AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 545
X X X X Extracts X X X X
X X X X Extracts X X X X
....turing and other expenses. 2. The assessee company is engaged in the manufacture and sale of Organophosphorous insecticides and intermediaries. It is a subsidiary company of Cheminova A/S Denmark, which is ultimately held by Auriga Industries A/S Denmark. 3. The first issue relates to the disallowance made u/s 14A of the Act. During the year under consideration, the assessee had earned dividend income of Rs. 60,510/-. The AO applied the provisions of Rule 8D and computed the disallowance at Rs. 2,67,781/-. The Ld CIT(A), by following the decision rendered by Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Ltd (328 ITR 81), held that the provisions of Rule 8D shall not be applicable to the year under consideration. Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was 27-01-2004, but the assessee inadvertently mentioned the date as 27-01-2007. Hence the AO has drawn conclusion that the assessee was having business dealings with the above said party and accordingly disallowed the bad debts claim. The Ld A.R submitted that this fact, along with copy of relevant invoice, was furnished to Ld CIT(A), but the first appellate authority chose to confirm the addition. He further submitted that the decision of TRF Ltd (323 ITR 397) rendered by Hon'ble Supreme Court shall apply to the facts of the instant case. He further submitted that the Circular No.12 of 2016 issued by CBDT has also states that the writing off of debt is sufficient to claim deduction u/s 36(1)(vii) of the Act. 8. We have heard Ld D.R and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat there was actually decrease in interest and finance charges by Rs. 0.74 crores. Further, there was increase in cash discount of Rs. 1.21 crores and there was decrease in the interest income by Rs. 0.70 crores. 11. However, the AO held that the assessee has not furnished any proper evidence to support the explanations given. Accordingly he made ad-hoc disallowance of Rs. 2.00 crore for want of evidences and added the same to the total income. 12. Before Ld CIT(A), the assessee filed detailed explanations and hence the Ld CIT(A) called for a remand report from the AO. In the remand report, the AO reported that the assessee has only furnished ledger account copies and sample copies of bills in support of expenses, i.e., the assessee has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce of the AO. He submitted that the assessee would have arranged for bringing the entire volume of evidences, had the AO insisted upon the same. As stated earlier, the assessee was under bonafide belief that the AO was satisfied with the sample copies of invoices and vouchers. The Ld A.R also invited our attention to the analysis of various expenses furnished by him along with the written submissions. 14. On the contrary, the Ld D.R supported the order passed by Ld CIT(A). He submitted that the assessee did not produce all the evidences during the course of remand proceedings also. 15. We have heard the rival submissions on this issue and perused the record. We notice that the assessing officer has made ad-hoc disallowance out of manufact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....210.65 crores, whereas the sales relating to traded goods have gone up from Rs. 14.15 crores to Rs. 35.51 crores. The assessee has stated that the change in the sales product mix coupled with the inflationary increase of prices and expenses have contributed to the increase in manufacturing expenses. When we look at this analysis furnished by the assessee, we do not find any infirmity in it. We notice that the AO has also not commented adversely on this analysis. 18. The next major increase is in the Employee Cost to the tune of Rs. 1.15 crores. It is stated that this cost is an item of fixed cost and the increase in this expenditure is due to annual salary increase. This explanation of the assessee also, in our view, sounds reasonable. 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has offered plausible explanations with regard to the fall in turnover, fall in profit and increase in expenditure. We notice that the AO did not examine these explanations and also the analysis made by the assessee. We have already noticed that the assessee has furnished evidences in the form samples and the AO did not find fault with them. In our view, any defeciency noticed in the samples given would normally trigger further investigation. According to the assessee, the AO did not find any defect and further, did not ask for furnishing of further evidences. These discussions show that the assessee was willing to co-operate fully with the assessing officer and could not furnish all the volumes of invoices/vouchers due to practical difficu....