TaxTMI 
TaxTMI 
2024 (9) TMI 338
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....ses of Rs. 3,54,58,395/- made by the Assessing officer. 3. On the facts and in circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 1,07,33,756/- by disallowance expenses on which TDS has not been deducted. 4. The appellant craves to add, amend or forgo any ground(s) of appeal at any time before or during the hearing of this appeal. 3. The brief facts qua the issue raised is that the assessee company is engaged in trading of lights, lighting and related electronic components parts, fitting accessories etc. The assessee has filed the return of income declaring loss of Rs. (-)7,08,26,184/- After noticing this, the Assessing Officer asked the assessee to justify the increase in manufacturing and other expenses and increase in cost of material consumed from Rs. 70,28,15,113/- to Rs. 1,06,08,91,844/-. The assessee contended that one of the main reasons for increase in the cost was forex rate INR/USD, which was on average of 7% and increased cost of material purchased. The assessee also pointed out that there has been increase in Revenue by 39.72% as compared to previous year. He noted that increase in forex rate is only 1.01 cro....
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.... 1,53,33,936 Less 30% already disallowed 46,00,180 1,07,33,756 This amount pertain to non-resident u/s 40(a) (ia) limit ofdisallowance restriction to 30% is not applicable. Hence entire amount is disallowed. Total Disallowance comes to Rs. 1,07,33,756/- The Assessee has furnished inaccurate particulars of income. Hence the Penalty proceedings u/s 271(1)(c) of the Act are initiating separately." 6. Before the learned CIT(A), the assessee has submitted the calculation of ratio of cost of sales for the assessment years 2016-17 and 2015-16 in the following manner: Particulars AY 2016-17 AY 2015-16 Purchases of stock-in-trade 112,56,61,167 69,61,96,541 Changes in inventories of stock-in-trade (6,47,69,323) 66,18,572 Total cost of sales 106,08,91,844 70,28,15,113 Revenue from operations 168,51,32,899 120,60,67,883 Ratio of cost of sales to revenue from operations 62.96% 58.27% 8. Thus, it was submitted that the difference is only marginal. Apart from that, it is stated that gross revenue from operations has increased around 40% and since the assessee has earned revenue from sale of imported products and t....
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....h the assessee has purchased goods as compared to earlier years. For instance, average exchange rate of INR/USD prevailing during the earlier year, i.e., AY 2015-16 was INR 61 per USD. In other words, materials amounting to Rs. USD 1000 were purchased with a total cost of Rs. 61,000/-. During the relevant assessment year 2016-17, the average exchange rate increased to Rs. 65.50 per USD, i.e., the cost of material amounting to USD 1000 was Rs. 65,500/-. This has to increase of 7% of actual increase. This fact has not been disputed at all and has been explained before the AO and CIT(A). It has also been further stated that overall profitability of the assessee has improved from (-) 3.45% to (-) 2.49% in this year. Once, the assessee has submitted the details of increase for manufacturing and other expenses, statements showing change in the forex rate, details of increase in ratio of expense, revenue in comparison with the preceding year and details on gross profit and net profit for the last three years, then without any such defect, addition of Rs. 7,88,64,219/- cannot be made. Accordingly, we do not find any reason to deviate from the finding of the CIT(A) and the same is upheld. C....
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....mmission which can be further corroborated from the tax audit report duly verified by the tax auditors of the Appellant (refer pages 581 to 593 of the paperbook). Further, any disallowance on account of late deposit or non- deduction of TDS has already been disallowed for the purpose of computing taxable income as per provisions of section 40(a)(ia) of the Act." 11. Learned CIT(A) has deleted the additions after observing as under: "7.3 I have considered the facts of the case and the submission made by the AR. It has been contended that the basic details with respect to various expenses were called for by the AO and the same were furnished and the AO did not specifically ask the appellant to produce any further clarification or evidence and has made the addition without issuing any show cause notice which is mandatory as per Board Instructions. It is further submitted that the addition has been made on adhoc basis. The AR has also explained the reason for increase in commission expenses and has submitted that the same was due to the increase in size and scale of the operations of the appellant. On perusal of the complete facts, I am of the opinion that the AO has made t....