TaxTMI 
TaxTMI 
2018 (8) TMI 670
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....6,511/- for the assessment year 2012-13 and an amount of Rs. 3,46,16,358/- for the assessment year 2013-14 towards low recovery of chromium. He observed that the assessee company supplies high carbon ferro chrome to Tata Steel Ltd., on conversion basis and as per agreement between Tata Steel Limited and the assessee company, if the chrome contents in the materials offered by the assessee company is less than the minimum percentage against respective weighted average of 'chrome and iron ratio' indicated in product quality/norms, pro rata deduction will be made on conversion and coke charges payable to the assessee. During the relevant previous year, the total deduction so made by Tata Steel Limited from the bills of the assessee company on account of the low recovery of chrome is Rs. 4,06,06,511/- for the assessment year 2012-13 and Rs. 3,45,16,358/- for the assessment year 2013-14. The Assessing Officer suspected the intent of such an understanding between Tata Steel Limited and the assessee company, which is a sister concern of the Tata Steel Limited and for the reasons stated in the assessment order, held that such an arrangement was made with the assessee company to reduce its t....
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....for low recovery of chromium reveals that the loss so worked out is not an actual loss but the netting off of the output for a certain period of time and based on such netting off, I amounts are being worked out and charged by TSL xiv) It is to be mentioned that having made a claim, the onus is on the assessee to establish its genuineness beyond doubt. xv) In this regard, reference is made to the decision of the Hon'ble Supreme Court of India in the case of Shri Sun Siddharthbhai vs CIT (1985) 156 ITR 509 (SC), held that it is the right of the income-tax authorities to consider the genuineness of the transactions and to penetrate the veil and ascertain the truth. It is within their power to consider whether a particular transaction was to evade tax. 5. Before the CIT(A), the assessee submitted that the Assessing Officer stated that the level of chromium in the finished goods was beyond the control of the assessee. But when we go through the manufacturing process and the factors, we can easily understand that the process is in the control of the assessee. The total lower recovery quantity wise and year wise is as follows: Year Total delivery quantity Total q....
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....a very important and a determining factor for the buyer, hence the quality of the product needs to be maintained by the assessee at all times. Therefore, it was submitted that the expenditure was incurred wholly and exclusively for the purposes of business and hence, allowable deduction. 8. On appeal, the CIT(A) vacated the disallowance observing that there is no doubt that Tata Steel Limited has deducted the impugned amount of Rs. 4,06,06,511/- for the assessment year 2012-13 and Rs. 3,46,16,358/- from the conversion charges payable to the assessee company during the relevant previous year. The Assessing Officer has doubted the genuineness of this deduction by Tata Steel Limited probably because the assessee company is a sister concern of Tata Steel Limited. The Assessing Officer's doubt was that this sort of arrangement of making deduction on account of low chrome recovery may be a method adopted by Tata Steel Limited and its sister concern for mutual benefit of both. May be the Assessing Officer is hinting at the fact that the transactions in question may not be at 'arm's length' terms and conditions. However, no materials have been brought on record by the Assessing Officer ....
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....reement entered into by Tata Steel Limited and Nava Bharat Ventures Limited and submitted that similar deduction from the bills of conversion charges was made in the case of Nava Bharat Ventures Limited and the agreement entered into with the assessee was at par with that entered into with Nava Bharat Ventures Limited. 12. The CIT(A) considered the submission of the assessee and held that the Assessing Officer has doubted the agreement between Tata Steel Limited and the assessee for the conversion charges and, therefore, has made disallowance of the expenditure claimed by the assessee. He has brought no material on record to show that the arrangement was deliberate between Tata Steel Limited and the assessee company and the transactions were not real. The CIT(A) held that on the basis of suspicion alone, no disallowance can be made of the expenditure claimed by the assessee. 13. Before us, ld D.R. though supported the order of the Assessing Officer but could not bring any cogent and positive material on record to controvert the findings of the CIT(A). No material has been brought on record to show that the deduction claimed on account of low recovery of chrome of Rs. Rs. 4,06....