AI Drafter 
TaxTMI 
TaxTMI 
2019 (9) TMI 763
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....e Revenue in ITA No. 5920/Del/2013 for assessment year 2008-09 are reproduced as under: 1. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 31,05,390/- made on the issue of expenses of chilling charges. 2. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,00,00,000/- made by the AO u/s 68 on account of share application money received by the assessee company despite the fact that during the remand proceeding in examination of additional evidences, concerned parties didn't/t make any compliance before the AO and these evidences remained unverified. 3. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 3. At the outset, Ld. DR submitted that the tax effect involved in the appeal filed by the Revenue is below the prescribed monetary limit in CBDT Circular No. 17 of the 2019 dated 08/08/2019, however, he submitted that said circular may not apply on the pending appeals. The Ld. DR further submitted that whether the appeal falls under exclusion criteria as per par....
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....1 for assessment year 2006-07. The grounds raised in the appeal are reproduced as under: (1) That the Hon'ble Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case by upholding the disallowance made by the learned Assessing officer with respect of the Rs. 38.00 lacs paid as Chilling Charges' for chilling the milk at various Chilling Centres before it is brought to the factory of the appellant company for further processing. The Hon'ble Commissioner of Income Tax (Appeals) has upheld the said disallowance without appreciating the fact that the increase in expenditure is due to a substantial increase in the quantity of milk send to the Chilling Centres for chills as compared to the previous years. The appellant company paid chilling charges for 2,17,95.182. kgs of milk during the year under appeal as compared to 1,66,963 kgs of milk chilled during the previous year. (2) That the Hon'ble Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case by upholding the disallowance of Rs. 1,02,232/- made by the learned Assessing Officer by providing half year depreciation on tetrapack machine by the appellant comp....
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....n as against 'chilling' expenses of Rs. 25,043/- claimed by the assessee in the immediately preceding year. It was explained by the assessee before the Assessing Officer that in preceding year 70% of the milk was purchased as chilled from the 'Milan Dairy', which didn't not require chilling, however, in the year under consideration, the assessee only purchased 30% of the total purchases from Milan Dairy Food (Pvt.) Ltd. and balance milk procured was subjected to 'chilling' from other parties, which was the main reason for increase in chilling expenses. The Assessing Officer verified ledger and vouchers for the 'chilling' expenses produced by the assessee, however, he found that all the vouchers were self generated and most of the payments were made in cash. According to the Ld. Assessing Officer, as per version of the assessee, if in immediately preceding year, 30 % of the purchase were made from parties other than Milan Dairy (70% purchases were claimed from Milan Dairy), the milk purchase amount from third parties would work out to Rs. 38,27,89,101/- which undergone chilling process, whereas the chilling charges of Rs. 25,043/- were only debited. But in the year under considerati....
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....s, cash purchases and cash sales were unavoidable in the dairy business. 6.3 The Ld. CIT(A) after analyzing submission of the assessee, rejected the contention raised by the assessee. Regarding the quantity of milk of 2,17,95,182 Kgs. of milk as compared to only 1,66,963 kgs. milk chilled in the immediately preceding year, the assessee failed to brought any evidence/explanation on the record. The Ld. CIT(A) was not convinced with contention that rate of the chilling charges varies from Rs. 0.10 to Rs. 0.25 per kg due to factors like position/status/financial influence of the owner or facility provided by the chilling centre or quantum of milk processed at the Centre etc. The explanation in respect of the cash payment was also not found justified by him as the payment in the range of Rs. 5 lakh -10 lakh had been made in cash to the chilling centres which were neither under unorganized sector nor run by illiterate people. In view of the observations, the Ld. CIT(A) held that the expenses were not incurred wholly and exclusively for the purpose of the business and accordingly, sustained the disallowance made by the Assessing Officer. 6.4 Before us, the Ld. counsel of the assesse....
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....There was an increase of about 15 to 20% in the chilling charges. (iii) During the year, chilling charges were paid to six centres as compared to one centre during assessment year 2005- 06. (iv) The chilling charges were subjected to TDS. (v) Variation in rate of chilling charges was due to multiple factors like- location of chilling centres; availability of other chilling centres in the area/locality; position/status/financial influence of the owner of the chilling centres; facility provided by the chilling centres; and quantum of milk processed at the centre." 6.7 Regarding increase in expenses as compared to last year, on being asked by the Ld. CIT(A) to support the claim of chilling of 2,17,95,182 Kgs. of milk during the year under consideration as compared to only 1,66,963 kgs milk chilled in the immediately preceding assessment year, the assessee failed to submit any evidence before the Ld. CIT(A). Before us also, the assessee did not file any evidence to rebut the finding of the Ld. CIT(A) in this regard . Various explanation regarding variation in rate of chilling charges have also been rejected by the Ld. CIT(A) observing as under: "5....
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....ceptable that the chilling centers do not maintain bank accounts. It is seen that to two of the chilling centers payments of more than Rs. 10 lakhs were made during the year and to other two payments close to Rs. 5 lakhs were made. Surprisingly, despite being such heavy amounts, the same were paid in cash. It is difficult to believe that a well establish chilling centre would refuse to receive payment by cheque/ demand draft. The appellant's contention that the payments were subjected to TDS cannot bring a colour of genuineness to the transaction, if otherwise, it does not appear to be genuine." 6.9 Before us also, the assessee could not justify as why huge sums of cash payments have been made to the industrial units engaged in chilling process. 6.10 As the assessee has failed to rebut any of the finding of the Ld. CIT(A) with cogent evidences, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground No. 1 of the appeal is accordingly dismissed. 7. The ground No. 2 of the appeal is regarding disallowance of Rs. 1,02,232/- for depreciation on 'Tetra Pack' machine. The issue of contention between the part....