TaxTMI 
TaxTMI 
TaxTMI 
2013 (7) TMI 1058
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....ution to provident fund, (ii) CIT(A) failed to appreciate that the provision of section 43B which applies to employer's contribution have no role in deciding the issue of allowability of employees contribution which are governed by sec. 36(1)(va) rws 2(24)(x) of the Act." 3. It is submitted by the learned DR of the Revenue that the issue regarding delayed payment of employees' contribution of provident fund is now covered in favour of the Revenue by the recent decision of the Tribunal rendered in the case of ITO Vs. LKP Securities Ltd. ITA No. 638/Mum/2012 dated 17.5.2013. He also submitted that in this case, the Tribunal has considered all the available judgments including the judgment of Hon'ble Apex Court rendered in the case of CIT Vs. Alom Extrusions Ltd., 319 ITR 306. As against this, the learned counsel for the assessee supported the order of the learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the decision of Hon'ble Apex Court rendered in the case of Alom Extrusions Ltd. (supra). 4. We have considered rival submissions and gone through the material on record and the orders of the authorities below. We have gone through the decisio....
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....n was deleted in assessee's own case in A.Y.1998-99 by the learned CIT(A), and also by the Tribunal. This Tribunal order in assessee's own case for A.Y.1998-99 is available at page no.1 to 5 of the paper book. In that Tribunal order, it is seen that it is noted by the Tribunal that this addition in that year was deleted by the learned CIT(A) on this basis that the outstanding excise duty has already been paid before the filing of the return of income, and thus, allowable under section 43B. The reliance was also placed by the assessee before the learned CIT(A) on the decision of the Hon'ble Madras High Court in the case of CIT Vs. English Electric Co. Ltd. Vs. CIT (supra). In the present year, there is no finding given by the learned CIT(A) that the excise duty in dispute has been paid by the assessee before the due date of filing of the return of income, as in A.Y.1998-1999. Regarding the judgment of the Hon'ble Madras High Court rendered in the case of English Electric Co. Ltd. (supra), we find that in that case, the issue was decided by the Hon'ble High Court on this basis that, if excise duty has to be added in the value of the closing stock, then deduction for the same has to b....
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....file of the learned CIT(A) for fresh decision. The assessee has to bring evidence on record before the CIT(A) as to whether the assessee has made payment of excise duty before the date of filing of the return of income for the present assessment year i.e. 27.11.1997, and if it is found that such excise duty was actually paid by the assessee before this date, then obviously no addition is justified on this count. But, if the assessee is not in a position to establish this, then the addition has to be made, because the excise duty amount has to be added in the value of the closing stock, and deduction in respect of excise duty cost, cannot be allowed as per the provisions of section 43B, because the same is not actually paid till the date of filing of the return. The learned CIT(A) has to decide this issue afresh as per our above decision, after providing reasonable opportunity of hearing to both the sides. This ground of the Revenue is allowed for statistical purpose. 8. The ground no.3 of the Revenue's appeal is as under: "3. The CIT(A) has erred in deleting the disallowance of depreciation of ₹ 1,80,000/- on provision of exchange rate difference." 9. The learned DR suppo....
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....erused the material on record and gone through the orders of the authorities below, and also the Tribunal decision cited by the learned AR of the assessee. We find that in that order, the issue was decided by the Tribunal, on this basis that, it was a fact that the assessee has received MODVAT credit, and the same was reduced from the cost of plant & machinery, and therefore, reducing depreciation again will amount to double disallowance. In the present year also, a clear finding is given by the learned CIT(A) in para 14.3 of his order that the assessee had reduced the cost of capital asset to the extent of ₹ 8,63,075/- being MODVAT availed on capital goods. This finding of the learned CIT(A) could not be controverted by the learned DR of the Revenue, and hence, we do not find any reason to interfere in the order of the learned CIT(A) on this issue, because under similar facts, similar issue was decided by the Tribunal in favour of the assessee in the preceding year. Respectfully following the same, this ground of the Revenue is rejected. 14. The ground no.5 of the Revenue's appeal is as under: "4. The CIT(A) has erred in deleting the addition of ₹ 6,16,850/- on acco....
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....ring low gross profit, (ii) the CIT(A) failed to appreciate that the assessee had claimed excess consumption of raw materials, wages and stores & spares etc. in comparison to previous year." 18. The learned DR supported the assessment order, whereas the learned counsel for the assessee supported the orders of the learned CIT(A). He also submitted that a brief note on this issue is available at page no.32 to 41 of the paper books. He also submitted that the GP ratio of the company for A.Y.2001-2002 was only 40.90% as compared to 42.99% in the present year, and since the GP rate of 40.90% in A.Y.2001-2002 was accepted by the AO, in that year, as per the copy of the assessment order enclosed at page no.42 to 51 of the paper book, in the present year also, the addition made by the AO is not justified, and hence, rightly deleted by the learned CIT(A). 19. We have considered rival submissions, perused the material on record and gone through the orders of the authorities below. We find that this issue has been decided by the learned CIT(A) vide para 24.3 of his order, which is reproduced below for the sake of ready reference. "24.3 I have carefully gone through the submissions of the a....
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....ear, as compared to the preceding year. The AO has noted four items of such raw materials, for which the prices have gone down in the present year, and these raw materials were silica sand, felospar power, dolomite power and activate carbon. Thereafter, the AO has worked out the percentage of various expenses heads to sales and has noted that consumption of raw material to sales in the present year is 26%, as compared to 20% in the preceding year. The AO has also noted that there is a significant fall in the cost of power and fuel, which has gone down to 11.97% in the present year, as compared to 13.94% in the preceding year, and therefore, even if there is some increase in some expenses, the same is offset by such decline in the cost of power and fuel. Even after such analysis, the AO has adopted GP rate of 45% in the present year, as against 45.77% of GP in the preceding year. 21. From the above discussion, we find that the GP addition was made by the AO after examining all the aspects very carefully, but the learned CIT(A) has deleted such addition on simple basis that since there is a decrease in average sale price, fall in GP is explained. We, therefore, do not find any reaso....
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....es of ₹ 9,40,559/- as of revenue in nature and allowed the claim of the appellant. On verification of records, it is found that the contention of the counsel is found to be correct that appellant had incurred expenditure of ₹ 9,40,559/- towards flooring in factory building which are not debited to profit & loss account but capitalized and added to 'Factory building'. However, further contention of the counsel that same be treated as revenue expenditure is rejected since appellant has himself treated such expenses of capital nature. The expenditure being in the nature of enduring benefit cannot be allowed as revenue expenses. The action of the AO is therefore confirmed." 29. We have also examined the relevant details and invoices available at page no.63 to 68 of the paper book. At page no.63 is the copy of the ledger account, which does not throw any light on the nature of expenses. At page no.65 is a bill of Bhakti Construction for an amount of ₹ 7,01,802.40. As per the narration given by the party in this bill, it is stated that the expenses is for providing and laying 75mm tremix flooring work, as per the work order specification, and as directed by the enginee....
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....377; 22,22,735/-, as base figure, which is after adjustment of this amount of ₹ 58,585/-. Hence, further addition made by the AO of this amount resulted into double disallowance, and therefore we delete the same. This ground is allowed. 35. The ground no.5 of the assessee's CO is as under: "5. The CIT(A) has erred in not appreciating the facts with regards to the disallowance of ₹ 7 lakhs, out of the legal & professional charges and has dealt with confirming the disallowance of Rs,5,00,000/- subject to giving effect in the subsequent A.Y.1998-99, as then assessee following mercantile system of accounting and complete details for expenses paid and provided in the books are filed. The same be allowed." 36. It is submitted by the learned AR of the assessee that reliance was placed on the finding of the learned CIT(A) in para 23 to 23.3 at page nos.23 and 24 of his order. He further submitted that this provision is reversed in A.Y.1998-99, and the learned CIT(A) has directed the AO to give effect in that year. He further submitted that suitable directions may be given to the AO to give effect in A.Y.1998- 99, as per the directions and finding given by the learned CIT(A)....
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..... 43. The ground no.2 of the appeal of the Revenue is as under: "2. The CIT(A) has erred in deleting the addition of ₹ 27,128,492/- on account of income accrued in respect of arbitration award." 44. The learned DR supported the assessment order, whereas, it is submitted by the learned AR of the assessee that this issue is covered in favour of the assessee by the Tribunal order in assessee's own case for A.Y.2004-2005 and 2005-2006 in ITA No.4025/Ahd/2007 and 3220/Ahd/2008. He further submitted that copy of the Tribunal decision is available at page no.52 to 68 of the paper books and the relevant paras are para no.19 to 22 of the Tribunal order. 45. We have considered rival submission and perused the material on record and gone through the orders of the authorities below. Since similar issue has already been decided by the Tribunal in favour of the assessee in assessee's own case for A.Y.2004-2005 and 2005-2006, and no difference in facts has been pointed out by the learned DR of the Revenue, we do not find any reason to take a contrary view in the present year, and hence, decline to interfere in the order of the learned CIT(A) on this issue. This ground of the revenue is....
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.... business loss is also not allowable in the present year, because the claim of the business loss is allowable in the year in which quantum is finally ascertained, and in the present case, he has given a finding that the assessee has not established that the business loss of ₹ 12,56,705/- has crystallized during the year. As per the details available at page no.62 of the paper book also, it is seen that there was an opening debit balance of ₹ 3,98,451.40 in the name of M/s.Sunhem Minerals which was written off on 31.3.2005. The claim was made by the assessee in A.Y.2006-2007, and that too, of ₹ 1,56,705/-. Hence, before us also, the assessee could not establish that any business loss has crystalized during this year, and therefore, we do not find any reasons to interfere in the order of the learned CIT(A) on this issue. Accordingly, this ground is also rejected. 55. In the result, CO of the assessee is dismissed. 56. Now we take up the appeal of the Revenue for A.Y.2007-2008 i.e. ITA No.2024/Ahd/2010. 57. The ground nos.1(i) & (ii) of the Revenue's appeal are as under: "1(i) & (ii) CIT(A) has erred in deleting the disallowance u/s.40(a)(i) of ₹ 5,51,251/....
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..../Ahd/2010 for A.Y.2007-2008. 65. The ground no.1(i) & (ii) of the CO are as under: "1. The CIT(A) has erred in confirming the disallowance of ₹ 39,325/- being 1% of the total expenses incurred under the DCIT Vs. Gujarat Borosil Ltd. (6 appeals) -23- head other expenses. As the books of accounts are audited and there being no qualification by auditor regarding personal or non-business expense." 66. Regarding this ground, it was fairly conceded by the learned AR of the assessee that this issue is covered against the assessee by the decision of the Tribunal in A.Y.1998-99 in ITA No.2343/Ahd/2002. Accordingly, this ground is rejected. 67. The ground no.2 of the CO of the assessee is as under: "2. The CIT(A) has erred in confirming the disallowance of ₹ 27,500/- being notional interest on advance given to subsidiary company. The assessee has not borrowed funds on interest for giving advance, has its own funds, surplus & reserves." 68. Regarding this ground also, it was also fairly conceded by the learned AR of the assessee that this issue is covered against the assessee by the decision of the Tribunal in A.Y.1998-99 in ITA No.2343/Ahd/2002. Accordingly, this ground is ....
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....pellant is distinguishable on facts and in that cse the liability was established to be ascertained. However, in the instant case in the absence of details the liability cannot be said to be established. In my humble view therefore the said provision is not an allowable deduction from book profit. The disallowance is therefore sustained." We also find that as per the judgment of the Hon'ble Bombay High Court rendered in the case of CIT Vs. Echjay Forging (supra) the DCIT Vs. Gujarat Borosil Ltd. (6 appeals) -25- provision for gratuity was made on the basis of actuarial valuation and it was held that it has to be accepted that, this is an ascertained liability and cannot be added for the purpose of book profit. Similarly, for the provision for bonus, it was held that if the provision is in accordance with the Payment of Bonus Act, it has to be accepted as ascertained liability, and therefore it cannot be added in book profit. In the present case, there is no material available on record, as to whether the provision of gratuity was on the basis of actuarial valuation or not, and similarly, as to whether the provision of bonus was as per the Payment of Bonus Act or not, and hence, we....