet woe purchased for trading when assessee admitted during the course of hearing that the asset was imported for own manufacturing purpose. iii) That on the facts and in the circumstances of the case Ld. CIT (Appeals) has erred in deleting the addition of Rs. 8,70, 807/- on account of commission under irrelevant considerations when there is no evidence brought in record to prove that the commission agents provided genuine services which are wholly and exclusively related to the commercial need of the business. iv) That on the facts and in the circumstances at the case Ld. CIT (Appeals) has erred in deleting the addition of Rs. 3,48, 020/- on account of accrued interest on fixed deposit by wiring that such accrued interest is contingent in nature when assessee itself is regularly showing income from fixed deposit on accrual basis. 2. In respect of ground No. (i) briefly stated facts of the case are that the Assessing Officer disallowed depreciation of Rs.12,06,558/- on account of plant and machinery, tools and implements and electric motor since he found from examinat....
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....sets in continuous use while kept at premises of customer for use. He lastly urged before the bench to confirm the action of the Ld. CIT (A). 5. We have heard both the sides and perused the material available on record. The Ld. CIT (A) has rightly allowed the depreciation on the assets as it is not in dispute that the assets were deployed by the assessee at the site of the customer to meet warranty obligation in respect of contracts executed by it in earlier years. Thus, the assets were in continuous use as and when required by the customer. The fact that the depreciation was allowed on these assets in previous as well as in subsequent years was also not disputed by the revenue at the time of hearing before us. In view of this, we do not find any infirmity in the order passed by the Ld. CIT (A) and the same is hereby upheld. This ground of the revenue is, therefore, dismissed. 6. Ground no. 2 is in respect of deleting the addition of Rs. 1,16,029/- being expenditure related to capital asset. Briefly stated facts of the case are that the Assessing Officer found that the expenses was debited to the P & L Account and claimed deduction u/s. 37 of the I.T. Act. From the submission....
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....ded that the expenses in connection with import and return of the machine are of revenue nature and are allowable expenses or allowable as loss incidental to business. The Ld. CIT (A) has, therefore, rightly deleted the addition by holding that the expenses were normal business expenditure allowable as revenue expenses. 9. We have heard the rival submissions and perused the material available on record. We find that while making the disallowance the Assessing Officer has noted that the Assessee has debited expenses to P&L Account. The expenses was directly related to machinery which the assesee imported from Canada and therefore, capital in nature. Not allowable u/s. 37 of the I.T. Act, while deleting the addition, the Ld. CIT(A) has observed as under: "I have gone through the submission filed by the Appellant and the order of the A.O. and am of the considered opinion that expenditure incurred by the company on the return of the machine was not capital expenditure. The assessee had not capitalized the machine as fixed assets. Even vide notes to the accounts and statutory disclosure under the Companies Act the asses did not have any commitment on capital account for the year a....
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....e Ld. CIT(A) has held as under: "I have carefully gone through the submission of the appellant as well as the order of the A.O. The payments were made against bills duly passed by the officers of company. The payees are assessed to income tax. As explained before A.O. and before me different nomenclature is used and there is no difference in welder" 'welding plant and welding genset. All these are machines in which the assessee deals. Further as explained by the appellant P.V. Sharat Babu and Deejay Industries are regular agents of the company for several years and commission paid to them had always been allowed. This has not been disputed by the A. O. Commission of Rs. 1, 04,082/- paid to Krishna Kumar Mundra HUF had been paid for services as agent It appears that the A.O. did not consider the submissions of the assessee and made the additions on certain presumptions. In case the assessee (being a company) the discretion of ifs officers have to be relied upon by the assessee. The payment being made in the normal course of business' and after proper authorization by officers of company and when the accounts of assessee company being approved by the Board of Directors and shar....
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....s some submissions as submitted before the lower authorities relied on the order of the Ld. CIT (A) and urged before the bench to confirm the same. 17. We have heard the rival submissions and perused the material placed before us. We find that the Assessing Officer noticed that the assessee had not declared interest income from earnest money of Rs 38,86,880/- deposited to Railway Authorities in the form of Bank Fixed Deposits. According to the Assessing Officer, as the assessee was maintaining mercantile system of accounting regularly interest on such fixed deposits is assessable on accrual basis. He, therefore, assessed the interest income @ 9% on Rs 38,86,680/- which comes to Rs,3,48,020/- and added the same to the total income of the assessee. The Ld. CIT(A) in appeal while deleting the addition has observed as under: "I have gone through the submission and documents filed by the appellant and find that all the three FDRs are in the name of the Railways and not the appellant. As noted in respect of depreciation allowance the assessee is also under a warranty obligation for one year after completion of the projects. Therefore, realization of money against earnest money is t....