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2017 (3) TMI 956
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....while observing that the stock records have not been maintained properly in spite of fact that assessee is registered with excise department and all the records have been maintained regularly as required under relevant Act/rules". "2. The Ld. CIT (Appeals)-II has erred in law as well as on facts while considering the addition of Rs. 498,414/- being interest paid without deduction of tax at source u/s 40a(ia)". "3. The Ld. CIT (Appeals)-II has erred in law as well as on facts while making disallowance of Rs. 388,276/- out of Interest exp. assuming notional interest income on advance paid." 2. Firstly, we take up the ground regarding rejection of books of accounts and estimation of gross profit rate. Briefly, the facts of the case are that the assessee is engaged in the business of manufacture of DPC Copper wire and aluminium wire. For the year under consideration, the Assessing officer observed that though the turnover has increased vis-a-vis last year, the gross profit ratio has dropped to 4.74% as against 7.46% in A.Y. 2010-11 and 5.06% in A.Y. 2009-10. The Assessing Officer thereafter found certain defects in the books of accounts and basis that, the books of accounts we....
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.... material or finished goods register is maintained. No register for insulation material or kraft paper is maintained. This has been discussed in detail by the Assessing Officer in para 3.1(iii) of the Assessment Order. In view of the specific defects pointed out by the Assessing Officer which the appellant has not been able to fully explain, as discussed above, the books of accounts are rejected u/s. 145(3) of the I.T. Act". "2.4 The Assessing Officer has estimated the turnover at Rs. 10,70,00,000/- as against Rs. 10,48,03,179/- shown in the books of accounts. The appellant has submitted the copy of assessment order of VAT/CST in which the turnover of the assessee has been accepted at almost the value disclosed in the books of accounts. In view of the above, I do not agree with the Assessing officer in estimating its turnover at Rs. 10,70,00,000/-. Instead, the turnover disclosed in the books of accounts is accepted. As regards the estimation of G.P. rate is concerned, it is seen that the turnover of the appellant has increased from Rs. 6,40,57,943/- in A.Y. 2010-11 when its G.P. rate was 7.46% to Rs. 10,48,03,179/- in this previous year, when its G.P. rate has declined to 4.....
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.... Valuation as per chart Valuation as per books Copper Rod/Wire 487 @ 486 and @ 428 (as explained above) Aluminum Rod/Wire 129 @ 140 Craft Paper 92 @ 90 We are submitting herewith copy of invoices in support of our above submission. From the above, your goodself will find that the assessing officer's observation is not correct. 5. The ld AR further reiterated the following facts as submitted during the assessment proceedings: 5.1 Due to fluctuation in copper rates in international market, the assessee could not maintain the G.P. rate. We are enclosing herewith monthly rate chart of copper wire of Hindustan Copper Lts. and Sterlite Industries Ltd. which shows that copper wire rates were fluctuated between Rs. 337 per Kg. to Rs. 495/- per Kg. during the year. 5.2 Further, as per practice adopted by Vedanta (Sterlite Industries Ltd.) the supplies were made during the month as per provisional rates and final rates were decided at the end of the month for supplies made. We had enclosed copy of rates structure of July 2010 determined by Sterlite Industries Ltd. as example. 5.3 Due to fluctuation in copper rate and price fixation sy....
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....pending on the import/export policy of the government and demand and supply position of the products. The assessee's purchases are from Hindustan Copper, Sterlite Indusries and their agents/depots. The assessee's products are used in electrical, electronics industries and electricity boards. All the purchases and sales are from registered dealers of VAT/CST and fully vouched. We are enclosing herewith copy of account of Pashupati Enterprises who is authorized dealer of Hindustan Copper Ltd. From whom purchases have been made Rs. 716.57 Lacs out of total purchases of Rs. 1009.89 Lacs. 7.2 The assessee is also Registered under VAT/CST Act, and is being regularly assessed by CTO "Ë" circle Jaipur. We have already submitted the assessment order of VAT/CST act which shows the turnover(sales) of Rs. 103260960/- and is being again enclosed for ready reference. We have already explained the reasons of differences in sales of Rs. 32384/- in our letter dt. 14.10.2013. 7.3 The assessee is registered under Excise Act since long. All the records have been maintained and are being maintained regularly which have been checked by Excise authorities during their visit at factory. All the....
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....r. Books are duly audited by independent chartered accountant. The assessing officer has not pointed out any discrepancy in the accounting of purchase/sale, has not pointed out any unrecorded transaction, has not pointed out any transaction which could not be verified from supporting documents. In absence of above, the accounts are correct and complete and assessing officer's action of applicability of section 145(3) is arbitrary and is bad in law. 7.11 As regards, valuation of stock, the Income Tax Act and Income Tax Rules does not prescribe any particular method of valuation of stock. The assessee may value its stock either at cost price or at market price whichever is lower. In this case also, the assessee has valued the stock of copper wire in two parts:- (a) Normal Stock: At cost Price. ITO has accepted the valuation and raised no objection. (b) Sub-standard Stock: At Realizable value for which the assessee has submitted the proof of actual realization in F.Y. 2011-12 (A.Y. 2012-13). 7.12 Assessment for ensuing years have also been completed u/s 143(3) and declared results were accepted as under:- A.Y. 2013-14 Sales/Job Work 82121707/- Gross P....
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....10.07.2010 23.635 384 Shri Krishna Sudershan Urja (P) Ltd. 166 16.07.2010 160.820 370 Balaji Industries 172 21.07.2010 8.535 370 From the above, your goodself will find that assessee had sold the metal to M/s Keshav Electricals (P) Ltd. and M/s Rajasthan Transformers & Switchgears (P) Ltd. at very low margin. Further, the terms of payment of these parties were also very much favourable, which is as under:- Sales to M/s Keshav Electricals (P) Ltd. 203.32 Lacs Balance outstanding at year end Nil Sales to M/s Rajasthan Transformers & Switchgears (P) Ltd. 186.98 Lacs Balance outstanding at year end .24 Lacs (Excess Received) From the above submissions, your goodself will find that reduction in G.P. Rate is very much supported with documentary evidences and therefore declared results deserves to be accepted. 7.14 The ld AR also relied upon the decision of Hon'ble High Court of Delhi in the case of Commissioner of Income Tax V/s Paradise Holidays, IT Appeal No.445 of 2010 dt. 28.04.2010 (2010) 325 ITR 13 (Del.). In this Case it was held as under: "The question as to whether the accounts produced b....
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....r has fluctuated during the year, a fact which has not been controverted by the Revenue and hence, cost of purchase is not in dispute. In respect of the sales which have been affected during the year, the Ld. CIT(A) has taken note of the assessment order under VAT/CST legislation wherein the turnover of the assessee as disclosed in the books of accounts have been accepted by the assessing authority. Further, the excise audit has also been completed and there is no adverse finding which has been reported therein. Given the fluctuation in the copper prices, as per the regular practice followed, the assessee raises the necessary debit notes on its customers to recover the differential price than billed provisionally. The differential pricing and all the sales have been duly recorded in the financial statement which has been duly audited. The Assessing Officer has also disputed the turnover of the assessee and computed the same at Rs. 10.70 Cr. as against Rs. 10.48 Cr. shown in the books of accounts. The Ld. CIT(A) has upheld the turnover figure as reflected in the books of accounts and the Revenue is not in appeal against the said confirmation of the turnover as upheld by the Ld. CIT(....
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....n-banking finance company having PAN No.AAACR5054J and is listed in major stock exchange of India and is supposed to comply all the legal requirement of Income Tax in time. 12. It was further submitted that section 40(a)(ia) is applicable only in respect of TDS defaults if amount is payable. If amount is actually paid and tax is not deducted under the above sections, section 40(a)(ia) is not applicable. Section 40(a)(ia) has to be subjected to restrict interpretation. Going by the rule of strict interpretation, the default with reference to actual "payment" of expenditure would not entail disallowance. The aforesaid observation has now been upheld by different benches of Tribunal - Teja Consturction V. CIT(2010)39 sot 13 (Hyd.). Merilyn Shipping & transporters V. CIT(2012) 20 taxmann.com 244 (Visakapattnam), S.S. Warad V. CIT(2012)19 ITR (Trib.) 35 (Bang.). T.T. Kuruvilla v. CIT (2012) 149 TTJ (Coch.) 533. Emdee Apparels v. CIT (2012) 54 SOT 600 (Bang.), Barronics India Ltd. v. CIT (2012) 52 SOT 188 (Hyd.), Cadtrium Engineering Solutions (P) Ltd. v. ITO (2013) 33 taxmann.com 269(Delhi), ITO v. Vinod Datta (2013) 33 taxmann.com 440 (Mum.) ITO v. MGB Transport(2013) 143 ITD 564 (K....
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....t by this Court, it binds smaller Bench and co-ordinate Bench of the Tribunal. Under the circumstances, it is not open to the Tribunal, as rightly contended by Mr. Narasimha Sarma, learned counsel, to remand on the ground of pendency on the same issue before this court, overlooking and overruling, by necessary implication, the decision of the Special Bench. We simply say that it is not permissible under quasi judicial discipline. Under the circumstances, we set-aside the impugned judgement and order, and restore the matter to the file of the Tribunal which will decide the issue in accordance with law and it would be open to the Tribunal either to follow the Special Bench decision or not to follow. If the special Bench decision is not followed, obviously remedy lies elsewhere." 2.6 Subsequently, the Coordinate Bench in case of Shri Amit Naresh Shah in ITA No. 4154/Mum/2013 dated 10.09.2014 taking into cognisance the decision of Hon'ble Andhra Pradesh High Court in case of Janapriya Engineers Syndicate (supra) has held as under: "From the clarification issued by the Hon'ble High Court, it is clear that until and unless the decision of Marilyn Shipping and Transport (supra) is r....
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....isallowance of sum of Rs. 14,14,534/- u/s 40(a)(ia) of the IT Act, is hereby deleted." 15. In light of above, following the earlier decision of the Coordinate Bench in case of Siyaram Exports (supra), we hereby delete the disallowance under section 40(a)(ia) as no amount remained payable as on 31st March. In the result, the ground no. 2 of assessee is allowed. 16. Regarding 3rd ground of appeal, the Assessing Officer found that the assessee has given interest free advances to two family members with whom the assessee did not have any business connection. The appellant has explained that these advances were given due to urgent requirement of funds in the normal course of business. The appellant has stated that it has received interest free loans also. As per the ld CIT(A), this contention of the appellant is not acceptable because the assessee has not able to show that moneys were advanced to the above two persons for business purposes. Also, the appellant has not been able to establish any nexus between the interest free loans and the interest free advances given by it. In view of the above, the disallowance of interest expenditure made by the Assessing Officer @ 12% on the i....