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2020 (10) TMI 990
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....ed in law and on in confirming the following disallowances: (i) Depreciation Rs. 45,36,884 (ii) Business promotion exp (foreign) Rs. 16,72,746 (iii) Foreign traveling exp. Rs. 1,38,381 (iv) Damage & wastage Rs. 25,57,779 2.2 That in the facts and circumstances of the case, the Ld. CIT(A) ought not to have upheld the above said disallowances. 2.3 The observations made and conclusion reached by CIT(A) to upheld the impugned disallowances are not admitted by the appellant to the extent the same are contrary to the evidence on record. It is therefore prayed that the impugned disallowances made by AO and confirmed by CIT(A) may be deleted/reduced." 3. The first issue raised by the assessee is that the Learned CIT (A) erred in confirming the disallowance made by the AO in part for the depreciation of Rs. 45,368,84/- only. 4. The facts of case on hand are that the assessee in the present case is a private limited company and engaged in the business of manufacturing and trading of pharmaceuticals items. The assessee during the assessment proceedings vide letter dated 24thAugust 2010 submitted that it has purchased a piece....
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....el charges. In view of the above the AO concluded that the manufacturing activities of the assessee has not commenced in the year under consideration and therefore the depreciation of Rs. 51,31,747/- is not eligible for deduction under Section 32 of the Act. Accordingly, the AO disallowed the same and added to the total income of the assessee. 6. Aggrieved by the order of AO, the assessee preferred an appeal before the Ld. CIT (A). 7. The assessee before the Learned CIT (A) submitted that the AO has disallowed depreciation for Rs. 51,31,747/- which is the accumulated depreciation as per accounting record whereas it has claimed the depreciation for the year consideration for income tax purpose for Rs. 45,36,884/- only. The assessee also claimed that it had not claimed any depreciation on capital work in progress. 8. The assessee further submitted that it started production activity in the year under consideration as evident from the following documents: i. Declaration for Central Excise exemption, ii. Agreement with District Industries Center (Haridwar) dated 05-07- 2008, iii. Electricity bill for month of February 2008 showing consumption of t....
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....tally, it is pertinent to point out that vide note sheet entry dt 14-10-2013, the A R of the appellant was requested to file Trading & P & L A/c. Of Uttarakhand Unit which is not complied with. Consequently, in view of the available evidences, it is held that the action of the A O in disallowing the claim of depreciation on the premise that no manufacturing activity was undertaken between the impugned period is a correct and is based upon adequate appreciation and understanding of the available evidences. To the extent, the disallowance made by the A O in principle is confirmed. The argument of the appellant however appears to be justified regarding the error in committing the mistake as far as quantum of disallowance is concerned. The appellant has submitted that current years depreciation claimed was only Rs. 45,36,884/- and that Rs. 51,31,747/- is actually accumulated depreciation. The A O is therefore directed to verify from the original records comprising balance sheet, schedule of fixed assets etc as to the actual depreciation claimed pertaining to the year under consideration and to restrict his addition to such figure only. The ground of appeal No. 2 is therefore partly all....
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....aterials and miscellaneous factory expenses, placed on pages 110 and 111 of the Paper Book in the year under consideration whereas it was shown NIL in the immediate preceding year ending as on 31-03-2007. But such information cannot be relied upon to decide the issue in hand in the absence of primary documents as highlighted by the authorities below. 17. Likewise, the assessee failed to file any documentary evidence reflecting the sales made by it through the Manufacturing activity viz a viz the trading activity separately which was essential to establish the fact that assessee has carried out the manufacturing activity in the year under consideration. 18. However, before parting we note that the assessee has claimed depreciation in the year under consideration amounting to Rs. 45,36,884/- in the opening written down value and addition of fixed assets put together which was disallowed by the Learned CIT (A). In our considered view, the depreciation claimed by the assessee in the opening written down value cannot be denied in the year under consideration as it pertains on the fixed assets which were acquired in the earlier years and the depreciation was allowed thereon. Accord....
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....early brought out in the assessment order as well as the remand report that the appellant failed to provide list of expired goods and their reasons for non inclusion in VAT audit report. Even during the appellate proceedings, the appellant has failed to address to these queries of the A O. It is pertinent to point out at this stage that in the activity concerning business of pharmaceutical products maintenance of records and registers for damaged and expired goods is a necessary pre-requisite as the same comes under the supervision of Drug Control Authority. The appellant therefore cannot take the argument that the expired goods are disposed off just like that. Incidentally, it is pertinent to note that in the paper book, the appellant has furnished a copy of sample agreement made with one Suhani Marketing Pvt. Ltd of Gauhati. Page-5 of the said agreement clearly lays down that the responsibility of appellant for damage to the goods shall be only till it is received by the agent and not thereafter and that the agent shall be solely responsible for loss or damage. There is no other clause in this agreement, which is common to all the agents, which indicates that the responsibility o....
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....ed under the provisions of law as provided under Section 36(1)(viii) read with Section 36(2) of the Act. It is because, the assessee by claiming the bad debts is not under the obligation to prove the ir-recoverability of the amount from the parties. However, the assessee chooses to write off such amount as the damaged goods which is also supported by the ledger copy of the other party placed on pages 38 to 46 of the Paper Book. Thus,in the present situation, what we try to infer is that claim of the assessee cannot be treated as bogus. 29. It is also pertinent to note that the authorities below have also not verified from the concern parties whether the claim made by the assessee is not tenable by issuing notice under Section 133(6)/131 of the Act. 30. We also note that similar claim of the assessee was admitted by the Revenue for immediate preceding assessment year as discussed above, therefore, the same claim in the year under consideration, though high in value, cannot be rejected without any cogent materials. In view of the above and after considering the facts in totality, we are not impressed with the finding of the authorities below in the manner in which they have rej....
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.... made by the ld A O of Rs. 16,72,746/- is confirmed and the ground of ground of appeal No. 4 is dismissed." 36. Aggrieved by the order of the Learned CIT(A) the assessee is in appeal before us. 37. The Learned AR before us contended that the expenses were incurred for the purpose of the business and therefore the same cannot be disallowed. 38. On the other hand the Learned DR vehemently supported the order of the authorities. 39. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the assessee incurred certain expenses to sponsor the tour of the doctors to Singapore for its commercial expediency. However, the Authorities below were of the view that such expenses incurred to facilitate the doctors are prohibitedin terms of Circular No.5/2012 issued by CBDT dated 01.08.2012.Now the first issue before us arises for our adjudication whether the Circular No.5/2012 issued by CBDT is applicable retrospectively or prospectively. In this regard we note that the relevant assessment year under consideration is A.Y. 2008-09 during which there was no CBDT Circular as referred by the authorities below for making ....
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....1/- instead of Rs. 15,376/- only. 47. The Learned AR further submitted that the assessee being a body corporate cannot incur any expenditure which are personal in nature. Accordingly, the ld. AR prayed to allow the claim of the assessee. 48. On the other hand, the Learned DR vehemently supported the order of the authorities below. 49. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we note that, the claim of the assessee was accepted by the Learned CIT(A) to the tune of 90% of the total foreign travelling expenses incurred by the assessee. But, the Learned CIT(A) in his finding has inadvertently restricted the disallowance at Rs. 1,38,381/- instead of Rs. 15,376/-. Thus, accordingly we hold that the issue is limited to the extent of Rs. 15,376 only. First of all, we note that there is no provision under the law to make the disallowance on estimated basis. As such we do not find any cogent material on the part of the Learned CIT(A) for making disallowance in part. 50. In addition to the above, we also note that the assessee being a body corporate cannot incur any expenditure personal in ....