TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 96
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....in nature. The same therefore need no adjudication. 4. Ground No.2 raised by the assessee reads as under: "2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the disallowance of an amount of Rs. 2,11,095/- under section 36(1)(iii), being the amount of interest paid on bank loan for setting up new stores or stores in which business activities did not commenced in the year under reference." 5. The issue raised in the above ground relates to disallowance of interest expenses of Rs. 2,11,095/- u/s 36(1)(iii) of the Act. The facts relating to the issue are that the assessee had raised term loan of Rs. 42,48,669/- for capital work in progress in new stores and claimed the interest paid thereon as revenue expenditure. The AO disallowed the same holding that the interest related to the period prior to business activities commencing in the stores, i.e prior to the asset being put to use and was therefore not allowable as per section 36(1)(iii) of the Act. The Ld.CIT(A) upheld the disallowance holding at para 4.2 of his order as under: "4.2 I agree with the addition made by the Assessing Officer. The appellant had ta....
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....bstantial justice, the documents as mentioned in Annexure-l attached, may kindly be admitted as additional evidence and be adjudicated at the time of hearing." 7. The Ld. DR objected to the admission of the additional evidences and further relied upon the orders of the lower authorities. 8. We have heard both the parties. Dealing first with the issue of admitting the additional evidences filed before us, We hold that the same need to be admitted. The disallowance of interest, admittedly has been made for the reason that the assets /stores for which the loans had been taken and to which the interest related, were not started during the year. The additional documents filed by the assessee by way of Sanction letter of Bank for term loans taken and the utilization certificate of the term loans given to the bank by the assessee, are in support of its claim that interest paid pertained to loans utilized for renovating shops and not acquiring them and in any case the interest paid pertained to period after the asset for which the loans were taken were put to use. The additional evidences ,we find, therefore, go the root of the matter and are relevant for bringing the correct facts on ....
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....icer. The addition made by her is confirmed and ground of appeal No.3 is dismissed." 13. Before us the Ld.Counsel for the assessee reiterated the contentions made before the lower authorities. 14. The Ld. DR, on the other hand relied upon the order of the CIT(A)/AO. 15. We have heard the rival contentions. We do not find any reason to interfere in the order of the CIT(A). The factual findings of the CIT(A) made after perusing the details filed by the assessee that the additions made were in the nature of furniture and fittings, have not been controverted by the assessee by way of any explanation or detail filed before us, nor the Ld.Counsel for the assessee was able to point out any discrepancy in the findings of the Ld.CIT(A). That the applicable rate of depreciation on the said assets is 10% is not disputed. In view of the same, we find no reason to interfere in the order of the CIT(A) in restricting the depreciation to 10% on electric fittings. The ground of appeal No.3 raised by the assessee is dismissed. In effect, the appeal of the assessee is partly allowed for statistical purposes. We shall now take up the appeal of the assessee relating to A.Y 2011-12 in IT....
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.... also deducted on the same. The same has, therefore, been rightly taxed in the impugned year. The ground of appeal No.2 raised by the assessee is, therefore, dismissed. 23. Ground No.3 raised by the assessee reads as under: "3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the disallowance of an amount of Rs. 15,78,866- under section 36(1)(iii), being the amount of interest paid on bank loan for setting up new stores/work in progress/ stores in which business activities did not commenced in the year under reference." 24. It was common ground between both the parties that the above ground raised by the assessee in this appeal was identical to ground No.2 raised in ITA No.1010/Chd/2017, relating to disallowance of interest u/s 36(1)(iii) of the Act on account of the same pertaining to the period prior to which the asset/shop was put to use. It was contended by the Ld.Counsel that additional evidences to disprove this finding of the Revenue authorities had been filed in this case also as in Ground No.2 of ITA No.1010/Chd/2017 and that the arguments also were identical. 25. In view of the above since the iss....
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....ccounts in F.Y. 2010-11 even while it pertained to F.Y. 2009-10. On being confronted, the assessee replied that since the rent was paid in the current year therefore it was debited in this year. The Assessing officer did not allow the expenditure of Rs. 5,72,741 /- holding that it did not pertain to the impugned year. The Assessing officer also observed that there was a difference of Rs. 2,42,868/- with the accounts obtained from M/s Adidas. The difference was on account of difference in cost of goods. The assessee, he noted had booked an inflated cost in his books by taking the MRP value. On being confronted the assessee did not furnish any reply to the Assessing Officer on this issue. The Assessing Officer observed that the excess booking was reversed in the next year. But since there was an excess claim in the current year, he disallowed this expenditure. 28. The Ld.CIT(A) upheld the order of the AO holding at para 7.3 as under: "7.3 I have considered these issues. Both the additions were made on account of wrong claim of expenses. The expense on rent of Rs. 5,72,741/- for March 2010 could not have been claimed in F.Y 2010-11. The appellant is following mercantile system of....
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....ase Deed. As per clause 3.1 rent was fixed at Rs. 5,76,000/- or 20% of net sales value per month plus service tax whichever is higher. Further kind attention is invited to clause 3.2 of lease deed at page 5 of additional evidence which is reproduced as under: "3.2.The lessee has already made payments of monthly rent to the Lessors upto 30th April,2010 as per terms of previous lease deed dated 25.03.2009 and addendum dated 25.08.2009 whereby the rent was increased from Rs. 5,00,000/- to Rs. 5,76,000/-executed between Lessors and Lessee. The obligation to make payment of Rent after execution of this lease deed shall be of Nominee. Without prejudice to the above, the Lessors hereby confirm that the Lessee has paid rent @ 5,76,000/- per month until 31.03.2010." 3. It is clear from clause 3.2 as reproduced above, that the rent till 31.03.2010 has been paid by Lessee i.e. Benetton India Pvt.Ltd and the obligation to pay rent by the Nominee i.e. assessee, shall be only after execution of this lease deed i.e. 12.04.2010. 4. Further kind attention is also invited to letter dated 27.03.2014 addressed to the JCIT, Circle 2(1),Chandigarh, by M/s Benetton India Pvt.Ltd. furnishin....
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....see was that there was actually no excess purchase booked but in fact the assessee had been unable to point out to the authorities below that against the so called excess purchases of Rs. 5,61,666/- the assessee had entered discount of the identical amount thus reflecting net purchases of Rs. 3,18,798/- only and there was, therefore, no difference with respect to this figure as reflected in the books of M/s Adidas. The submissions of the assessee filed in writing before us at paras 8 to 10 of his written submissions are as under: "8. This ground relates to disallowance of Rs. 2,42,868/- on account of excess purchase value from M/s Adidas booked on MRP(maximum retail price) at Rs. 5,61,666/- instead of wholesale price at Rs. 3,18,798/- and thus resulting in difference of Rs. 2,42,868/- in the account of M/s Adidas. It was submitted to Id.AO vide reply dated 28.03.3014 at page 42 of paper book, that the mistake was rectified by making necessary rectification in the next financial year. The AO rejected the explanation of assessee and made disallowance. The Ld.CIT(Appeals) has upheld the disallowance in para 7.3 (page 5) holding that AO has rightly disallowed inflated purchase....
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....nt, discount account and ledger account of M/s Adidas showing that corresponding entry of discount was passed in the books of the assessee thus negativing the excess purchases booked. All the documents we find are relevant for establishing the correct facts relating to the issue for adjudication. Also we find there was reasonable cause with the assessee for not producing them before the lower authorities, since as stated by the director of the company on oath, the documents had got misplaced in shifting of the premises of the assessee, which has not been controverted by the Revenue. We therefore admit the additional evidences .Further since the facts as contended by the assessee need to be verified, we restore this issue back to the AO to verify the contention of the assessee and thereafter adjudicate the same in accordance with law. Needless to add the assessee be granted due opportunity of hearing. The ground of appeal No.4(i), (ii), (iii) and (iv) raised by the assessee is allowed for statistical purposes. 33. Ground No.5 raised by the assessee reads as under: 5. On the facts and circumstances of the case, the learned CIT(Appeals) has erred in having confirmed disallowanc....
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....ot be completely ruled out that certain amount of expenses is incurred in the course of its business considering the nature of its business dealing in trading of branded clothes/apparels. We, therefore, consider 50% of the amount actually claimed by the assessee as reasonable and disallow the balance 50%. The ground of appeal No.5 is therefore partly allowed. 39. Ground of appeal No.6 raised by the assessee reads as under: "6. On the facts and circumstances of the case, the learned CIT(Appeals) has erred in having confirmed disallowance of an amount of Rs. 3,79,914/- made by the Assessing officer by taking resort to the provisions of section 40(a)(ia) by holding that as no TDS was deducted out of the following expenditure incurred by the appellant, the same was not an allowable expenditure:- (i) Expenditure on Advertisement Rs. 1,48,748.00 (ii) Professional charges paid to Noshen Oceanic Rs. 1,65,450.00 (iii) Expenses on repair and maintenance Rs. 67,716.00 40. Brief facts relating to this ground are that the Assessing Officer made addition of Rs. 3,79,914/- u/s 40(a)(ia) as the assessee failed to deduct TDS on contract payments. The details of expenditure on wh....
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....al of the assessee pertaining to A.Y 2013-14 ITA No.1013/Chd/2017: (A.Y 2013-14): 44. In this appeal ground Nos.1 and 5,it was stated by the Ld.Counsel for the assessee, were general in nature. The same therefore need no adjudication. 45. Ground No.2 raised by the assessee reads as under: "2. On the facts and circumstances of the case, the learned ClT(A) has erred , both on facts and in law in having confirmed the addition of Rs. 7,96,537/- made to the income of the appellant being the difference in the amounts of receipt as per form No. 26AS and as accounted for in the books of accounts of the appellant." 46. The facts relevant to the issue are that the Assessing Officer made an addition of Rs. 7,96,537/- on account of mismatch in the income as per 26AS form and income as per income tax return. The Assessing Officer examined the 26AS form of the assessee and found that there was difference of Rs. 7,96,537/- from M/s V.F. Brands India Pvt. Ltd. and in the absence of any explanation regarding the same from the assessee, added Rs. 7,96,537/- to the income of the assessee. 47. The CIT(A) upheld the order of the AO holding as under: "5.2 I have examined the issue in det....