TaxTMI 
TaxTMI 
2016 (1) TMI 779
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.... 1.1 Without prejudice to the above, the learned C.I.T. (Appeals) has erred in upholding the additions on account of undisclosed stock. It is submitted that the difference in rawmaterial as submitted to bank and as per audited accounts of Rs. 80,000/- is on account of sample stocks (Finished goods) shown as Raw-material in statement submitted to bank and the difference of Rs. 2,23,734/- in finished goods is on account of sales made in the month of March. The closing stock being fully and correctly shown in the books, the addition of Rs. 3,83,734/- be deleted. 3. So far as this grievance of the assessee is concerned, the relevant material facts are as follows. The assessee is engaged in the business of digital printing on flex and other extracts. During the course of assessment proceedings, the Assessing Officer noticed that there is difference in the closing stock books of accounts and as reflected in the statement filed with the banker. As the statement to the banker reflected more stock than the stock shown in the books of accounts, the Assessing Officer required the assessee to show cause as to why the same not be adopted for computing taxable profits of the assessee. The a....
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....quently. As regards sample kits, I agree with the assessing officer that there is no question of sample kits distributed free for raw material and therefore qty difference to that extent remained unexplained. As regards finished goods, quantity details were given to the bank after 31st March and therefore there cannot be any adjustment for sale effected on 31st March. Appellant admitted that sale was effected subsequently but Bills were issued on 31st March. When sales were not effected on 31st March, then how appellant could disclose the same in this financial year, is not clear. Appellant disclosed less quantity of stock in the books of accounts despite the fact that no such sale took place upto the 31st March. The decisions relied upon by the appellant also confirm the additions on account of stock difference if there is any difference in quantity. Therefore legally any difference in quantity between stock statement given to the bank and stock disclosed in books can be added. Appellant could not explain the difference or explanation offered by the appellant is of adjustment only and not of actual sale till 31st March. Considering this the difference in stock is correctly added b....
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....e end product would be a different. 2.1 Without prejudice to the above the learned C.I.T. (Appeals) has erred in not granting additional depreciation of Rs. 78,60,300/- claimed on the new Plant and Machinery installed and commissioned during the year. It is submitted that the additional depreciation of Rs. 78,60,300/- be allowed now. 2.2 Further the learned C.I.T. (Appeals) erred in holding that the assessee is not entitled for additional depreciation as most of the machineries purchased are second hand. It is submitted that all the machinery are new machinery except one second-hand machine of Rs. 62,40,000/- on which no additional depreciation is claimed. The assessee rightly claimed additional depreciation and it be held so." 10. So far as these grievances of the assessee are concerned, the relevant material facts are like this. During the course of assessment proceeding, the Assessing Officer noticed that while assessee has not produced any new article of thing, the assessee is not eligible for additional depreciation of machines used for printing. The Assessing Officer was of the view that the assessee is only printing on an existing object, and no new product comes int....
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....of the assessee by the judgement of Hon'ble jurisdictional High Court in the case of CIT vs. Ajay Printers Pvt. Ltd., 58 ITR 811 wherein Their Lordships have, inter alia, observed as follows:- "Considering the consistent view that has been adopted by the various High Courts while deducing the meaning of the word "manufacture" or "manufacturer" and the object with which Explanation 2 has been inserted in section 23A of the Act, we are of the view that the business carried on by the respondent-company of printing balance-sheet, profit and loss accounts, dividend warrants, pamphlets, share certificate, etc., required by the textile mills referred to in the statement of the case and other textile mills would be a business which consists wholly of manufacture and, therefore, clause (ii) of Explanation 2 to section 23A would apply in the present case. The Calcutta case in Sati Prasanna v. Md. Fazal had a different problem and cannot apply. In our view the construction placed upon clause(ii) of Explanation 2 by the Tribunal was correct." 14. When this was put to the ld. Departmental Representative, he did not have much to say except placing his reliance on the stand of the authorities....
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....to the tune of Rs. 6,00,02,988/-. In this backdrop, the Assessing Officer proceeded to disallow proportionate interest to the extent of interest free advances given to the Company to its directors. 21. Aggrieved by this disallowance of Rs. 49,622/-, the assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) deleted the disallowance on the short ground that there have been transactions with the directors of similar case with respect to amount received from the directors as well. It was noted that there is a receipt of Rs. 95,00,000/- from the directors on 06.04.2006.and that there is another receipt of Rs. 30,00,000/- on 19.04.2006 but no interest was paid in respect of amounts so received and used by the assessee company. Considering the facts of the case and over all fund available with company, the ld. CIT(A) deleted the disallowance of interest made by the Assessing Officer. The Assessing Officer is aggrieved and is in appeal before us. 22. Having heard the rival contentions and having perused the material available on record, we are decline to disturb the finding of the ld. CIT (A). We have noted that there is no finding to the effect that interest-bearin....
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....ssessee has not shown sales out of use of this machine and, therefore, this machine was not put to use. Accordingly, he disallowed the deprecation. 28. On appal the first appellate authority has allowed the depreciation. The finding reported by the ld. CIT(A) reads as under :- "5.3 I have considered the facts of the case, assessment order and appellant's submission. Assessing Officer disallowed claim of depreciation on new UV machine on the ground that in the audit report, no production from the said machine was mentioned. It is not in dispute that appellant purchased the said machine in May 2006 and the said machine was also installed. Appellant also submitted sale bills relating to this machine. For claim of deprecation, only two conditions are to be fulfilled - the assets should be owned by the appellant and it should be used for the purpose of business. There is no doubt about ownership of the asset by the appellant. Assessing Officer only doubted the use of machine. Since the machine was purchased within first two months of the previous year and it was installed within first four months also, presuming that machine was not used or ready for use of business purpose is not co....
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....ce. It is admitted position that the permission of the JCIT which is sine qua non was not obtained on the facts of this case. In this view of the matter, the ld. CIT(A) was legally justified in deleting the impugned disallowance. We uphold his action and decline to interfere in the matter. Ground no.4 is thus dismissed. 33. In ground no.5, the Assessing Officer is aggrieved of ld. CIT(A)'s deleting the addition of Rs. 16,28,241/- made on account of disallowance of depreciation on machines claimed to be put to use before 30th September, 2006. 34. So far as this ground of appeal is concerned, it is sufficient to take only a few material facts. The claim of the assessee was that machine was put to use before 24th September, 2006 and accordingly deprecation was claimed for the full year. The Assessing Officer rejected this claim on the short ground that "there is no significant change in sale, purchase figure during the month of September 2006". The Assessing officer further observed that as a matter of fact there is a decline in the sale figure in September 2006. It was in this backdrop that the Assessing Officer was of the view that the claim of the assessee to the effect that mach....