TaxTMI 
TaxTMI 
2017 (9) TMI 1902
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....ure on the ground of not having been accounted on mercantile system is bad in law. 3. Brief facts of the case are that the assessee company is a Govt. of Orissa undertaking engaged in mining and trading of minerals and filed the return of income for A.Y.2008-09 electronically on 29.9.2009 disclosing total income of Rs. 19003593960/- and subsequently the case was selected for scrutiny under CASS and notices are issued u/s.143(2) & 142(1) of the Act. Ld.AR appeared from time to time and filed details and produced books of accounts and supporting documents. On the disputed issue with respect to peripheral development expenses the AO referred ast para 3 page 11 of the order that the assessee has claimed the amount of Rs. 7500040/- under the peripheral development expenses and called for the details. The AO is of the opinion that the expenditure was incurred under various development programmes and contribution was made to societies and such expenditure is not related to the business activities of the assessee. The AO observed that the assessee could not give satisfactory explanations in reply to support the claim of expenditure and does not satisfy purpose of the commercial expediency....
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.... the amount has been spent at the request of Government authorities, but also the OMC as a corporate entity has derived benefits by way of facilities for its employees and a visibility for the company's brand name. In view of the same and applying the ratio of the decision of the Hon'ble Tribunal referred by the Ld.AR, it is held that the above two expenses are allowable business expenditure u/s.37(l). However, the other expenditure including contribution to Ram Krishna Mission are pure donations for which there is no evidence that ahy concrete business benefit accrues to the company. Such acts while being noble and clearly charitable do not qualify for deduction u/s.37(l). Since these expenditures are also not at the direction/request of the Government authorities, the ratio of the decision of the Hon'ble Tribunal referred by the assessee for assessment year 2008-09 shall not apply. In view of the same, out of peripheral expenditure of Rs. 75,00,040/-, addition to the extent of above two amounts to Capital Hospital and BMC aggregating to Rs. 35,46,800/- is deleted and the balance addition is sustained. The ground is, thus, partly allowed. On the second disputed issue of prior per....
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....ard the rival submissions and perused the material on record and judicial decision cited above. Prima facie, the peripheral expenses is incurred by the assessee as per the notification and the sanctions of the Government to maintain the relationship with people working at mines and adjoining areas. The peripheral expenses consists of various claims submitted by the ld. AR, which according to us are to be verified and test checked, further on perusal of the assessment order there is no proper findings on the disputed issue, the ld. AR filed written submissions and supported his arguments with the paper book containing details and annexures supporting the claims and judicial decisions. Accordingly, in the interest of substantial justice since the above information was filed and the same was not available with the AO. We direct the AO to examine and check the genuineness of claim and pass the order on merits after providing adequate opportunity of hearing to the assessee and remit the disputed issue to the file of AO and allow the grounds of appeal of the assessee for statistical purposes. 8. On the second disputed issue of prior period expenditure the ld. AR submitted that assessee ....
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....t no details or evidences were furnished; (hi) Miscellaneous expanses;- Miscellaneous expenses relate to supply of explosives during financial year 2004-05 and, hence, provision should have been made in that year. In any case, no evidence was furnished that the same accrued during the year; (iv) Repair to the building - Rs. 4,35,364/-: This amount relates to purchase of GGI sheets on 30.12.2005 and repairs in pursuance to agreement entered in financial year 2004-05. Accordingly, the provision should have been made during that year. In any case, no evidence was furnished that the same accrued during the year; (v) Raising expenses- Rs. 12,02,510/-: These expenses mostly consist of raising of mineral ore at Dubna mines for 1998-99, 19992000, 200001 and 2001-02, also includes over burden cutting in 2001 and in respect of agreements/activities done in , 2001-02. Accordingly, provisions should have been made in 'Those years in respect of these expenses. In any case, no / evidence was furnished that the same accrued during the year. vi) Rent, rates 6c taxes - Rs. 4,58,432/-: In fact, these are rent paid for private plots taken on lease by OMC. As per details filed, the rent wa....
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....shall examine the genuineness and crystallisation of the expenses in the financial year and assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Accordingly, we restore the disputed issue to the file of AO and allow the grounds of appeal of the assessee for statistical purposes. 9. Now, we take up the revenue's appeal in ITA No.163/CTK/2013, wherein the revenue has raised the following grounds :- 1.On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the addition of Rs. 1150,35,26,077/- on the issue of valuation of closing stock. 2.On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in ignoring the fact that the sales are assured for which a market exists and there is negligible risk of failure to sale. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in ignoring the fact that as per the clarification issued by the ICAI in January 1994 all mandatory Accounting Standards apply i.r.o. financial statements audited u/s.44AB of the Act. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) is not j....
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....tial valuation of closing stock, where the CIT(A) has erred in allowing in favour of the assessee relying on the coordinate bench Tribunal decision of the earlier year and prayed for allowing the appeal. Contra, ld. AR relied on the orders of CIT(A). 11. We have heard rival submission and perused material on record. Ld.DR's contention that CIT(A) erred in deleting the addition we find the coordinate bench of the Tribunal in assessee's own case in ITA No.551/CTK/2012 has decided the issue in favour of the assessee and we respectfully follow the judicial precedence and uphold the action of CIT(A) allowing the claim relying upon the decision of the Tribunal and dismiss the grounds of appeal of the revenue. 12. In grounds No.8 & 9 of the revenue's appeal, disputed issue is with respect to expenditure incurred on peripheral development expenses. Ld.DR submitted that there is no nexus of claim with the assessee's business and CIT(A) has erred in allowing the partial relief and ld. AR relied on the order of CIT(A). 13. We have heard rival submissions and perused the material on record. The ld. DR's contention that CIT(A) has granted partial relief to the assessee and on certain documen....