TaxTMI 
TaxTMI 
2022 (9) TMI 878
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....ing in the balance sheet. 4. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.1,33,008/- on account of difference in balance with Supplier viz Kerala State Bamboo Corporation Ltd. 5. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.59,94,293/- out of purchases. 6. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.40,500/- on account of discount given to supplier. 7. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.83,892/- made for non reflection of transaction in the books of supplier. 8. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.1,42,580/- treating repairing expenditure as capital expenditure. 9. It is, therefore, prayed that the order of the Ld. CIT (A) may be set aside and that of the Assessing Officer be restored." Ground number 1: deletion of disallowance of forfeited security deposit on leased premises Rs. 12,52,661/- of the Act 3. The brief facts in relation to this ground of appeal are that the assessee is engaged in the business o....
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....llowable as revenue expenditure in light of the decision of the Delhi ITAT in the case of Fab India Overseas Private Limited in ITA number 199/Del/2012 dated 28-06-2013. 5. In the result, ground number 1 of the Department's appeal is dismissed. Ground number 2: deleting the addition of Rs. 3,38,593/- made under section 40(a)(ia) of the Act 6. The brief facts in relation to this ground of appeal are that the assessee made payments to various Clearing and Forwarding agents for commission as well as towards reimbursement of expenditure. The assessee had deducted TDS on commission part and no TDS was deducted on the reimbursement element. The AO disallowed the quantum of reimbursement element by invoking the provisions of section 40(a)(ia) of the Act and disallowed expenditure amounting to Rs. 31,02,921/-. In appeal, Ld. CIT(Appeals) gave partial relief to the assessee with the following observations: "Decision: 7.4 I have duly considered the submission made by the appellant as well as gone through the assessment order. The issue in this case is classified in three categories viz. no default, part default (short deduction) and no deduction. In respect of Velj....
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....) has given relief in respect of non deduction of TDS for cases where (i) the agent had issued separate invoice for reimbursement expenditure (ii) relief was also granted in respect of cases where there was no requirement for TDS since falling within the limit of Rs. 20,000 (iii) when the payee was filing his return of income and had reflected the said receipts and his return of income. However, in such cases where the assessee could not file the relevant proof of the payee filing its return of income and reflecting such income in the return of income, the Ld. CIT(Appeals) disallowed the same. In our considered view, we find no infirmity in the order of Ld. CIT(Appeals), either in facts or application of law. 8. In the result, ground number 2 of the Department's appeal is dismissed. Ground number 3: deleting addition of Rs. 55,51,780/- on account of difference in stock statement 9. The brief facts in relation to this ground of appeal are that the assessee had submitted stock statement with Bank containing details of goods hypothecated with the bank for the purpose of availing credit facility. The AO disallowed an amount of Rs. 55,51,780/- on account of difference in stock ....
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....lso having unabsorbed loss of Rs. 19.11 crore thus there is absence of any kind of motive which may lead to suppression of stock and thereby the profit to reduce tax effect. It is noted that even after making additions the tax effect comes NIL. Considering all the aspects and Submissions of the case the addition on account of difference in stock statement submitted with bank vis-a-vis books of account is not justified and the same is hereby directed to be deleted. This ground of appeal is allowed." 10. Before us, the Ld. DR relied on the observations made in assessment order. In response, the counsel for the assessee drew attention to page 7 of the synopsis submitted before us and submitted that when the books of accounts are clubbed together, then the stock in the books of accounts is higher than that in the statement given before the bank. On a perusal of the records and on going through the order passed by the Ld. CIT(Appeals), we are of the considered view that the Ld. CIT(Appeals) has not erred in facts and in law in deleting the additions made by the AO. 11. In the result, ground 3 of the Department's appeal is dismissed. Ground number 4: deleting t....
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....,33,008/- and consequently it has to be added to the purchase price as the same has direct nexus with the cost of purchase. I do not see any accounting error in entering the transaction and thereby debiting the said amount to the cost of purchase. Merely because the supplier has not written back the amount in his books of account mainly because it was awaiting Form no. 18A would not vitiate the fact that the duty was not refundable to the appellant and ultimately it had to go to the profit and loss account. As per accounting principles the expenditure has to be recognized the moment liability crystalised. In this case on receipt of the letter from the supplier demanding Form no. 18A and appellant inability to issue the same made it clear that the liability was sure and, therefore, it was appropriate to recognized in the respective year. In view of above discussion I hereby direct the AO to delete the addition of Rs. 1,33,008/-. This ground of appeal is allowed." 13. Before us, the Department relied upon the observations made in the assessment order. In response, counsel for the assessee drew our attention to page 261 of the paper-book and submitted that the amount of Rs....
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....etc.. All the purchase under consideration are duly supported by documentary evidences which clearly establishes the actual movement of goods and in the light of the same the genuineness and actual receipt of goods cannot be denied. Merely, non-furnishing confirmation return of supplier, return of notice would not negate the evidentiary value of the material produced by the appellant. Moreover, the appellant has furnished confirmations of both the suppliers during the course of the remand proceedings and copy of the same is also submitted before me, with this the basic grievance of the ld. AO also does not survive. This view is also forfeited by the decision of Hon'ble ITAT-Mumbai in the case of National Tiles & Industries Pvt. Ltd (supra). In the light of the documentary evidences, mode of payments, corresponding sales, respectfully following decision of Hon'ble ITAT, Mumbai and other aspects as discussed above I am of the considered opinion that the appellant has duly discharged its onus and ld. A.O. has wrongly disallowed the purchases . I, therefore, direct ld. A.O. to delete the disallowance." 17. On perusal of the facts before us, it is observed that the assessee h....
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....have perused the material on record, and in our considered view, we find no infirmity in the order of Ld. CIT(Appeals). In our view, income can be recognised by the assessee only when the same comes to the knowledge of the assessee. It is quite common in any line of business that the assessee cannot be expected to know about the discount unless the same is intimated to him. It is also observed that in the subsequent year i.e. assessment year 2006-07, the assessee recognised the discount in its books of accounts, when it came to know about the same. Accordingly, a find no infirmity in the order of Ld. CIT(Appeals). 22. In the result, ground number 6 of the Department's appeal is dismissed. Ground number 7 deleting the addition of Rs. 83,892/- made for nonreflection of transaction the books of supplier: 23. The brief facts in relation to this ground of appeal are the assessee got job of work done through M/s Gajjar fabrication for Rs. 83,892/-. On verification of the contra account of M/s Gajjar fabrication called under section 133(6) of the Act , the AO noted that the said transaction is not appearing on this account. Accordingly, the AO disallowed the job work of Rs. 83,89....
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....proofing was Rs. 1,42,580/-only. Accordingly, since the expenditure was too small as compared to the value of asset, the assessee was justified in claiming the same as revenue expenditure. While passing the order, Ld. CIT(Appeals) made the following observations: "Decision: 14.4 I have considered the submission of the appellant and assessment order as well. During the course of the hearing ld. AR drawn attention towards the gross value of the factory building as per the balance sheet which was Rs. 5,00,67,882/-, whereas the repairing expenditure viz. water proofing costing comes to Rs. 1,42,580/- only. The expenditure is too small in compare to the value of the asset and hardly it could be said to be an accumulated repairs at all. Further, water proofing coating can be considered for the purpose of maintenance and preservation of the existing asset and not for acquiring or replacing new asset. There is no replace of any part of the asset even. Hon'ble Supreme Court in the case of Sarvana Spinning Mills Pvt. Ltd (supra) has dealt with the issue of current repairs. It was held as under: "The basis test to find out as to what would constitute current rep....