TaxTMI 
TaxTMI 
2017 (4) TMI 1092
X X X X Extracts X X X X
X X X X Extracts X X X X
....r section 14A while computing the book profit under section 115JB (Ground No.3.1 and 3.2). (iv) Disallowance on account of alleged bogus purchases comprised of following:- Utilization of material as- Amount (Rs.) Treatment in Accounts Plant & Machinery/Moulds 23,79,82,268 Addition to Plant and Machinery Trail Run 13,94,92,838 Charged to Capital WIP account Trail Production 6,83,99,170 Charged to Capital WIP account Machinery Spares 14,97,74,663 Shown as Inventory in Balance Sheet Raw Material & Consumables 3,50,24,425 Charged to Profit and Loss account 63,06,73,365 (Ground No.4.1 to 4.6) (v) Credit of TDS amounting to Rs. 51,00,532/- (Ground No.5) (vi) Short period for advance tax amounting to Rs. 15 crore (Ground No.6) (vii) Charging of interest under section 234B and 234C (Ground Nos.7 & 8) (viii) Initiation of penalty proceedings under section 271(1)(c) (Ground No.9) 2. The assessee company is engaged in the business of manufacturing and trading of consumer electronics and home appliances, exploration crude oil and gas, investment in shares, securities and properties, leas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e commission. Provision of Guarantee was not international transaction. However, out of abundant caution assessee company has recovered 0.25% as guarantee commission from its AEs which has been offered to the tax. As submitted earlier in the immediately preceding assessment year, the corporate guarantee provided by the VIL does not fall within the definition of international transaction as per the definition of International Transaction prevailing at the time of providing corporate guarantee. However, TPO in earlier years has taken a view that the Finance Act 2012 introduced Explanation to Sec 92B with retrospective effect from 01.04.2002 and as per the Explanation Corporate Guarantee is a type of capital financing transaction and within the meaning of definition of international transactions under 92B." 5. Apart from that the assessee also submitted a detailed analysis and reasoning to justify firstly; it is not an international transaction and therefore no bench marking is required; secondly, the rate of 3% as guarantee commission is not correct on the facts of the case; and lastly, charging of 0.25% of guarantee commission is justified from internal CUP. However, the Ld....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Fee 3% p.a. Arm's Length Guarantee Fee @ 3% p.a on the outstanding corporate guarantee for 170 days Rs.9,91,77,534/- Price Received vis-à-vis the Arms Length Price: The guarantee fee charged by the assessee to the AE is Rs. 8463,750. Hence the difference between ALP of guarantee commission and commission actually charged is to be adjusted as computed below: Arm's Length Guarantee Fee calculated above Rs.9,91,77,534/- Guarantee Fee received Rs.84,63,750/- Difference between arm's length price and price charged by the assessee Rs.9,07,13,784/- Thus, the above amount of Rs. 9,07,13,784/- is treated as transfer pricing adjustment being the difference between the arm's length guarantee fee receivable and the actual guarantee fee received by the assessee from its AE, Videocon Global Energy Holdings Ltd, British Virgin Islands for the FY 2010-11." 6. As regards the letter of undertaking in the case of Videocon Hydrocarbon Holdings Ltd., commission allowance, the adjustment was made in the following manner: "Outstanding Guarantee Amount Rs.18,056.00 Million No. of days the guarantee is outstanding du....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity Charge on present and future assets of the AE (assets net off current liabilities as on 31.3.2011 @ 45.14) 8958.03 Hypothecation of receivables of AE 6217.63 Approximate value of security (excluding Guarantee given) 15,175.66 Loan for which Guarantee Given (Amount in million rupees) by Assessee as on 31.3.2011 9028.00 Value of security covering Loan 1.68 times Videocon Global Energy Holding Ltd. - Guarantee of USD 150 Million Particulars Amount rupees in million Security Margin Deposit of USD 30 Million @ 46.44 (as on 1.9.2010) 1393.20 Loans and advance (joint venture interest as on 1.9.2010) (230.89 millions) 10722.53 Approximate value of security (excluding Guarantee given) 12,115.73 Loan for which Guarantee Given 150 million at 46.44 as on 1/9/2010rupees) by Assessee as on 31.3.2011 6966.00 Value of security covering Loan 1.739 times Regarding letter of undertaking given to Videocon Hydro Carbon Ltd., he pointed out that State Bank of India has charged bank guarantee commission by giving 50% concession to assessee (i.e. 50% of 1.75%) which comes to 0.875%. If ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....39;International Transaction' or not, because before us, the Ld. counsel Mr. Sonde has mainly raised the issue that, benchmarking if at all is required to be done, then same should be done by taking the corporate guarantee commission rate between 0.25% and 0.50% and in support of which he relied on various decisions. He has not stressed on this issue, whether corporate guarantee is an international transaction or not. Whence assessee before us is not pursuing the matter, we are also not inclined to adjudicate the issue. On merits, Ld. CIT DR tried to justify the charging of corporate guarantee commission @ 3% and submitted that there are various decisions wherein corporate guarantee commission of 2% to 3% have been accepted. 11. After considering the rival submissions and on perusal of the impugned orders, we find that it is an undisputed fact that the assessee has given corporate guarantees to financial institution/banks in respect of loan or credit facilities extended to its two AEs and letter of undertaking to the lenders in the case of another AE. For providing such corporate guarantee it has recovered 0.25% as guarantee commission. In support of charging of 0.25%, the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been claimed, the ld. Assessing Officer issued show cause notice as to why the dividend income should not be considered as exempt and expenditure attributable for earning of such exempt income should not be computed in accordance with section 14A read with rule 8D. In response to the said show cause notice, the assessee had submitted as under: "II. Dividend Income of Rs. 49,14,724/- has been shown in the Investment Division. Our investments as per Sch. 6 of our Balance Sheet are of Rs. 39,66,70,91,020. Our share capital of Rs. 347,95,82,540 and Reserves & Surplus of Rs. 79,65,27,57,457 total up to Rs. 83,13,23,39,997/- which amount is more than our investments. Hence, it is submitted that provisions of Sec. 14A of the I. T. Act, 1961, are not applicable in our case as held by B'bay H.C. in Reliance Utilities & Power Ltd., 313 ITR 340 (Bom) & followed in Godrej & Boyce Ltd., ITAT, Mum, No. 1629/MUM/09. We have inadvertently not claimed exemption u/s 10(34) of the Act, in respect of Dividend Income of Rs. 49,14,724/- included in accounts of our Investment Division. You are requested kindly allow the same and oblige." However, the Assessing Officer rejected the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iii) CIT v. Corrtech Energy (P.) Ltd. 372 ITR 97 (Guj.); (iv) CIT v. Shivam Motors (P) Ltd. 2014 (5) TMI 592 - ALLAHABAD HIGH COURT; (v) CIT v. Lakhani Marketing lnc. 2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT; (vi) CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204 (Punj. - Trib.) ; (vii) CIT v. Holcim India (P.) Ltd. 2014 (9) TMI 434 - DELHI HIGH COURT (viii) Avshesh Mercantile (P.) Ltd. v. Asstt. CIT [2012] 54 SOT 19 (Mum.) (ix) Jindal Steel & Alloys Ltd. v. ACIT [IT Appeal No. 9611 (Mum.) of 2009] (x) Asstt. CIT v. Lafarge India Holdings (P.) Ltd. [2008] 19 SOT 121 (Mum.) (xi) Asstt. CIT v. M Baskaran [2015] 152 ITD 844 (Chennai - Trib.) 15. That apart, he pointed out that the assessee had huge surplus fund in the form of 'share capital' and 'reserve and surplus' which aggregated to Rs. 8313,23,39,997/- which is far excess than the investments made which stood at Rs. 3966,70,91,020/-. Thus, in view of the decision of Hon'ble Bombay High Court in the case of CIT v. Reliance Utilities & Power Ltd. [2009] 313 ITR 340; CIT v. HDFC Bank Ltd. [2014] 366 ITR 505 (Bom.); and again in HDFC Bank v. Dy. CIT 383 ITR 529 (Bom.), if ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see. 17. After considering the rival submissions and on perusal of the relevant material placed on record as well as the finding given in the impugned order, at the outset we are of the opinion that the basic premise on which the disallowance under sec. 14A gets triggered is that, there has to be an income to the assessee which does not form part of the total income and assessee claims any deduction in respect of expenditure attributable to earning of such income. If assessee has not claimed any exempt income or has made it part of total income liable for tax, then provisions of sec 14A does not get triggered. This basic postulate is not satisfied in the present case, because neither the assessee has claimed it as exempt income nor Assessing Officer has allowed any exempt income which was in the form of dividend income of Rs. 49,14,724/-. Once the revenue itself has treated the exempt income as part of the total income which has been held to be taxable, then the disallowance of expenditure under sec. 14A does not gets triggered, especially in light of the judgments of various High Courts as referred to above especially in the case of Cheminvest Ltd, (supra); Corrtech Energy (P.)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2.5 have become purely academic and therefore, no separate adjudication is required. 18. As regards the issue raised in ground nos. 3.1 and 3.2 that disallowance u/s. 14A should be added as part of the book profit, the same too is now a settled proposition that if any disallowance under sec. 14A is made in the normal computation, then the same would be added to the book profit u/s. 115 JB. Accordingly, we order that, whatever disallowance is made under rule 8D, the same should be added to the book profit. 19. The next issue relates to various additions made on account of purchases from certain dealers which has been treated as bogus and sums aggregating Rs. 63,06,73,365/- has been added to the income of the Assessee. 20. The relevant facts and background qua this issue are that, an information was received to the Assessing Officer vide letter dated 15.05.2014 from the Assistant Director of Income-tax (Inv.), Unit-Ill, Kolhapur, allegedly indicating that certain concerns from whom purchases has been shown did not actually sell material but only issued bills, that is, were providing accommodation entries. Based on the report of the ADIT (Inv.), Unit Ill, Kolhapur, the AO ob....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....M. Traders (viii) Sarvesh Enterprises (ix) Trishul Enterprises (x) Sai Enterprises (xi) Crystal Enterprises 21. Before us, Ld. CIT DR, Shri N.K. Chand for the assistance of the Bench has filed written submission along with copy of statement of the key person, Mr. Suresh A. Parekh which was recorded by the DIT (Inv.) and also made reference to the cross examination of Suresh A. Parekh in pursuance of Tribunal order in the AY 2009-10. He pointed out that the Assessing Officer in his order has referred to statement of Shri Suresh A. Parekh recorded on 28.03.2014 by DDIT (Inv.), Kolhapur and in his specific reply to question no.12, he admitted that he is in the business of providing accommodation bills without delivery of goods and this activity was being carried out by him from Sangli. He also referred to question No. 13 and 14 which was appearing at pages 32 and 33 of the assessment order. The relevant questions for the sake of ready reference are reproduced hereunder: "Q.12. As admitted by you on earlier occasions, you were indulged in providing of accommodation bills/entries to various business houses/business concerns/entities/persons without actual delivery of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etails of accommodation bills/entities provided by us through each bank account held by each entity. However, since the matter is very old, we could ascertain certain entries and as such these entries have been shown by us as suspense entries. We are still working on the same so as to give you the complete beneficiary wise list of accommodation entries provided by us. We assure you that such list of beneficiaries will be submitted at the earliest by clearing the entire suspense entries. Meanwhile, in order to work out the details of turnover of accommodation entries achieved by each one of us either independently or in common, we have agreed to accept the following basis: 1. The turnover of accommodation bills independently carried out by each person has been identified and the same has to be taken separately. 2. The turnover of accommodation bills carried out in common between me and Shri Dinesh Parekh and where beneficiaries have been identified, such turnover has to be shared by me and my younger brother Shri Dinesh Parekh in the ratio of 50:50. 3. The turnover of accommodation bills carried out in common between me and Shri Dinesh Parekh and where beneficiaries have no....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (such as Param, Swastik etc.) through RTGS. Then after withdrawing the payment on the same day or at times, the next day, keeping my commission and the commission of my allies, if any, I used to return the balance amount in cash to such businessman. Q.16. Does this mean that the beneficiaries to whom you have provided accommodation bills have booked bogus purchases to the extent of amount of accommodation entries provided by you and your allies? Yes, these are only accommodation entries in the books of the beneficiaries as in respect of such bills neither me nor my allies had sold any goods to them nor was there any physical movement of goods." Based on such reply, the Assessing Officer had concluded that Shri Suresh A. Parekh had received the cheques/RTGS from the corporate houses in the respective bank account maintained in the names of various entities and after the receipt of RTGS/clearance of cheque, cash was withdrawn and handed over to the respective corporate houses after deducting their commission. During the course of assessment proceedings, the assessee was asked to provide complete details of transaction with the abovementioned parties and the fitment in the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O and assessee was given opportunity to cross examine him in the presence of senior officers of the assessee company. In his statement before the Assessing Officer, Shri Suresh A. Parekh first of all admitted to the modus operandi of his business/transaction but stated that he had sourced the material from grey market from the dealers where he did not get the bill. It is after the material has been supplied to M/s. Videocon Industries Ltd., Aurangabad (assessee) by the suppliers of the grey market that bills are prepared in the names of various entities controlled by him. He also confirmed before the Assessing Officer that proprietors of the said concerns were his family members and friends. Thus, he categorically admitted that he had actually procured the material from grey market without sale bill and the said material procured from the grey market was supplied to M/s. Videocon Industries Ltd. along with the sale invoices of his concerns in various years. When the material was supplied to the assessee, he has received the payments by way of cheque/RTGS in the names of respective parties and after the clearing of cheques/RTGS in the respective bank accounts, cash has been withdraw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the name of aforesaid parties are in bulk quantity of various items and on analysis it is that The Primary details of Purchase order & Date are not mentioned in the Tax Invoice. Also there is no mention in respect of 'Transportation details' i.e., delivery terms. All the invoices produced before have no proper seals of the assessee company evidencing that the material has really been received in the factory premises. More importantly, certain delivery challans have also been attached to the bills, however, one of the delivery challans have acknowledgment of receipt of material either of the company or the supplier. More so there are materials of various specifications, however, no such supporting evidences of specific specification for supply of material has been attached to the bills/delivery challans. There is no single initial/stamp showing date and time of receipt, etc. From the statement of Shri Rajesh Methi, Accounts Manager of M/s. Videocon Industries Ltd., it is seen that in respect of purchases shown from other than hawala parties, there are proper documentary evidences viz., Tax Invoice, Delivery Challan, Gate Entry Stamp (i.e. stamp of the Guard on duty, date ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment order), the Assessing Officer has worked out the disallowance depending upon the nature of purchases and disallowances to be made. 17. Therefore, the fact of admission of non-supply of goods by the proprietors/partners of the aforesaid entities in the deposition given before the Sale-tax authorities have been proved that they never supplied the goods but only issued sale bins for commission. Importantly, this fact was brought to the notice of Shri Suresh A. Parekh, while recording his statement on oath (Q.No.13) for which he has simply stated that he has procured the material from grey market and material was supplied to the company in the name of aforesaid hawala parties. However, in support of purchase of goods Shri Parekh has not submitted any evidences. This demonstrates that he has not purchased any material, but issued bogus sales bills without supply of material. Hence, there is no mention in receipt of receipt of material by the assessee company. It is also important to mention that the assessee company has also not been able to show evidences of receipt of goods at the factory premises. It is common knowledge that the transporters carry multiple copies of goods bei....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the probability the contention of the hawala party and the assessee company cannot be accepted that the material has been supplied. (iv) The impounded material regarding vouchers and other documents pertaining to purchase clearly shows the difference and discrepancies between the genuine purchase and bogus purchase as has been observed above. (v) Further, no single evidence of delivery has been submitted at any point of time by either the haw ala party or the assessee company even though specifically been asked for. Even during the course of survey no evidence was found at the premises of the assessee, whereas in other genuine purchases, all such evidences were found or submitted by the assessee." 24. In view of the aforesaid finding the Assessing Officer made following additions/disallowances on account of bogus purchases: (i) disallowance of Rs. 8,98,22,987/- on account of depreciation on plant and machinery and moulds; (ii) reduced written down value of plant and machinery and moulds by Rs. 33,20,80,461/- by holding that the assessee does not have evidence in respect of purchase of said plant and machinery and moulds and assessee has never procured....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the purchase departments of the factories, specifying the specifications of the products and their quantity required urgently. According to their requirement, he sourced the suppliers from the grey market and supplied the items as per their requirement along with the bills of the aforesaid concerns and accordingly, received the payments. The parties from whom he purchased the materials in grey market do not provide any sale bill; therefore, he has regularized the said supply of those goods by raising invoices through the aforesaid concerns against which the payments have been received, by cheques/RTGS. By utilizing the payments received, from the corporate houses, he pays, the supplier, who supplied the goods in grey market without bill. With regard to the transportation cost and other related expenditure for delivering the goods at site or desired place of the Corporate Houses, Suresh Parekh clarified that the transportation costs were to be borne by the suppliers as the order was placed at a fixed rate, which included the overhead expenses from source to destination. He had submitted that the practice of purchasing materials from grey market is not uncommon and is prevalent sinc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d explained the modus operandi of his activities. From above, it is very clear that he procured material from grey market and gave bills of other parties who had not supplied any material. He also confirmed that he had huge experience in acquisition and supply of electronic materials and in response to oral purchase orders and as per requirement, he sources the supplier in the grey market who supplies the items and receives the payments via the entities controlled by him. (Refer to Question no. 8 and 9 of statement u/s. 131 of the Act on 12/3/2015 Page No. 45 - 46). 2. Contention of the AO The AO has stated that in reply to Q. Nos. 15 & 16, in statement dated 18-03-2014, Suresh Parekh had categorically explained the modus operandi adopted by him for giving accommodation bills and also his commission thereon. According to the AO, from the reply of Shri Suresh Parekh, it is amply clear that he had received the cheques/RTGS from the corporate houses, in the respective bank accounts maintained in the name of hawala entities and after receipt of RTGS/clearance of cheque, cash was withdrawn and handed over to the respective corporate house after deducting their commission. This ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (Page No. 57 of the Assessment Order). 4. Contention of AO: The Primary details of Purchase order & Date are not mentioned in the Tax Invoice. (Pg. 57 of the Assessment Order). Submission of the Appellant: It is clarified by Suresh Parekh that he has received oral/verbal purchase order. Total Purchases made by the Appellant during FY 2010- 1 1 were Rs. 7996.14 crores. It is not the case of the AO that there are purchase orders in each and every purchase other than the purchases of Rs. 63.07 crores. There are number of instances other than these purchases of Rs. 63.07 crores, where appellant has purchased material with oral orders and material has been received. The mere absence of a purchase order does not make genuine purchases made by the appellant as bogus. 5. Contention of the AO There are no details of 'Transportation'. Submission of the Appellant: Mr. Suresh Parekh has admitted and explained that the transportation costs and other related expenditure for delivering the goods at the delivery station was to be borne by the supplier as the order is placed at a fixed rate, which included all the overhead expenses from source to destination. Theref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....As regards transportation cost and evidence in respect of supply or materials, he explained that expenditure on delivery or goods are borne by actual suppliers in grey market to whom he had paid cash. (Refer Reply to Question nos. 14 and 17 (wrongly mentioned (IS 16) on Page No. 51 and 54 of the Assessment Order). 8. Contention of the AO The AO has stated that a perusal of the purchase bills submitted from the various dealers indicate the use of same gate entry stamp i.e. stamp having only challan number and signature of a person. While in other purchases, the gate entry stamp is different and more elaborate and is having various fields. (Page No. 66 of the Assessment Order) Submission of the Appellant The Appellant generally maintains 2 to 3 sets of gate entry stamps in order to handle contingencies of emergency or number of consignment entering the premises at the same time. It is not the case of the assessing officer that in all other cases one single gate entry stamp was used. 9. Contention of the AO: The AO stated that there is no evidence regarding receipt of material other than the affidavit filed by Shri Suresh A. Parekh in support of supply of goods. (....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the aforesaid purchase- transactions made by the assessee company. At that point of time the requisite details were not available at the office premises in Mumbai where the statement of Shri V. N. Dhoot was recorded as the same were maintained at factory premises at Aurangabad. Therefore, the Managing Director has stated, that the transactions with the aforesaid, parties are not immediately verifiable. The necessary details as called for have been duly reconciled with necessary supporting and submitted before Investigation Wing as well as in the assessment proceedings. Therefore, the purchases shown from the aforesaid parties are genuine, the material of which have been received through Shri Suresh Parekh, along with the bills of these parties and payment for which have been made by cheques/RTGS by the appellant company." Apart from above rebuttal, reliance was placed on following judgments: (i) Ramesh Kumar & Co. v. ACIT, [IT Appeal No. 2959/Mum/2014]; (ii) ACIT v. Ramila Pravin Shah, IT Appeal No. 5246/Mum/2013; (iii) Ganpatraj A Sanghavi v. ACIT, [IT Appeal No. 2826/Mum/2013]; (iv) Hiralal Chunilal Jain v. ITO, [IT Appeal No.4547(Mum....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to source the suppliers in the grey market as per the specification of the products and direction of the purchase department of the assessee company and the suppliers from the grey market supplied these items directly to the assessee company. Since these suppliers operate in grey market, therefore, to regularize the same, he used to give sale bills to the assessee company by raising invoices through his concerns against which the payment was received by him and the same has been distributed to the suppliers of the material in the grey market. In his cross examination he has also explained and clarified his earlier statement and admitted that what has been said is correct but he admitted and clarified that material has been actually procured and delivered from the grey market to the assessee company. In the earlier statement also he has confirmed the supply of material in his sworn affidavit dated 08.01.2013 filed before ADIT, Kolhapur. He has also admitted to deal in number of corporate houses and he is in the business of supply of electronic items and material for several years. However, when confronted to specific supplies made to Videocon Industries group, he duly confirmed tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ddition on account of alleged bogus purchases has been made on the utilisation of following materials and the treatment in accounts: Utilization of material as- Amount (Rs.) Treatment in Accounts Plant & Machinery/Moulds 23,79,82,268 Addition to Plant and Machinery Trail Run 13,94,92,838 Charged to Capital WIP account Trail Production 6,83,99,170 Charged to Capital WIP account Machinery Spares 14,97,74,663 Shown as Inventory in Balance Sheet Raw Material & Consumables 3,50,24,425 Charged to Profit and Loss account Total 63,06,73,365 29. From the aforesaid additions it is quite ostensible that firstly it has been accounted for in the books of account and majority of the material purchased are either part of addition to the plant and machinery or it has been charged to capital WIP account or shown as inventory in the Balance Sheet. There is no immediate effect on inflation of expenditure which can lead to an impression that assessee has tried to suppress its profit by entering into alleged bogus transactions with hawala dealers, which is generally resorted to by traders and such suppression of profit i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ally raised this issue before the AO. Either the entire statement of Shri Suresh A. Parekh should be accepted or it should be discarded in its entirety. Only one part of the statement given at initial stage cannot be solely relied upon for making the addition and the second part of the statement which has been made before the AO himself during the course of the assessment proceedings when it was subject to cross examination cannot be disregarded or rejected by the revenue. As stated earlier, here, in this case, unlike in the other cases of bogus purchases the assessee's trading account is not affected directly because the material purchased have been utilised for addition to the plant and machinery and has been charged to capital WIP account and only a part of it has been shown as inventory in the Balance Sheet and raw material consumables which has been charged to the P&L Account. There is no direct impact of suppression of profit, at least on the amount which has been charged to capital WIP account or addition made to plant and machinery. Thus, we are of the opinion that the entire purchase cannot be disallowed by the department solely on the basis of first statement of Shri ....