TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 2056
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....ooks of Accounts and brought to tax the entire purchases from M/s. Daksh Diamonds, M/s. Kailash Enterprises and M/s. Aadi Impex. On appeal the Ld.CIT(A) restricted the addition to 5% of the purchases, in view of the various judicial pronouncements and also since the assessee has maintained quantitative details, sales were not doubted. Against this order the Revenue is in appeal before us. 3. Ld. DR vehemently supported the order of the Assessing Officer and the Ld. Counsel for the assessee relied on the order of the Ld. CIT(A). The Counsel for the assessee further submitted that in the subsequent years the Assessing Officer himself restricted the disallowance to 5% of the purchases. 4. We have heard the rival submissions, perused the orders of the Authorities below. This aspect of the matter has been considered by the Ld.CIT(A) with reference to the submissions and averments made by the Assessing Officer in the Assessment Order. It is the finding of the Ld.CIT(A) that the assessee is maintaining quantitative details and the Assessing Officer not doubted the genuineness of the sales and sales have been accepted. The Ld.CIT(A) followed various judicial pronouncements and estimate....
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.... had issued bills for such goods. Though the purchases are shown to have been made by making payment thereof by account payee cheques, the cheques have been deposited in bank accounts ostensibly in the name of the apparent sellers, thereafter the entire amounts have been withdrawn by bearer cheques and there is no trace or identity of the person withdrawing the amount from the bank accounts. In the light of the aforesaid nature of evidence it is not possible to record a different conclusion, different from the one recorded by the Commissioner (Appeals) and the Tribunal concurrently holding that the apparent sellers were not genuine, or were acting as conduit between the assessee-firm and the actual sellers of the raw materials. Both the Commissioner (Appeals) and the Tribunal have, therefore, come to the conclusion that in such circumstances, the likelihood of the purchase price being inflated cannot be ruled out and there is no material to dislodge such finding. The issue is not whether the purchase price reflected in the books of account matches the purchase price stated to have been paid to other persons. The issue is whether the purchase price paid by the assessee is reflected ....
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.... normal course of business. Two aspects need to be taken into consideration in such circumstances. First, these diamonds in the grey market are always cheaper than the diamonds sourced from the genuine dealer. This is because, the genuine dealer would charge his incidental cost including the whole administrative cost while selling the goods in the market, whereas the petty dealers in the grey market do not carry such incidental charges on such sales, wherein they are only looking for a quick profit. Secondly, there is always an element of discount in the case of instant cash purchase. 7.14 Hence, the task is to ascertain the additional GP, which the appellant must have earned by purchasing the said goods from the grey market, than from the regular dealer. During the present proceedings, the AR brought to my notice that the appellant has shown the G.P. margin of 8.49% which is at par with the industry standards in which appellant operates. During the present proceedings, the AR also brought to my notice and also furnished, copies of the assessment orders passed for the assessment years 2009-10, 2012-13, 2013-14 & 2014-15, wherein the AO considered the same issue of bogus purchase....
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....son to interfere with the findings. Thus, we sustain the Ld.CIT(A) order on this issue. 6. The second ground of appeal in the Revenue's appeal is in deleting the disallowance made towards additional depreciation. 7. At the outset, Ld. Counsel for the assessee submitted that the issue of additional depreciation has been decided by the Tribunal in assessee's own case by the Coordinate Bench for the Assessment Year 2008-09 in ITA Nos. 3756 & 3109/Mum/2013 dated 03.01.2017 which is placed at Page No. 279 of the Paper book. 8. We have perused the order of the Coordinate Bench of the Tribunal and find that the issue is squarely covered in favour of the assessee. The Coordinate Bench while dismissing the appeal of the Revenue for the Assessment Year 2008-09 accepted the contention of the assessee that it is eligible for additional depreciation observing as under: - "6. The second issue in the appeal of the Revenue is against the order of CIT(A) deleting the disallowance of additional claim of depreciation. For this, the Revenue has taken following grounds of appeal: "3. Whether on the facts and circumstances and in law, the Ld.CIT(A) has erred in allowing the additional deprec....
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....rpn. Vs. CIT 311 ITR 309, CIT vs. Empee poly yarn Pvt. Ltd., 320 ITR 665 etc and finally held that the assessee was engaged in the business in the manufacture of cutting and polishing rough diamonds and accordingly eligible for deduction u/s. 80IA of the Act. Thus, the decision of the Hon'ble ITAT, Mumbai bench which is later to the date of the Hon'ble Supreme Court decision in the case of Gem India Mfg Pvt Ltd and which also refers to the decision of the Gem India Mfg Pvt . Ltd clearly holds that the activity of cutting and polishing of rough diamonds constitute manufacturing activity. In view of the above, I am of the considered opinion that the given facts and circumstances being similar to that of the Sheetal diamonds Pvt. Ltd., case cited above, the appellant is engaged in manufacturing activity and therefore entitled to claim additional depreciation u/s. 32(1)(iia) of the Act. Accordingly, I direct the AO to allow the additional depreciation of Rs..23,21,714/-. Appellant succeeds on this ground." 8. We also find that the Tribunal in the case of Flawless Diamond India Ltd., Vs. Addl. CIT (2014) 45 Taxmann.com 67 (Mum) after considering the recent decision of the Hon....