TaxTMI 
TaxTMI 
2014 (9) TMI 158
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....labour charges to only 10% of the total unverifiable labour charges, whereas the addition made is specific in nature this year. 5. The Ld. CIT(A) has erred in deleting the entire addition on account of disallowance of site development expenses - out of Total Site development expenses of Rs. 78.86 lakhs an amount of Rs. 11,37,761/- is not verifiable in the books and hence disallowed. 6. The Ld. CIT(A) has erred in deleting the additions of Rs. 44,96,024/- made on account of disallowance of closing stock when the assessee did not maintain any stock register nor produced any evidence to the Assessing Officer." 2. Ground no. 1 is general in nature and does not require any adjudication. 3. Ground no. 2 relates to the deletion of the addition made by CIT(A) in respect of sum of Rs. 5 lacs of M/s. Vasavi Travels. The facts relating to this ground are that the AO while making assessment noted that a sum of Rs. 5 lacs alongwith other creditors remained outstanding from A.Y 2009-10 even in F.Y 2012-13, therefore, invoked the provisions of Sec. 41(1) as there was no transaction with these creditors during the year and made the addition of Rs. 32,62,290/- which includes sum of Rs. 5 lacs t....
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....Ltd. reported in (2002)254 ITR 434(SC). The appellant has also placed reliance on the decision in the cases of CIT v/s Nitin S. Garg, 2012-TIOL-294(GUJ) and DCIT v/s Alidhara Texpro Eng. Pvt. Ltd. (2011) 43 SOT 1. Thus, in view of the above, it is clear that the A.O was not justified in deciding that the liability to pay had ceased to exist, in absence of confirmation of intent by both the debtor and the creditor. Also, the appellant had himself written-off/back these amounts as on 31.03.2013 and disclosed it as income. Thus, in view of Apex Court's decision in the above discussed cases, in my opinion, the A.O was not justified in making addition u/s 41(1) amounting to Rs. 32,62,290/- and he is directed to delete the addition. This Ground of Appeal of the appellant is allowed." The Revenue has come in appeal before us in respect of unpaid sundry creditors of M/s. Vasavi Travels amounting to Rs. 5 lacs. 3.1 We have heard the rival submissions and carefully considered the same. In our opinion, no interference is called for in the order of the CIT(A). There were in all, three creditors which were outstanding. The facts in respect of each of the creditors are the same. The Assess....
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....O was not satisfied and disallowed the sum of Rs. 45,59,627/- treating it to be the payment made for sham transaction. The Assessee went in appeal before the CIT(A). CIT(A) after going through the submission of the Assessee as well as the statement recorded by the AO of Shri Zoivant Cano took the view that the addition made by the AO was not based on proper appreciation of the facts and the genuineness of the transaction has been proved beyond doubt by observing as under : "6.4 I have gone through the statement of Mr. Zoivant Cano, conclusion drawn by the A.O and submission made by the appellant. In this case, the appellant has made payment through cheque, has deducted TDS as applicable, has produced the person before the A.O. for examination. The A.O. recorded the statement of Shri Zoivant Cano on oath. In the statement, Mr. Cano confirmed having received his consultancy charges. He has also filed Return of Income, wherein he has disclosed this receipt as his income. He also produced copy of his Bank statement for verification, wherein he has utilized his money for himself and his family members. The AO's observation that since there was no written contract between the assess....
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....that under similar circumstances disallowance was restricted during the A.Y 2009-10 in the case of the Assessee by the Income Tax Appellate Tribunal @ 10% of the total expenses claimed by the Assessee. CIT(A), therefore, respectfully following the order of the ITAT directed the AO to disallow 10% of the total labour charges of Rs. 1,40,62,215/- amounting to Rs. 14,06,222/-. 5.1 We have heard the rival submissions and carefully considered the same. It is not denied by the ld. DR that during the A.Y 2009-19 under similar facts, disallowance was restricted to 10% of the total labour charges. In view of this, in our view no interference is called for in the order of CIT(A) restricting the disallowance to 10% of the labour charges as judicial discipline demands that the decision of the earlier year in the case of the Assessee by the ITAT has to be followed. No distinguishing fact was brought to our knowledge by the ld. DR even though he vehemently argued. We, accordingly confirm the order of CIT(A) on this ground. Thus, this ground stands dismissed. 6. Ground no. 5 relates to deletion on account of disallowance of site development expenses. The facts relating to this ground are that t....
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....of the view that the authorities below were not correct in holding that the expenditure incurred by the Assessee was capital expenditure. We, accordingly, set aside the order of CIT(A) and delete the disallowance. In the result, this ground of appeal is allowed." Respectfully following the order of the Hon. ITAT, the A.O is directed to allow site development expenses as revenue expenses and accordingly, this ground of appeal of the appellant is allowed." 6.1 We have heard the rival submissions and carefully considered the same alongwith the order of the tax authorities below. Since the issue involved is duly covered in favour of the Assessee by the decision of this Tribunal, as has been observed by CIT(A) in para 9.4.2 of the earlier year in the case of the Assessee in ITA No. 75/PNJ/2012 for A.Y 2009-10, we do not find any illegality or infirmity in the order of CIT(A) in deleting the said addition. We noted, the ITAT in its order dt. 17.5.2013 while deleting a similar addition observed as under : "3.4 We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that it is an admitted fact on the record that the Assessee h....
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....self proves that the Assessee has not derived any enduring benefit out of this. The expenditure so incurred, in our opinion, cannot be regarded to be a capital expenditure. We have also gone through the decisions of Ballimal Naval Kishore vs. Commission of Income Tax, 224 ITR 414. In this decision, we noted that the issue relates to whether the expenditure incurred on extensive repairs to the structure of the cinema building is current repairs or not. While interpreting the word „current repairs', the Hon'ble Supreme Court held that current repairs means expenditure on building, machinery, plant or furniture which is not for the purpose of renovation or restoration but which is only for the purpose of preserving or maintaining an already existing asset and which does not bring a new asset into existence or does not give to the Assessee a new and different advantage. The question whether the expenditure is revenue expenditure or capital expenditure was not before the Hon'ble Supreme Court. Even the expenditure does not relate to the development of the land for facilitating the business. This decision, in our opinion, is not applicable to the facts of the case. 3.5....
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....ve = Rs.1,91,88,833 Difference in the value of closing stock = Rs.44,96,024 The Assessee went in appeal before the CIT(A). CIT(A) sustained the addition to the extent of Rs. 18,07,817/- by holding as under : "11.4 Since the appellant complained of violation of natural justice, the learned counsel was allowed opportunity to put across their contention on the issue of valuation of closing stock. The assessee furnished the chart showing the method employed by the assessee for valuing the closing stock. The learned counsel of the appellant was shown the defect in their method of valuation and he accepted the same. At the same time, he also objected to the valuation done by the A.O., wherein the A.O. Applied the highest rate on entire closing stock. The objection of the learned counsel was found to be correct. Therefore, the opening stock, purchases and sales were analysed. In the case of AGA, it was seen that out of purchases from M/s G.N. Agarwal only 2465 MT were sold and balance were lying in the closing stock. Though the purchases were made @ Rs. 1431.80, this stock was valued by the assessee @ Rs. 341.28/-. Therefore applying purchase price of Rs. 1431.80, the under v....