TaxTMI 
TaxTMI 
2013 (8) TMI 484
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..... The first issue in this appeal relates to the restriction of disallowance of proportionate interest out of interest payment to 12% instead of 15% disallowed by the A.O. Facts relating to this issue in brief are that the assessee is a liquor contractor and trading in country liquor, IMFL and Beer in Jodhpur region. The assessee furnished return of income on 13/3/2007 declaring total income of Rs. 1,95,30,790/-, which was processed u/s 143(1) of the Income Tax Act (hereinafter to be referred as the Act) on 31/3/2008. Later on the case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer on perusal of balance sheet, noticed that the assessee has advanced funds to many parties viz. Raja Ram Rajendra B & party and Ashok Kumar Devendra Meel & party. He further noticed that the assessee was paying interest @ 15% to 18% on various overdrafts accounts, therefore, the assessee was asked to explain the reasons for not charging the interest on loans/funds advanced to various other AOPs and parties. The assessee submitted that basically, it was withdrawals by the members of the existing AOP from their capital contribution, on which no interest has been....
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....e the authorities below and supported the impugned passed by the learned CIT(A). 6. After considering the submissions of both the parties and the material available on record, in the present case, it appears that the Assessing Officer himself made the disallowance @ 12% in the succeeding year i.e. 2007-08. It was claimed that the facts for the year under consideration were similar with the facts involved in the assessment year 2007-08. The learned CIT(A) also pointed out that in another comparable case having similar facts, the Assessing Officer himself disallowed the proportionate interest @ 12%. We, therefore, did not see any infirmity in the order of the learned CIT(A) on this issue. 7. The next issue vide ground No. 2 relates to the relief allowed by the learned CIT(A) out of the addition made by the Assessing Officer under the head vehicle insurance and registration expenses. The facts related to this issue in brief are that the Assessing Officer during the course of assessment proceedings, noticed that the assessee had debited Rs. 12,73,967/- under the head vehicle registration and insurance expenses and the details filed by the assessee revealed that the entire amount ....
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....iation @ 15%. Now the department is in appeal. 10. We have considered the submissions of both the parties and gone through the materials available on record. In the present case, it is noticed that the A.O. disallowed all the expenses incurred by the assessee on account of insurance and registration charges for the assets acquired first time during the year under consideration. However, he ignored this vital fact that insurance charges were to be paid year after year annually so those were revenue in nature. In the instant case, it is not the case of the Assessing Officer that those expenses were not incurred for the business purposes, therefore, the Learned CIT(A) was fully justified in deleting the disallowance to the extent of Rs. 5,55,033/-, which related to the annual insurance expenses. We, therefore, do not see any merit in this ground of the departmental appeal. 11. The next issue vide ground No. 3 relates to the deletion of addition made by the Assessing Officer on account of under valuation of closing stock. The facts related to this issue in brief are that the Assessing Officer noticed that the assessee had shown closing stock of Rs. 2,15,95,145/- in the trading ac....
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....but could not controvert the observations given by the Learned CIT(A) in the impugned order. 15. In his rival submissions, the learned counsel for the assessee strongly supported the order of the Learned CIT(A). 16. After considering the rival submissions of both the parties, we are of the view that the Assessing Officer was not justified in treating the permit fee relating to the transmission of the stock from godown to the shops as a part of the closing stock. Moreover, whatever permit fee was paid by the assessee that was for the sale materialised, therefore it could not have been added while valuing the closing stock, which was to be surrendered/ returned on the next day following the end of the year to the Excise Department/distillery at cost price. We , therefore, do not see any infirmity in the order of the Learned CIT(A) on this issue. 17. The last issue vide ground no. 4 relates to the depreciation on written down value of the carats. The facts relating to this issue in brief are that the Assessing Officer during the assessment proceedings, noticed that the assessee in the revised depreciation chart claimed the depreciation at Rs. 37,000/- on carats, based on the ....