TaxTMI 
TaxTMI 
2017 (8) TMI 949
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....n memo of appeal filed with the Income-Tax Appellate Tribunal in their appeal in ITA No. 8438/Mum/2011:- "On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting disallowance of Rs. 4,85,480/- on account of processing charges without appreciating the fact that there was an abnormal increase in this account and the disallowance made by the AO was reasonable as the turnover increase marginally compared to the preceding year. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 8,30,395/- on account of ice charges without appreciating the fact that there was an abnormal increase in this account and the disallowance made by the AO was reasonable as the turnover increased marginally compared to the preceding year. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance of Rs. 2,52,933/- on account of chemical expenses without appreciating the fact that....
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....ssue, the A.O. disallowed 10% of Rs. 48,54,802/- i.e. 4,85,480/- which was added to the total income of the assessee, vide assessment order dated 28-11-2008 passed by the AO u/s 143(3) of the 1961 Act. On first appeal filed by the assessee with learned CIT(A) being aggrieved by the assessment order dated 28-11-2008 passed by the AO u/s 143(3) of the 1961 Act, the ld. CIT(A) deleted additions made by the A.O. on the ground that there was no justification and cogent reasons given by the AO backed with evidences before making such adhoc 10% disallowance, vide appellate order dated 19-09-2011. Aggrieved by the appellate order dated 19-09-2011 passed by the ld. CIT(A), the Revenue is in appeal before the Tribunal. At the time of hearing before the tribunal, none appeared on behalf of the assessee, therefore, we proceed to dispose of this appeal after hearing ld. D.R. . We have observed that since 02nd September 2015 i.e. for almost two years, the assessee has not entered appearance when the appeal was fixed for hearing on 02-09-2015, 17-03-2016, 21-09-2016, 30-03-2017 and finally on 10-08- 2017. The ld. DR relied on the assessment order of the A.O. and submitted that the disallowance ....
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....the assessee increased by 10% while processing charges increased in multiples which is not sufficient to sustain disallowance and fasten tax liability on the assessee, which additions in our considered view was rightly deleted by learned CIT(A) vide appellate order dated 19-09-2011. Thus, under these circumstances, we do not find any reason to deviate from the decision taken by the ld. CIT(A) vide appellate order dated 19-09-2011 with which we concur and appellate order of learned CIT(A) is hereby confirmed. We, therefore, dismiss the ground raised by the Revenue. Thus, Revenue fails on this ground. We order accordingly. 5. The next ground relates to disallowance of ice charges to the tune of Rs. 8,30,395/- on adhoc basis to the tune of 25% of total ice charges of Rs. 33,21,580/- . The A.O. on perusal of the records and submissions made by the assessee during the course of assessment proceeding u/s 143(3) r.w.s. 143(2) of the 1961 Act observed that the assessee had debited an amount of Rs. 33,21,580/- towards ice charges. The A.O. asked for the details from the assessee and on perusal of the details observed that the turnover of the assessee had increased only 10% whereas the ice ....
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....ubt, had increased to Rs. 33.21 lacs for the financial year ending 31-03-2006 compared to Rs. 13.89 lacs last year but nothing incriminating has been brought on record by the AO to suggest that there has been any overt attempt by the assessee to conceal income, inflate expenses or defraud revenue or manipulate /falsify its books of account thereof.. The said ice charges constitute insignificant proportion of the turnover achieved by the assessee and mere increase of ice charges to Rs. 33.21 lacs in the relevant year under consideration from Rs. 13.89 lacs during preceding year not in tandem with upward movement of turnover is not indicative of any overt attempt by the assessee to conceals his income, inflate expenses or to defraud revenue calling for adhoc disallowance in the absence of incriminating material brought on record by the AO for which onus was on the AO as the assessee discharged its primary onus by bringing on record the relevant material. We have observed that the A.O. has not brought on record any cogent incriminating material, reasons or justifications while making adhoc disallowance of 25% of ice charges except taking a view that turnover of the assessee increased ....
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....n 10-08-2017. The ld. DR relied on the assessment order of the A.O. and submitted that the disallowance made by the A.O. is justified as the turnover of the assessee has increased only 10%, whereas the chemical expense had increased in multiples. It is submitted the assessment order of the A.O. should be upheld. We have heard ld. DR and perused the material available on record. We have observed that the assessee has in its paper book filed with the tribunal enclosed copy of audited financial statement and tax audit report for the financial year ended 31-03-2006 (pb/page 1-39), wherein copy of P&L account is also filed along with annexures, it can be seen that the turnover of the assessee has increased from Rs. 37.06 crores during the financial year 2004-05 to 40.61 crores during financial year 2005-06 and the gross profit of the assessee has increased to Rs. 3.94 crores during financial year 2005-06 from Rs. 3.37 crores during financial year 2004-05. Thus, It is observed that the GP ratio has improved from 9.07% to 9.70%. The closing stock of finished goods had also increased to 11.69 crores during financial year ending 31-03-2006 from Rs. 8.02 crores last year. The chemical expe....
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....Act, vide assessment order dated 28-11-2008 passed u/s 143(3) of the 1961 Act by the AO. On first appeal filed by the assessee with learned CIT(A) against the assessment order dated 28- 11-2008 passed by the AO u/s 143(3) of the 1961 Act, the ld. CIT(A) deleted addition made by the A.O. as the assessee has submitted before learned CIT(A) that accident took place in the factory of the assessee wherein one employee Mr. Shrinidhi Srinivas Iyengar lost his life for which the assessee had paid compensation of Rs. 4,15,960/- under Workman's Compensation Act which is a statutory obligation cast upon the assessee company allowable u/s 37(1) of the Act. The death certificate of Mr. . Shrinidhi Srinivas Iyengar was also produced by the assessee before learned CIT(A). The ld. CIT(A) observed that the reason for the disallowance by the AO of above amount was absolutely baseless and learned CIT(A) deleted the disallowance made by the A.O., vide appellate order dated 19-09-2011. Aggrieved by the appellate order dated 19-09-2011 passed by the learned CIT(A), the Revenue is in appeal before the tribunal. At the time of hearing before the tribunal, none appeared on behalf of the assessee, therefor....
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....e order of learned CIT(A) with whom we concur and find no reason to deviate from a view taken by learned CIT(A) deleting the addition made by the AO. The AO has given a reasoning that since employee family will get compensation under PF and ESIC Act's, hence the compensation paid by the assessee is not an business expenses calling for disallowance u/s 37(1) of the 1961 Act is a view which is totally unsustainable view in the eyes of law as this expenses in infact is an expenses which is incurred wholly and exclusively for the business of the assessee within mandate of provisions of Section 37(1) of the 1961 Act, because firstly the compensation is paid to family of any employee who died in an accident in factory premises occurred which occurred during conducting business of the assessee during the previous year relevant to the impugned assessment year secondly the liability has arisen under the statute i.e. Workmen Compensation Act which the assessee is obliged under law to discharge, thereby fulfilling mandate of Section 37(1) of the 1961 Act from which ever angle it is seen, as it is a business expenses incurred wholly and exclusively for the purposes of business. We affirm well ....
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....e letter dt. 15.10.2008 submitted on behalf of the assessee. Vide his letter dated 31.10.2008 the AO sought details of TDS on the amount of payment under the head "THC" charges and also reasons as to why the aforesaid payments should not be considered as work contract u/s.194C of the Act. Submission was made during the course of assessment proceedings vide letter dated 15.10.2008. Details of expenses under the head THC charges and documentation charged were furnished. The learned AO has disallowed the amount of Rs. 32,44,766/- u/s.40(a)(ia) of the Act for the reason that no proof of TDS on the payments made was furnished. 13.3 The provisions of sec. 194C of the Act in respect of payments made as terminal handling charges and for documentation charges are not applicable in this case since the payments have been made to the- agents of foreign shipping companies. Such payments to foreign Shipping companies or to their agents of terminal handling charges and for documentation charges are exempted from TDS provision, vide circular No. 723 dated 19.09.1995 issued by the CBDT. A copy of the said circular is enclosed as Annexure G. It may please by noted from the circular that agents ac....
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....s, the assessee has not entered appearance when the appeal was fixed for hearing on 02-09-2015, 17-03-2016, 21-09-2016, 30-03-2017 and finally on 10-08-2017. The ld. D.R. relied on the assessment order of the A.O. and submitted that the assessee has filed paper book wherein these details have been given vide page 99 to 110 which need verification / examination by the AO and hence the matter may be set aside / restored to the file of the AO as these details were not furnished by the assessee before the AO. We have heard ld. D.R. and perused the material available on record. We have also gone through the order of authorities below and also the paper book filed by the assessee. We find that the assessee had made payment to 22 parties with respect to the terminal handling charges and documentation charges aggregating to Rs. 32,44,766/- as is emerging from details placed in paper book/page 100-102 .We have perused these details carefully . We have observed that with respect to these 22 parties, evidences w.r.t. only six parties have been enclosed in the paper book filed with the tribunal (page 104-110/pb) to claim that these payouts were to nonresident shipping companies and/or their ....
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....d term loan incurred by the assessee on term loans before such plant & machinery was put to use for business. Hence, out of Rs. 92,91,068/- claimed as interest expenses for the year, the A.O. disallowed Rs. 3 lacs treating it as interest paid against such plant & machinery before it was put to use, vide assessment order dated 28-11-2008 passed by the AO u/s 143(3) of the 1961 Act. On first appeal filed by the assessee with learned CIT(A) against the assessment order dated 28-11-2008 passed by the AO u/s 143(3) of the 1961 Act, the ld. CIT(A) gave relief to the assessee by holding as under:- "13.2 The appellant submitted that it has capitalized Rs. 59,739/- of interest only and the interest expenses of Rs. 92,91,068/- is revenue expense. The appellant also furnished date of installation of machinery and how it has capitalized interest of Rs. 59,739/-. Under the circumstances, estimated disallowance of Rs. 3,00,000/- is not warranted. Ground 13 is, therefore, allowed." Aggrieved by the appellate order dated 19-09-2011 passed by the ld. CIT(A), the Revenue is in appeal before the tribunal. At the time of hearing before the tribunal, none appeared on behalf of the assessee, theref....