TaxTMI 
TaxTMI 
2011 (9) TMI 805
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....; 5. The learned CIT(A) erred in law and on the facts in deleting the addition of Rs. 97,000 made by the AO on account of travelling expenses. 3. The first issue for consideration relates to deleting the addition of Rs. 76,84,169 made by the AO on account of trading addition. The AO during the course of assessment proceedings issued summons under s. 131 to Manager, State Bank of India, G.T. Road, Ballabhgarh and was required to furnish statement of stock given by the assessee during the financial year 2006-07 and the copy of inspection report. The desired information was submitted by the SBI. The AO on the basis of the information supplied by SBI and details of monthly purchase, sale, direct expenses etc. computed trading account on monthly basis which is reproduced on p. 2 of the assessment order. The AO in the month of June, 2006, December, 2006 and March, 2007 found that there was loss of Rs. 10,09,392, Rs. 34,37,761 and Rs. 32,37,006 respectively. The AO asked the assessee to explain the manufacturing process. From the details submitted, she noted that there was no wastage during the course of manufacturing process. Since the assessee did not offer any explana....
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....ove it is clear that the AO had drawn monthly P&L a/c on the basis of information given to the bank for the purpose of availing of the credit facilities. The assessee is engaged in manufacturing of conveyor belts which have been supplied mainly to Government undertakings on tender basis. The manufacturing activities of the assessee are subject to Central Excise. It is not the case of the AO that the assessee had sold goods outside the books of account. The AO had merely drawn monthly P&L a/c and disallowed the losses incurred by the assessee in some of the months. The method of computation of P&L a/c by the AO cannot be approved as this is against the norms of any business or the guidelines issued by the ICAI. A businessman can suffer loss in a particular month for various reasons. One of which could be sale of manufactured goods at old rates whereas the cost of production must have gone up by lapse of time, from the table in assessment order, we also find that in the months where the AO has computed the profit, the same is in the range more than 50 to 79 per cent, which is not possible in any of trading/manufacturing activities. Therefore, in our considered opinion the learned CIT....
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....dit is an irreversible credit available to the manufacturers upon purchase of duty paid raw material, it would not amount to income, which is liable to be taxed. The learned CIT(A) accordingly deleted the addition made on account of Cenvat credit. 8. Before us the learned senior Departmental Representative supported the order of the AO. On the other hand, the learned Authorised Representative of the assessee submitted that excise duty is payable on manufactured goods. The assessee received credit for excise duty paid by it on raw material. The products manufactured by the assessee are subject to payment of excise duty. As per excise duty the conveyor and transmission belts are excisable items. The assessee had availed Cenvat credit of Rs. 75,29,635 as per RG-23(ii) records. However, the amount credited in the P&L a/c was Rs. 70,45,042. The assessee had paid excise duty on purchase of raw material, which was debited in the records. Excise duty collected on sales has been credited. Hence no addition can be made on account of Cenvat credit. 9.1 We have heard both the parties and gone through the material available on record. In the case before us the products manufactured by the....
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....e for consideration relates to deleting the addition of Rs. 1,38,066 on account of liquidated damages and deleting the addition of Rs. 3,45,546 on account of miscellaneous adjustments. The AO while completing the assessment noted that the assessee had debited an amount of Rs. 1,38,066 as liquidated damages and miscellaneous adjustments at Rs. 3,45,546 on account of short receipts of sale proceeds. The AO after issue of show-cause notice observed that deduction was not allowable under s. 36(l)(vii) r/w s. 36(2) of the Act. He therefore, added both the amounts. On appeal, it was submitted by the assessee that liquidated charges were not bad debts, but represented lesser of sale price due to belated delivery of the goods. The assessee was supplying its goods to Government undertakings or PSUs and goods were supplied through tender process. Due to some business exigencies at some point of times goods were not supplied in time. In that case the Government undertakings deducted liquidated damages. Though the assessee kept making follow-up for making the payment by such PSUs and regular correspondence had been done with those Departments, but the assessee could not go into litigation as h....
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....y in the order passed by the learned CIT(A) deleting the addition. 13. The last, issue for consideration relates to deleting the addition of Rs. 97,000 on account of travelling expenses. The AO out of Rs. 4,07,063 incurred on foreign travel expenses noted that an amount of Rs. 97,000 was incurred by Deepa Singhal, partner and Dr. A.K. Singhal. The assessee was asked to furnish proof and the purpose of foreign visit with documentary evidence. However, the assessee failed to furnish supporting evidence in respect of partner, Deepa Singhal and Dr. A.K. Singhal. He, therefore, disallowed the amount of Rs. 97,000. On appeal, it was submitted that expenses were incurred by partners of the firm Shri Anil Kumar Singhal and Ms. Deepa Singhal. The expenses have been incurred to explore business opportunities. The partners have made visit to USA, but no business transactions crystallized during the year. It would not mean that the expenses were not related to the business or have not been incurred at all. The learned CIT(A) however, noted that the expenditure incurred by partner on foreign travel could not be disallowed. The partners were entitled to travel abroad for business exploration.....