TaxTMI 
TaxTMI 
2011 (3) TMI 1630
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent proceedings, the Assessing Officer noted from the tax audit report that the assessee is following the exclusive method of accounting for excise duty. The Auditors have stated that Modvat credit on raw materials purchased is excluded from the purchases and the excise duty is accounted for at the time of removal of goods from the factory. It was further mentioned that Modvat credit of Rs. 2,35,50,477/- was added to the closing stock in the preceding assessment year, the opening stock for the year under consideration would be higher by Rs. 2,35,50,477/- and the closing stock for the year under consideration would be higher by Rs. 1,52,87,989/- resulting into reduction in the profits to the tune of Rs. 82,62,488/-. This effect was also shown in the computation of income. The Assessing Officer specifically asked the assessee vide his letter dated 11.8.2006 to furnish the details of un-availed Modvat credit. Due to non filing of such details by the specified date, the Assessing Officer further gave a number of opportunities. In absence of documentary evidence/details filed by the assessee to substantiate the reduction in the profits to the tune of Rs. 82,52,488/-, the Assessing Offic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he parties, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. There is no dispute to the fact that the assessee has claimed un-utilized Modvat credit of Rs. 82,62,488/-. We find the Assessing Officer disallowed the same in absence of any documentary evidence filed by the assessee in respect of such claim. It is the submission of the ld counsel for the assessee that all the details were already there in the audit report and in the computation statement attached with the return of income. It is the submission of the ld DR that the assessee, despite being given sufficient number of opportunities, failed to discharge the onus cast on it by producing documentary evidence in respect of the Modvat credit availed. It is the submission of the ld counsel for the assessee that if an opportunity is given, he will substantiate the claim of the assessee by filing excise records and other related documents. 6 Considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the matter back to the file of the Assessing Officer with a direction to give one more opportunity to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....why the inventory has been written off and noting that the list contains certain items which cannot become obsolete, the Assessing Officer disallowed the claim of the assessee. 11 In appeal, the CIT(A) confirmed the action of the Assessing Officer on the ground that the assessee has failed to furnish any reason for treating the stores and spares as obsolete, and has to be written off even during the appellate proceedings. Aggrieved with such order of the CIT(A), the assessee is in appeal here before us. 12 We have considered the rival submissions made by both the parties, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We find the Assessing Officer disallowed the claim of the assessee on the ground that the assessee failed to furnish any reason for treating the stores and spares as obsolete and fit to be written off. We find, the assessee before us has filed a chart showing item wise stores and spares and also a write up justifying the reasons for such written off as additional evidence. 13 After hearing both the parties, the additional evidence filed by the assessee justifying the written off of item wise stores and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ness loss or depreciation for each year as stated above, and after setting off the profit for AY 2003-04 the assessee company has arrived at an amount of Rs. 10.87,20,000/- which is carried forward for set off in future years. However, while computing the book profit for AY 2004- 05, the assessee company has set off an amount of Rs. 22,20,04,000/- instead of setting of Rs. 10,87,20,000/-. The assessee company has recomputed the amount of business loss to be reduced from the book profit for AY 2004-05 by reducing the proportionate business income and depreciation for AY 2001-02 and 2003-04 from the brought forward loss and unabsorbed depreciation. According to the Assessing Officer, such a computation, as done by the assessee company has no legal sanctity. The assessee company has simply twisted the computation of figures of brought forward loss and unabsorbed deprecation so as to increase the amount of set off available. He, accordingly came to the conclusion that the book profit arrived at of the earlier year is incorrect and calculated such profit at Rs. 24,95,50,976/-. 16 In appeal, the CIT(A) confirmed the action of the Assessing Officer on the ground that the assessee was not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee vide the CIT(A)'s order dated 24.9.2004 in the AY 2001-02 where it was held: I have carefully considered the facts of the case and the submissions made by the counsel of the appellant. In my considered opinion, the AO is justified in rejecting the claim of the appellant. One of the conditions laid down by the Hon'ble Supreme Court in the case of Bharat Earth Movers Ltd (BEML) vs CIT 245 ITR 428 is that the liability should be worked out on the basis of a scientific method that is, calculation made by an actuary. In the present case, the appellant has not quantified the liability on the basis of any such actuarial valuation. Further, the appellant fails to submit any documentary evidence which legally entitles its employees to get leave encashment. In absence of the fulfilment of these basis conditions, ground of appeal no.4 is rejected. 8.5 The appellant has neither furnished any actuarial report nor proved that these are not contingent liabilities. Therefore, the same is treated as unascertained liability. 8.6 In view of the above, the AO's action of adding the provisions for gratuity, leave encashment and doubtful debts is confirmed and these grounds are dismi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lity on account of provision for gratuity and leave encashment was not worked out on the basis of scientific method i.e. calculation made by an actuary and no documentary evidence was filed to support that the provision is based on definite liability. However, we find, the provision made in the impugned year is different. The Auditors in their audit report have already mentioned that the liability for gratuity and leave encashment is provided on the basis of actuarial valuation (page 25 of the paper book). The submission of the ld counsel for the assessee that the note of the Auditors has not been proved to be false or untrue could not be controverted by the ld DR. Therefore, following the decision of the Hon'ble Supreme Court in the case of BEML (supra) provision for gratuity and leave encashment having been made on the basis of actuarial valuation cannot be added while computing the book profit for the purpose of sec. 115JB of the act. Therefore, grounds of appeal no.7 & 8 by the assessee are allowed. 23.1 So far as the issue relating to addition of Rs. 2,25,00,000/- on account of doubtful debts for computing the book profit for the purpose of sec. 115JB is concerned, the same h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the feeder lines are in exclusive possession of the assessee company. The assessee company is only entitled to an exclusive and uninterrupted supply of electricity from such feeder lines. Therefore, depreciation on the same is not allowable in the hands of the assessee company. For this proposition, the Assessing Officer relied on the decision of the Hon'ble Calcutta High Court in the case of CIT vs Indian Explosives Ltd reported in 204 ITR 593 wherein it was held that where the assessee has right to use the Railway Siding built by the Railways on the land transferred by the assessee, the assessee cannot be said to be the owner of the Railway siding so as to claim depreciation. He further noted that the order of the CIT(A) giving relief to the assessee for the Assessment Year 2001-02 has not been accepted by the revenue and the second appeal filed before the Tribunal is pending. He, accordingly, disallowed the depreciation of Rs. 45,96,328/- claimed by the assessee on the feeder lines. 25 In appeal, the d CIT(A), following his order for the Assessment Year 2001- 02, directed the Assessing Officer to delete the disallowance of depreciation of Rs. 45,96,328/-. 26 Aggrieved with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re brought before us by the ld DR, the ground raised by the revenue is dismissed. 29 Grounds of appeal 2 & 3 by the revenue and the grounds of appeal no.5 by the assessee relate to part relief given by the CIT(A) on account of manufacturing and trading expenses and other expenses. 29.1 Facts of the case, in brief, are that the Assessing Officer noted that in spite of number of opportunities granted, the assessee failed to file the details called for. The assessee company has filed only a broad breakup of certain expenses. The assessee company has also failed to file the details of purchases, manufacturing expenses and other general expenses etc. He noted from the tax audit report that against the clause 17(e)(1) which represents the expenditure by way of penalty or fine for violation of any law for the time being in force, the auditors have mentioned that "the scope of expenditure in this item, is such that it is not capable of being identified and/or quantified with reasonable accuracy, having regard to the volume of disbursement as also the plethora of laws, rules and regulations in India." 28.1 In view of the above, the Assessing Officer observed that the auditors have not qu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,65,59,000/- Total 12,98,47,000/- Thus, the CIT(A) sustained an amount of Rs. 64,92,350/-. 31 Aggrieved with such part relief given by the CIT(A), both the parties are in appeal here before us. 32 We have considered the rival submissions made by both the parties, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. Admittedly, the assessee, during the course of assessment proceedings has not furnished the full details as called for by the Assessing Officer. From the reply given by the assessee, during the course of assessment proceedings, copies of which are placed in the paper book, we find in none of the submissions, the assessee has given any clear cut reply. Giving only details of other expenses as per Appendix B submitted to the Assessing Officer on 26.12.2006, without supporting documents, is not sufficient for claiming the deduction. It is the settled proposition of law that for claiming any expense; onus is always on the assessee to substantiate with evidence to the satisfaction of the Assessing Officer that such expenditure is wholly....