TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 348
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 61, 450/- u/s. 143(3) of the Act. 2. First ground of appeal, raised by the assessee is not arising out of order of the First Appellate Authority (FAA), hence, same is not being adjudicated. 3. Next ground of appeal is about sustaining an addition of Rs. 85. 50 lakhs to the closing stock by way of inputting proportionate expenses towards custom duty and clearing charges. During the assessment proceedings the AO found that the assessee had shown closing stock of Rs. 3. 08 crores, that he had valued it at cost without loading the direct expenses, that in profit and loss account he had claimed custom duty (Rs. 2. 83 crores) clearing charges(Rs. 28. 73 lakhs), labour charges(Rs. 3. 35 lakhs), loading charges(Rs. 2. 01 lakhs), transportation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not deducting that tax. The AO held that since the assessee was required to deduct tax at source as per the provisions of section 194C of the Act, because of the failure on part of the assessee, he made a disallowance of Rs. 28, 73, 467/-. Part B of the ground three is about failure of the FAA to appreciate that proportionate expenses on clearing charges had already been disallowed. It is stated in the ground that rejection resulted in double disallowance. 5. Last ground of appeal is about sustaining the addition of Rs. 38. 26 lakhs under section 68 of the Act. During the assessment proceedings, the AO found that the assessee had received loans of Rs. 13. 26 lakhs and Rs. 25 lakhs from Abushad Siddiqui(AS) and Khalid Ahmed Mohammad(KAM).....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n charges etc, . that he had not loaded these expenses to the closing stock, that he did not submit any reason as to why no explanation was furnished in that regard, before the AO during the assessment proceedings in spite of several opportunities, that even during the appellate proceedings he had submitted explanation with regard to basis labour and loading charges aggregating to Rs. 17. 32 lakhs out of the total expenditure of 3. 32 crores, that the inability of the assessee proved that he had not to offer four major part of the expenditure, that principally there was no dispute that the assessee was required to value its closing stock by adding the proportionate direct expenditure as per the provisions of the Act, that the explanation su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not applicable. After considering the circular, the FAA observed that for non-applicability of tax deducted at source under section 194 C, the shipping agent should have been acting on behalf of the non-resident ship2875/ owners/charterers, that the assessee had submitted a common letter, dated, 19/01/2015 from MAERSK LINE issued to its customers, that from the letter it was not clear as to whether the assessee had made payment of all the clearing and forwarding charges, that it had not produced evidences about payments made to 3 other parties, that it was not proved that the other entities were assessed to tax as per the provisions of section 172 of the Act. He observed that the assessee had grossly failed to submit the complete party wise....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, that he had given relief to the assessee about the indirect expenses. As the assessee had loaded custom duty and the clearing charges to the P&L account, it was his duty to include the same while valuing the closing stock for the year under consideration. Failure on part of the assessee resulted in addition made by the AO and partly sustained by the FAA. In our opinion there is no legal infirmity in the order of the FAA, as the assessee has not followed the provisions of the Act as well as the accounting standards. Therefore. confirming the order of the FAA, we decide first ground of appeal against the assessee. 8.1. With regard to disallowance made for not deducting tax at source we would like to mention that the FAA has not considered....