TaxTMI 
TaxTMI 
2014 (3) TMI 107
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....wing the claim of depreciation of Rs. 5.01 lakhs on vehicle which was registered in the name of the partners of the firm. The learned CIT(A) deleted this addition based on the presumption that the assessee fulfilled the condition of 'ownership' i.e., assessee was in possession of vehicles and also utilising or the purpose of the business. The presumption of CIT(A) is not based on any evidence submitted by the assessee. 4. The Revenue also filed a petition requesting the Bench for admission of additional ground. The learned DR pleaded before us that though the additional ground emanates from the order of the CIT(A), inadvertently it was not raised on earlier occasion. He prayed that the same may be admitted for adjudication. The learned AR not raised any serious objection for the same. After hearing both the sides, we admit the additional ground for adjudication as the same emanates from the order of the CIT(A). 5. In the Cross Objection, the assessee raised the following grounds of appeal: (1) The learned CIT(A) erred in holding that the brokerage amount from two different parties i.e., M/s. Soubhik Exports Ltd. Rs. 5,84,106 and M/s. PKS Exports Ltd., Rs. 4,71,967/....
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....see submitted that the quality of rice in some of the railway rakes was not up to the agreed standards and also there was shortage in quantity. However, the party expressed inability to pay brokerage to the assessee as the rice is not of the agreed standards. As the said party disputed the payment due from them, the assessee has not raised any bill for the brokerage and not provided for it in its books of account. In respect of Soubhik Exports Ltd., it was explained by the assessee that the said party made the entry in their books of account in the month of August, 2008 and paid TDS of Rs. 1,16,415 during August, 2008. Even this amount of Rs. 10,27,495/- which was entered by them in their books of account in the month of August, 2008 was not even paid by them on the ground that there were quality and quantity differences in the rice supplied to them. This amount also is disputed by them. 8. When these facts were brought to the notice of the Assessing Officer vide letters of the assessee referred to above, the Assessing Officer opined that the books of account maintained by the assessee are not complete and correct for the purpose of deducing the correct brokerage income and acco....
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....re the CIT(A) that estimation of income at Rs. 3.15 per quintal is at higher side. 10. It was also brought to the notice of the CIT(A) that the AO over and above the returned income of Rs. 43,70,450 which include gross profit from brokerage, gross profit from trading in maize and transaction of purchase and sale of shares, he went on further estimation of income from brokerage which resulted in double addition. According to the AR, he should have limited estimation of additional income only in respect of transaction with M/s. Soubhik Exports and M/s. PKS Ltd. alone where there were certain discrepancies. 11. Regarding deletion of brokerage received from M/s. Soubhik Exports and M/s. PKS Ltd., the CIT(A) observed that the fact that there were discrepancies in the accounts of the two parties needs to be taken note of and dealt with. The assessee has admitted that it had not recorded the brokerage from these two parties for the reason that it had either not received the brokerage or it was of a view that it was not likely to receive it. In the mercantile system of accounting, which the assessee was following, such subjectivity in recording of transactions is not permitted. If th....
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.... its business purposes exclusively, both the conditions for allowing of depreciation were fulfilled. 14. The CIT(A) observed that registration under the Motor Vehicles Act was not an essential pre-requisite for the acquisition of the ownership of the motor vehicles but was only an obligation cast upon an owner of the vehicle for the purpose of running the vehicles in any public place. An assessee would be considered to be an owner under section 32 if he was in a position to exercise the rights of an owner not on behalf of the person in whom the title vested, but in his own right. In the instant case, the conditions of 'ownership' have been satisfied in that sense. Therefore, the CIT(A) held that the assessee was entitled to depreciation under section 32 of the Act. Against this, the Revenue filed the additional ground. 15. Further there was a disallowance by the AO at Rs. 86,152 towards undisclosed contract income on the transaction with Emmsons International Ltd. and Adani Enterprises Ltd. 16. Brief facts about the above two transactions are that the assessee sells maize and also supplies rice on brokerage to M/s. Emmsons International Ltd. In respect of M/s. Adan....
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....red this income of Rs. 38,202/- in its return of income inadvertently. Hence the assessee admits that this amount of Rs. 38,303/- has to be brought to tax instead of Rs. 86,152/- added by the Assessing Officer. Accordingly, the assessee challenged the following additions: Sl. No. Particulars of the addition Amount (Rs.) 1. Additional brokerage income based on estimation done after rejecting the books of account. 37,07,623 2. Business expenses disallowed in proportion to brokerage income shown in Profit and Loss A/c. 10,46,151 3. Depreciation disallowed 5,01,453 4. Undisclosed contract income 86,152 18. The assessee also challenged rejection of books of account. Regarding rejecting of books of account the CIT(A) observed that it is not every discrepancy in the books of account that merits rejection of books. It is undisputed that the discrepancy found by the AO was confined to only two of the various parties with whom the assessee had transactions and which were verified by the AO. It is also undisputed that there were no discrepancies found in the books of account relating to the other business of the assessee, of trading in maize as ....
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....part of the Profit and Loss A/c. prepared by the assessee. Since we have held that books of account of the assessee cannot be rejected, in our opinion, there is no question of disallowance of proportionate business expenses. This ground of the Revenue is dismissed. 22. Coming to deletion of addition from undisclosed contract at Rs. 47,950 relating to M/s. Emmsons International Ltd. According to the this does not constitute income to the assessee and the TDS certificate issued to the assessee by Emmsons International Ltd., wrongly as the assessee has not supplied rice to M/s. Emmsons International Ltd. Instead, one party viz., Mulkanoor Co-operative Credit Society Ltd., supplied rice to M/s. Emmsons International Ltd. directly. On the other hand, the TDS certificate suggested payment has been made to the assessee. However, the assessee not brought anything on record to suggest that M/s. Mulkanoor Cooperative Credit Society itself sold rice to M/s. Emmsons International Ltd. and assessee is only receiving commission on it. In the absence of positive material to suggest that the rice has been sold by Mulkanoor Cooperative Society directly to M/s. Emmsons International Ltd., the TDS....