2023 (6) TMI 41

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....62/-. 4. Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) vide order dated 31.05.2019 in Appeal No.260/16-17 granted partial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before the Tribunal and has raised the following grounds: "1. Ld. Dy. Commissioner of Income Tax (AO) has erred on facts & in law in making an addition of Rs. 5,68,22,267/- on account of 5% of material consumptions as being excess consumption of Raw Material. 2. Ld. Dy. Commissioner of Income Tax (AO) has erred on facts & in law in making an addition of Rs. 94,28,002/- on account of foreign exchange fluctuation as being beyond financial year 2011-12 and no narration given for claim 3. Ld. Dy. Commissioner of Income Tax (AO) has erred on facts & in law in making an addition of Rs. 18,11,088/- on account of 50% of the guest house expenses 4. Ld. Dy. Commissioner of Income Tax (AO) has erred on facts & in law in making an addition of Rs. 43,23,320/- on account of 25% of the Repair and Maintenance expenses of Rs. 1,72,93,277/-. 5. Ld. Dy. Commissioner of Income Tax (AO) has erred on facts & in law in mak....

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....le and during the year under consideration raw material consumption to sales is 77.12%, whereas in the previous year 2011-12 and 2010-11 it was 78.04% and 77.67% respectively. The appellant has also provided the list of trade payables and confirmation of overseas creditors, all the evidences have been examined by the AO during the remand proceedings and no adverse comments was offered by the AO. The AO has made the addition without any adverse material on record and no such addition on this issue was made in the previous year when the assessment was completed u/s 143(3). The appellant was subject to VAT and Excise and both the departments have accepted the financial result of the appellant. The appellant has furnished the complete detail of month wise sales and consumption of raw material and this year consumption of raw material is on the lower side compared to previous years, thus AO is not justified in making the addition by rejecting books of accounts u/s 145(3) and adding 5% of the raw material i.e. Rs.5,68,22,267/-. Hence addition made by the AO is not sustainable and it is hereby deleted." 9. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 10. Bef....

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.... was given for claiming of loss. AO therefore concluded that the aggregate foreign exchange loss of Rs.94,28,002/- to be without any basis and accordingly, disallowed the same. 15. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who deleted the addition by observing as under: "6.5 I have considered the facts of the case, finding of the AO, remand report and submissions of the appellant. The AO has made the addition of Rs.94,28,002/- in respect of the transaction which are related to exchange loss on capital goods and appellant has made the adjustment in the cost of assets and depreciation as per provisions of section 43A. Appellant has not claimed any expenses on account of foreign exchange fluctuation loss on capital goods and not debited the same in the profit and loss account. AO did not find any discrepancy in respect of foreign exchange fluctuation loss claimed by the appellant in the return i.e. Rs.5,43,03,735/-. The disallowance was made by the AO out of the amount on account of exchange loss on capital goods i.e. Rs.4,17,58,843.81/-. In remand report, AO has not given any adverse finding on the accounts furnished by the appellant in suppo....

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....not used for the stay and residence of the Directors. He therefore disallowed 50% of the guest house expenses amounting to Rs.18,11,088/-. 22. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who granted partial relief to the assessee by observing as under: "7.4 I have considered the facts of the case, finding of the AO, remand report and submission of the appellant. The appellant has filed the detail of expenses and it includes guest house rent paid at Rs.27,48,368/- and guest house expenses at Rs.8,73,807/- totalling to Rs.36,22,175/-. During the course of appellate proceedings, appellant has enclosed the address of the owner of the guest houses and file the ledger account of the guest house expenses. Remand report is called for from the AO on the submissions of the appellant and it is submitted by the AO that no supporting evidence and proof of any perquisite value and whether any benefit was extended to the Directors have been furnished. The appellant has furnished only rent agreements without any supporting bills and usages facility by the personnel. The appellant has not produced the bills and vouchers in support of rent paid for guest house....

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..... He therefore considered 25% of Repair and maintenance amounting to Rs.43,23,320/- to be not allowable and accordingly disallowed the same. 28. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who deleted the addition by observing as under: "8.4 I have considered the facts of the case, finding of the AO, remand report and submissions of the appellant. The appellant has filed the ledger account of repair and maintenance and some of the supporting bills in respect of repair and maintenance expenses. The AO has made the disallowance without pointing any defects in the books of account and bills and vouchers maintained by the appellant. The expenses were incurred for business purposes and allowable as per the provisions of section 37(1), thus AO is not justified by making adhoc disallowance of the expenses at Rs.43,23,320/- i.e. 25% of repair and maintenance expenses. Thus addition made by the AO is hereby deleted." 29. Aggrieved by the order of CIT(A), Revenue is now before us. 30. Before us, Learned DR supported the order of AO. Learned AR on the other hand supported the order of CIT(A). 31. We have heard the rival submissions and perused the....

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....al support agreements signed between Ripe Component Technologies Pvt. Ltd. and Ripe Korea Pvt. Ltd. found the contention of the appellant acceptable. Since AO has found the royalty payment genuine and appellant has also furnished necessary evidences in support of royalty payments, addition made by the AO at Rs.23,29,368/- is sustainable and it is hereby deleted." 35. Aggrieved by the order of CIT(A), Revenue is now before us. 36. Before us, Learned DR supported the order of AO. Learned AR on the other hand reiterated the submissions made before AO and CIT(A) and supported the order of CIT(A). 37. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the disallowance of royalty expenses made by AO but deleted by CIT(A). CIT(A) while deleting the addition has noted that AO had allowed royalty expenditure to 90% and disallowed 10%. He noted that the royalty payment made by assessee was not found to be bogus and since the assessee had furnished necessary evidence for making royalty payment, the adhoc disallowance could not be made. He thus deleted the addition made by AO. Before us, no fallacy in th....