TaxTMI 
TaxTMI 
2015 (3) TMI 268
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....sales Service charges Rs. 31,89,625/- (iv) Disallowance u/s 37(1) Administrative expenses Rs. 22,43,445/- (v) Short term capital gain on sale of assets Rs. 2,22865/-. 2.1. In first appeal, the ld. CIT(A) partly allowed the assessee's appeal. Aggrieved, with the order of ld. CIT(A) the assessee is in appeal before us. Following grounds are raised: 1. The order of the learned CIT(Appeals) is erroneous & contrary to the facts & law. 2. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) has erred in restricting the addition on account of interest and penalty to Rs. 1,25,8466/- as against Rs. 2,05,705/- made by the A. . 2.l. The Ld. CIT(A) ignored the finding recorded by the A.O. and the fact that the expenses in question are penal in nature. 3.0n the facts and in the circumstances of the case and in law, the Learned CIT(Appeals) has erred in deleting the addition of Rs. 2,22,865/- made by A.O. on account of short term capital gain on account of sale of assets. 3.l.The Ld.CIT(A) ignored the finding recorded by the A.O. and the fact that the assessee itself has confirmed the sale of machinery vide letter dated 24/....
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....ent of sale tax. Compensation for late payment 8594 3 VAT paid at Maharashtra, calculation. MVAT paid 50,940/- Total 88,453/-. 5.2. Ld. CIT(A) noted that out of Rs. 88,453/-, Rs. 8,594/- was penal in nature and, therefore, he allowed a relief of Rs. 79,859/- and restricted the addition at Rs. 1,25,846/-. 5.3. Ld. counsel for the assessee pointed out that in AY 2009-10 and 2010- 11, the AO has restricted the disallowance accordingly to Rs. 12,000/- and Rs. 2500/- respectively. 5.4. Having heard both the parties, we do not find any infirmity in the order of ld. CIT(A), because only those payments, which were penal in nature, could be disallowed. Ground is rejected. 6. Ground no. 3 & 3.1.:From the fixed assets chart, the AO noticed that assessee had sold machinery worth written down value of Rs. 47,50,500/-. In terms of section 50, he computed the short term capital gains at Rs. 2,22,865/- as under: Sale consideration Rs. 70,36,357/- Opening written down value Rs. 68,13,492/- Short term capital gain Rs. 2,22,865/- 6.1. Ld. CIT(A) in para 3 of his order observed as under: "5.3 On going thro....
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....on of sub-section (2) of Section 50 of the Act would show that, the very fact that, there is a reference to, in arriving at the cost of acquisition, to the written down value of the „block of assets‟ at the beginning of the previous year as increased by actual cost of assets falling within the "block of assets" acquired during the previous year would show that what is required to be seen is that whether at the end of the previous year, the „block of assets‟ have ceased to exist or, in other words what is to be seen is that whether „throughout the course of‟ or „after the commencement and before the expiration of the previous year‟ (i.e., the financial year immediately preceding the relevant assessment year) there was an asset which fell within the "block of assets". In the event the block of assets i.e., a class of asset(s) bearing same rate of depreciation exist(s) was with the assessee at the end of the previous year, then the provision of Section 50 (2) would not apply. The Section creates a deeming fiction. It cannot be extended beyond the purpose for which it has been enacted. The section is a special provision, which provides fo....
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....onouncements relied upon by the Id. AR, the findings recorded by the Id. AO as per the assessment order and the facts of the case on record. It has been consistently. held by various judicial authorities that if the assets are kept ready for use, the claim of depreciation is allowable to an assessee. The same view was held by the Jurisdictional High Court in the cases relied upon by the appellant. In the instant case, although, there was no manufacturing activity during the year under consideration but in the next year the same took place as can be seen from the submissions filed by the Id. AR. The appellant has submitted the details of raw material consumption and manufacturing of goods for the succeeding year when the plant and machinery was actually put to use. This establishes the fact that during the year under consideration, the assets were, in fact kept ready for use. Therefore, in the light of the rulings of the Hon'ble Jurisdictional High Court relied upon by the appellant and after considering the submissions filed by the Ld. AR, I am of the opinion that the claim of depreciation is legitimately allowable to the appellant. The addition of Rs. 311661/- made by the Ld. ....
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....es was made on the basis of region wise sales achieved by the appellate and FEMPL. He also produced a station wise list of sale and service franchisee to which apportionment was made as under: 51 No. Centre Franchisee Sales service claim 1 Lucknow MIs. Electrical solutions 144296/- 2 Kolkatta M/s.Europa sales & service 2165001- 3 Indore M/s.Glacier Aircon 1500001- 4 Jaipur M/s.Maharaja Services point 123365/- 5 Ludhiana M/s.Orion Appliances 116459/- 6 Chennai M/s.G.K.M. Customer Care Centre 2750001- 1025620/* 7.3 While discussing the submissions and on verification of the documents like copy of a/c of sales and services charges,* it was noticed that a further sum of Rs. 4,26,887/- was attributable to FEMPL as payment made to the following concerns which were acting on its behalf: M/s. Helping Hands (Service) Rs. 1,37,450/- M/s. Hi Tech Electric Service-(S) Rs. 2,28,410/- M/s. Jai Sales (Service) Rs. 61,027/- Rs. 4,26,887/- The appellant was, therefore, asked to explain as to why the same be not disallowed. The Ld. AR lat....
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....cted the disallowance to Rs. 98,123/- by observing as under: "8.2.1 The Ld. AR in his submissions before me contended that the addition was arbitrary in nature. He stated that the expenses claimed as per the P&L account pertained not only to the premises situated at 1/7, West Patel Nagar, New Delhi but to other premises also. He produced detailed working showing head wise and premises wise bifurcation of the total expenses claimed as under:- Particulars Salary Staff Welfare Expo Security Exp Telephone & Mobile Exp Office Water & Electricity Total income as per ROI Income tax paid Incurred at 1/7, west patel nagar MA 43283 40107 74061 397055 91640 410580 154849 EHAL 2934766 3197 - 137549 - (-) 7404212 - Omex Industries 678220 30114 194237 328139 - 191735407 FEMPL 32142363 130015 66581 122833 87126 521710 195161 Asiatic Engineers Pvt. Ltd . - - - - - - - Hindustan Appliances. - - - - - - - Incurred at other premises. - - ....