TaxTMI 
TaxTMI 
2014 (2) TMI 363
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....led by the revenue read as under :- "1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.17,08,029/- on account of preceding years expenses as the assessee was maintaining its accounts on mercantile system of accounting and the prior period expenses claimed were not allowable in the year under consideration 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.25,00,000/- out of repair expenses without appreciating that the assessee could not establish the genuineness of these expenses and the department was already in appeal on this issue in the A. Y. 2001-02 which was pending before the IT AT. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.2,00,000/- out of MD's commission with appreciating properly that the steep hike in expenses was not justified by the genuine needs of business and the departmental appeal filed on the issue is pending before the Ld. ITAT. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.50,000/- mad....
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....wing his order passed in the assessee's case for the assessment year 2001-02 & 2002-03 which has not been accepted and the departmental appeal on the issue is pending before the Ld. ITAT. 11. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the lump-sum addition of Rs.l,00,00,000/- without proper appraisal of findings of the AO that the transaction with M/s Ashish Engg. Works, M/s A.S. Mechanical Works and A.S. Forgings, Pioneer Engg. Works, R.K. Video & Other concerns as recorded in para No: 21 of the assessment order were not properly recorded and the method of accounting followed was such that the profits cannot be deducted therefrom. 12. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.10,000/- on account of foreign traveling expenses without appreciating that the assessee could not furnish complete details necessary explanation in respect of these expenses as well as justification for increase. 13. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.50,000/- out of advertisement expenses claimed without appreci....
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....see's contention for consistency wherein it was contended that in respect of earlier years also, this issue relating to prior period expenses has been decided in favour of the assessee by the Assessing Officer or by the CIT (A). The Department has also not filed further appeal. The assessee company is having many divisions all across the country and there can be instances and cases, where bills for expenses are received at much later dated or beyond the financial year and expenses could not be booked when they are incurred. For such a situation, the decision of Hon'ble Bombay High Court in the case of Nagri Mills Co. Ltd. (supra) is also a guiding force while deciding this issue of prior period expenses. The expenses were incurred wholly and exclusively for the purpose of business. The bonafide and genuineness of expenses is not doubted. However, the Assessing Officer observed that the bills of the expenses were not furnished during the Assessment Year proceedings. We have perused the audit report and the letter dated 15.03.1999 which give the details of expenses. The expenses are of varying nature. These pertain to freight, repair, electricity, water, telephone, entry tax, sales t....
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.... that the complete details of repair and maintenance on Plant & Machinery, Building & Others have been submitted. The disallowance was restricted to Rs.25 lacs as against Rs.50 lacs in the AY 1996-97. The AO has identified items of capital nature separately and allowed depreciation. For the year CIT(A) has allowed depreciation on WDV in subsequent years. The Department has not preferred any appeal. It is also a fact that the Department has not preferred appeal before ITAT in the assessment year 2003-04, 2004-05 & 2005-06 against the orders of CIT(A). 7. We have heard both the sides on the issue. Both the sides relied on the pleadings made in ITA No.3036/Del/2010 for assessment year 1996-97. We have dealt such issue in revenue's appeal in ITA No.3036/Del/2010 for assessment year 1996-97 in paras 9 to 12 of order dated 24.09.2013. The relevant para 12 is reproduced hereunder :- "12. We have heard both the sides on the issue. We have also gone through the details of the repairs and maintenance in the paper book at pages 370 to 451. We have also perused the show cause issued by the Assessing Officer. The Assessing Officer has asked only general details and no specific bills were ....
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....evenue's appeal. 9. Ground No.4 is against the disallowance of Rs.50,000/- made on account of professional expenditure. Similar disallowance has been made in the assessment year 1996-97. Both the sides relied on the pleadings made in ITA No.3036/Del/2010 for assessment year 1996-97. We have dealt this issue in revenue's appeal in ITA No.3036/Del/2010 for assessment year 1996-97 in paras 17 to 20 of order dated 24.09.2013. The relevant para 20 is reproduced hereunder :- "20. We have heard both the sides on the issue. We have also perused the details available on record. The assessee submitted the details. The Assessing Officer has not asked any further specific information. He has also not doubted the genuineness of the expenses. We find no substance in making the ad hoc disallowance without giving any specific finding in respect of any expenditure. Therefore, we find no merits in this ground of revenue's appeal and the same is accordingly dismissed." Facts being similar, respectfully following our decision in the aforesaid order, we dismiss this ground of revenue's appeal. 10. In the ground no.5, the issue involved is deleting the disallowance of Rs.3 lacs on account of....
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....r dated 24.09.2013. The relevant para 28 is reproduced hereunder :- "28. We have heard both the sides on the issue. We have also gone through the contentions raised by the ld. DR. We have no doubt regarding the legal issues raised by the Ld. CIT (DR). The expenses are allowed only if it is incurred wholly and exclusively for the purpose of business. The burden lies on the assessee to establish that the expenditure relates to the business. Thus, there is no quarrel regarding the legal issue raised by the ld. CIT DR. But we have to see how these legal issues are applicable in assessee's case. When the assessee has furnished complete details of expenses as asked for by the Assessing Officer along with evidences, then it is incumbent upon the Assessing Officer to seek specific information out of the details furnished. Without making such efforts, ad hoc disallowance out of commission expenses is unjustified. The Assessing Officer was free to examine further the commission agents to whom the payments were made by the assessee. Therefore, the legal proposition relied upon by the CIT DR are not applicable to the facts of assessee's case. Ad hoc disallowances can be made only when there....
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....l of the confirmations, we find that TNEC has confirmed that 45 wind electric generators were installed by the assessee. Thus, the existence of the wind electric generators was confirmed by the user himself i.e. TNEC. These facts establish the factum of existence of the assessee is beyond any doubt. TNEC has also confirmed that electric generation was started during the year under consideration and the power generation in terms of units has been also quantified. It ahs increased from 54512790 in Assessment Year 1995-96 to 129741589 in the year under consideration. The increase in the power generation was attributed to the addition of wind electric generators installed during the year. The sale of the power through wind electric generators was also sold for a sum of Rs.26,66,65,859/- which is reflected in the audited Profit & Loss Account and Balance Sheet of the assessee company. The details of the power sold, copies of bills of purchase of wind electric generators were submitted to the Assessing Officer. The Assessing Officer's observation that the supplier was not found at the given address but he has not issued any summons u/s 131 of the Income-tax Act, 1961 to M/s Airo Energy L....
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....d existing at the site of the assessee company at Champa. There is also a column wherein the items verified at the site by the Chartered Engineer have been mentioned and these items tally with the items leased by the assessee company on which, lease rent is being paid. The chart enclosed elsewhere in this order has been verified by us and we find that the directions of the CIT(A), Patiala vide his order dated 16.03.2000 have in fact been carried out by the Department though both the Assessing Officer and the CIT(A), Rohtak chose to ignore the same despite specific reference being made by the assessee to the report of the Departmental Engineer being available with them. The sole reason for disallowance of lease rent is that the so called suppliers have no capacity to manufacture and hence they could not have sold the machinery said to be leased. As against this presumption, the physical examination shows that machinery do exist in the premises of assessee as a result of which production is also undertaken. If a person has to look to his hands he need not see it in the mirror. The facts speak for itself. The existence of machinery having been proved by the physical examination itself....
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....mount from the same bank. The AD by due diligence could have unearthed the fact that G is a bogus party by recording statement of the bank manager, accountant or cashier or the party who introduced G to the bank. The matter is in the realm of appreciation of evidence and no interference is called for in the matter. In the circumstances, the appeals are dismissed". Keeping all these facts in view, we hold that the existence of the machinery and its use has been established by assessee beyond any doubt. The two decisions of ITAT in assessee's own case in earlier years which have been also confirmed by Hon'ble jurisdictional High Court on the issue also goes in favour of assessee. Therefore, respectfully following these aforesaid decisions, we uphold the order of the CIT (A) and dismiss this ground of revenue's appeal." Facts being same, therefore, respectfully following our aforesaid decision, we dismiss this ground of revenue's appeal. 16. Ground No.8 is against the disallowance of depreciation of Rs.10,60,941/- on the machinery transfer from one division to another division. The Assessing Officer has dealt this issue in para 15 at page 9 of his order and the CIT (A) has de....
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....round of revenue's appeal. 19. In the ground no.9, the issue involved is deleting the disallowance of Rs.5,71,49,911/- out of expenses claimed on lease rent/lease management fees etc. The Assessing Officer has dealt this issue in para 18 at pages 12 to 14 of his order and the CIT (A) has dealt this issue in para 16 at pages 13 & 14 of his order. Both the sides relied on the pleadings made in ITA No.3036/Del/2010 for assessment year 1996-97. 20. We have heard both the sides on the issue. We have dealt this issue in revenue's appeal in ITA No.3036/Del/2010 for assessment year 1996-97 in paras 38 to 41 of order dated 24.09.2013. The relevant para 41 is reproduced hereunder :- "41. We have considered the rival contentions and the case laws relied up in view of the facts on record. The lease rent is being paid largely in respect of assets which have been in existence for the last 2-3 years. The lease rent has been allowed by the ITAT, Delhi in respect of Assessment Years 1993-94 and 1995-96 by holding that the assets were in existence as per the spot verification report dated 08.03.2001 of the chartered engineer appointed by the Income-tax Department. These decisions of the ....
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....of lump sum addition of Rs.1 crore made by the Assessing Officer. The Assessing Officer made this ad hoc addition by holding that transactions with M/s. Ashish Engg. Works, M/s A.S. Mechanical Works, M/s A.S. Forgings, M/s Pioneer Engg Works, R.K. Video and other concerns were not properly recorded and the method of accounting adopted by the assessee was not correct. The Assessing Officer has dealt this issue in para 20 at pages 14 to 16 of his order and the CIT (A) has dealt this issue in para 18 at pages 15 & 16 of his order. Both the sides relied on the pleadings made in ITA No.3036/Del/2010 for assessment year 1996-97. 24. We have heard both the sides on the issue. We have dealt this issue in revenue's appeal in ITA No.3036/Del/2010 for assessment year 1996-97 in paras 48 to 51 of order dated 24.09.2013. The relevant para 51 is reproduced hereunder :- "51. We have heard both the sides. We have considered the relevant material available on record. After considering all the relevant material, we find that the addition of Rs.20 crores is primarily made on the ground that five parties were bogus and that the payments by cheques have been made to them beside the sale of raw ma....
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....remand report has already treated these five parties as genuine. Thus, allegations howsoever strong but these cannot take place of evidence. The Assessing Officer has failed to discharge the onus with regard to establishing the fact regarding the benami of these sources of the assessee. The Assessing Officer could have enquired regarding the person who has introduced the accounts from the account opening form and the necessary enquiries could have been made from the banks but nothing of such type has been done by the Assessing Officer. Merely stating that the cheques have been issued to the parties and received back during the year under consideration cannot be a basis for making such huge addition of Rs.20 crores. Addition can be made only if there is an escapement or evasion of income. The addition made for lease rent paid to these parties has been deleted in various years. The existence of the assets has been established. Lease rent paid on the lease assets has been found allowable. In these circumstances, we find no fault in the order of the CIT (A) and we sustain the same on this issue. This ground of revenue's appeal is dismissed." Respectfully following our aforesaid deci....