AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 1701
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....er the head stitching and cutting charges, the break-up showed the payment of Rs. 34,73,973/-. Accordingly, he made an addition of Rs. 1,19,680/- as unexplained expenditure under section 69C. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) noted the assessee's explanation that a sum of Rs. 1,19,680/- paid to BVC & Co was wrongly debited to process charges, and deleted the addition. The Assessing Officer is aggrieved and in appeal before us. 5. Having heard the rival contentions and having perused the material on record, we find no reasons to interfere in the matter. The appellant has not even faulted the explanation on merits but confirmed the plea to inadmissibility of additional evidence by the CIT(A). We are not inclined to uphold this plea, particularly looking to the fact that explanation is not challenged and that amount involved is a small amount. We approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. 6. Ground no.1 is dismissed. 7. In ground no.2, the Assessing Officer has raised the following grievance:- "The Ld. CIT(A) has erred in law and on facts in deleting the addit....
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.... (1) The following incomes will be deemed to accrue or arise in India: (i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, Explanation: For the purpose of this clause [i.e. 9(1)(i)], (a) in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India; (b) (c) (d)** ** **" (vii) income by way of fees for technical services payable by- (a)** ** **" (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c)** ** **" Explanation 1-.............* Explanation 2.- For the purposes of this clause, "fees for technical se....
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....ted to him, but the right to receive the commission arises in India only when exhibitor participates in the India International Food & Wine Show (to be held in India), and makes full and final payment to the applicant in India" and that "the commission income would, therefore, be taxable under section 5(2)(b) read with section 9(1)(i) of the Act". The Authority for Advance Ruling also held that "the fact that the agent renders services abroad in the form of pursuing and soliciting participants and that the commission is remitted to him abroad are wholly irrelevant for the purpose of determining situs of his income". We do not consider this approach to be correct. When no operations of the business of commission agent is carried on in India, the Explanation 1 to Section 9(1)(i) takes the entire commission income from outside the ambit of deeming fiction under section 9(1)(i), and, in effect, outside the ambit of income 'deemed to accrue or arise in India' for the purpose of Section 5(2)(b). The point of time when commission agent's right to receive the commission fructifies is irrelevant to decide the scope of Explanation 1 to Section 9(1 )(i), which is what is material ....
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....ning:- "From the forgoing discussions, the following irresistible conclusion can be reached:- (i) The assessee failed to produce the books of account, stock register and other documents for the verification of the A.O. inspite of numerous opportunities afforded to it without any reasonable cause. (ii) In the audited account furnished during the course of assessment proceedings, it is seen that there are stock variations in respect of fabric local, fabric export and made-ups etc. (iii) The assessee failed to reconcile the discrepancies in the audited account as pointed out above with books of account, stock register and other documents. 6.4 In view of the above, the book results declared by the assessee cannot be considered as a gospel one. As the assessee failed to produce the books of account, stock register etc. the defect in the audited account filed along with the balance sheet and P & L A/c. cannot be verified. As such, the book result shown by the assessee is rejected. During the year under consideration, the assessee has shown a meager gross profit at 4%, It is also seen that the assessee has shown a better gross profit at ....
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....tified then there will not be any difference. The appellant enclose herewith complete details in the matter. The appellant further submits that all the purchases and sales are vouched and verifiable therefore no adverse inference was required to be drawn. As regards lower gross profit margin as compared to assessment year 2006-07 for ih-e year, it is stated that appellant is mainly engaged in exports of goods and the profit margin depends upon various factors, moreover, all the purchases and sales are vouched and the transaction are taken place through banking channel and therefore no presumption is required to be made that the appellant had earned more profit over and above shown in books of account. The appellant further submits that the G.P rate for the preceding assessment year was 1.19% as against G.P. rate of 4.83% for the year under consideration and therefore the appellant had shown better G.P. rate and therefore the A.O. was not correct to adopt G. P. rate of 8%. Therefore, the additions made by the A.O. are not justified and deserves to be deleted. The appellant further submits that in the informative section of Audit report, the auditors had incorrectly st....
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....ss) Made ups -403712 (Excess) Reconciliation Fabric Local 2549530 Exports - 635650 ----------------- 1913880 Production not considered by A. 0. 145416 ----------------- Consumption of fabric as per page 71 2059296 ========= Made ups The difference of 403712 nos of made ups are due to not considering the production of 403712 out of the consumption of 2059296 Mts. Therefore, nothing is remained to be reconciled. In view of the above facts and submission made by the appellant, there is no quantity difference which was calculated by the A.O. and accordingly G.P. addition made based thereon deserves to be deleted. The A.R. also stated that no opportunity was given to explain the alleged difference according to the A.O. since actually there was quantitative tallied and no difference was there. Accordingly, the A.O. was further requested to send remand report after verifying the submission of the appellant with the facts of the case. However, again no hearing was done and the remand report dated 15/10/2013 was received stating that action taken in origin....
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....abric exports -635650 (Excess) Made ups -403712 (Excess) Reconciliation Fabric exports 2549530 Exports - 635650 --------------- 1913880 Production not considered by A. O. 145416 --------------- Consumption of fabric as per page 71 2059296 ======= Made ups The difference of 403712 nos of made ups are due to not considering the production of 403712 out of the consumption of 2059296 Mts. Therefore, nothing is remained to be reconciled. In view of the above facts and submission made by the appellant, there is no quantity difference which was calculated by the A.O. and accordingly G.P. addition made based thereon deserves to be deleted-" The A.R. stated that in view of the facts addition deserves to be deleted. 6.2 I have considered the, facts, assessment order, remand report as well as written and oral submission made by the A.R. on behalf of the appellant. I find that there were some mistake done by auditor in his report but the same were rectified by him in a letter addressed to The Board of Directors dated 15/03/2013 whe....
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.... us. We have also noted that the learned CIT(A) has granted impugned relief on the basis of specific explanations of the assessee which have remained uncontroverted. In the light of these discussions as also bearing in mind entirety of the case, we approve well reasoned conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 18. Ground no.3 is thus dismissed. 19. In ground no. 4, the Assessing Officer has raised the following grievance:- "4. The Ld.CIT(A) has erred in. law and on facts in deleting- the disallowance of administrative expenses of Rs. 1,63,485/- made u/s 14A of the Act, without properly appreciating the facts of the case and the material brought on record." 20. As far as this grievance is concerned, it is sufficient to take note of the fact that learned CIT(A) has deleted entire disallowance of Rs. 19,10,816/- under section 14A r.w.r. 8D on the short ground that the assessee did not use any borrowed funds in making investments yielding tax exempt income. What he, however, overlooked was the fact that out of disallowance of Rs. 19,10,816/-, the disallowance of Rs. 17,47,331/- was on account of interest expens....