TaxTMI 
TaxTMI 
2024 (3) TMI 1394
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....taken in ITA No. 5925/Del/2018 (AY 2011-12) are as under:- "1. Ground no. 1 That on the facts and circumstances of the case and in the law, the order passed by Ld. AO/ Ld. CIT(A) partly allowing the appeal filed by the Appellant, without appreciating the facts of the case and judicial precedents, is bad in law and is liable to be quashed to the extent it is prejudicial to the Appellant. 2. Ground no. 2-Disallowance on account of reversal of Provisions towards bad debts 2.1 That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the disallowance made by the Ld. AO in relation to the Appellant's claim on account of reversal of Provision towards Bad Debts amounting to Rs. 22,53,006. 2.2 That on the facts and circumstances of the case and in law, the Ld. CIT(A) failed to consider the submissions made during the course of appellate proceedings wherein the Appellant had stated that the amount represent reversal of provision created in earlier years and were offered to tax in the year when provision were created and reversal out of the same provision during the year under consideration cannot be brought....
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....r year's order is bad in law and is liable to be quashed; 4.2 That on the facts and circumstances of the case, without prejudice to aforesaid grounds, the Ld. CIT(A)'s action in disallowing container deposits under Section 41(1) is not in accordance with the provisions of the Act since no deduction was ever claimed by Appellant in the past on account of such container deposits. 4.3 That on the facts and circumstances of the case, the Ld. CIT(A) erred in law by not appreciating that liability for payment of security deposits continue to exist and no sums were written back to the Profit and Loss A/c, so as to invoke Section 41(1) of the Act being a sine-qua-non for taxability of any sum which is in complete disregard of judicial precedents including those of Apex Court and jurisdictional High Court; 4.4 That on the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in assuming that the closing balance of security deposits from customers outstanding as on March 31, 2003 amounting to Rs. 165,98,59,900 represent income of the Appellant. Such an action is grossly unjustified as it is without appreciating the business model ....
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....s of the case, the Ld.CIT(A) has erred in deleting the addition of Rs.8,06,98,146/- made on account of Staff Welfare Expenses as no details beyond mere numerical figures of the head-wise expenses related to the same (such as supporting vouchers, details of the site expenses etc. were produced during assessment proceedings) and even during the appellate proceedings only unsubstantiated justification and statistical chart showing the expenditure under various sub-heads of Staff Welfare Expenses were produced by the assessee company. 4. The appellate crave leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time before or at the time of hearing of the appeal." ITA No. 6296/Del/2018 (A.Y 2013-14) (Revenue) 1. "Whether on the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the addition of Rs.1,02,94,404/- made by the AO in respect of delayed payment of Employee's contribution to the Provident Fund, ESI and other welfare funds, not appreciating that the Employee's contribution to PF & ESI is governed by the provisions of section 2(24) read with section 36(1)(....
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....account of reversal provision towards bad debt amounting to Rs. 22,53,006/-, Rs. 2,25,51,980/- being amount paid for traffic challans and Rs. 7,89,58,311/- on account of deposit from customers. Further, the Ld. CIT(A) deleted the additions of Rs. 10,67,24,494/- made on account of inventory loss and leakages, Rs. 8,68,12,412/- made on account of repair and maintenance and further deleted the addition of Rs. 8,06,98,146/- made on account of Staff Welfare Expenses. Aggrieved by the above deletions, the Ld. CIT(A) filed the Appeal in ITA No. 5903/Del/2018 and as against the sustaining the additions, the assessee preferred the Appeal in ITA No. 5925/Del/2018 on the grounds mentioned above. 7. First we will take the Assessee's Appeals. The Ground No. 1 of the assessee appeals for A.Y 2011-12, 2012-13 and 2013-14 are general in the nature of which require no adjudication. 8. Ground No. 2 for A.Y 2011-12, is regarding reversal of provision for bad and doubtful debts amounting to Rs. 22,53,006/-. The Ld. A.O. while making the above addition for A.Y 2011-12 held as under:- "1. Addition on account of Reversal of Provisions towards Bad Debts As per the computation of In....
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.... 271(1)(c) are being initiated separately. [Addition of Rs. 22,53,006/-] 9. The assessee preferred an appeal before the Ld. CIT(A), the Ld. CIT(A) while upholding the addition held as under:- "4.3.3.2. The appellant has stated that the amount of Rs.22,53,006/-were already offered to tax in the year when the same were provided for, any reversal out of the same should be excluded from the total income to avoid potential double taxation of the amount (a) once in the year of creation of provision in which case the same would be debited to P&L A/C, and (b) on reversal / write-back of such provision in which case the same would be credited to P&L A/c. The appellant has submitted that the claim of the appellant was denied by the AO stating that scanty details were furnished. Further, the appellant has argued that the reversal of provision has been misinterpreted by the AO as bad debts written off and held that simply addition sums / provisions were offered to tax in earlier years, when it stood unascertained, subsequently, if these sums were found unavoidable further deduction in future year is not eligible. The appellant has submitted that it is a trite law that no provisi....
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....in ITA No. 5671/Del/2018 vide order dated 08/07/2023 wherein held as under:- "19. We have carefully perused the orders of the authorities below. Provision was created in the earlier year and it was written back in that year is not in dispute. The ld. CIT(A) has admitted that the issue in hand is a case of reversal of provision of which income has already been offered in the earlier year. Therefore, we fail to understand why the addition has been sustained by the ld. CIT(A). 20. In A.Ys 2008-09 and 2009-10 also, similar issue arose but no disallowance was made in this regard as the ld. CIT(A) has deleted the disallowance and no appeal has been filed by the revenue against the decision of the ld. CIT(A). Considering the past history and considering the totality of the facts, we do not find any merit in the addition. We, therefore, direct the Assessing Officer to delete the disallowance of Rs. 8,34,21,291/-. This ground is allowed. 13. By following the ratio laid down in Assessee's own case for A. Y 2010-11 (supra), we direct the A.O. to delete the disallowance of Rs. 22,53,006/- made in A.Y 2011-12, accordingly the Ground No. 2 of the assessee Appeal in ITA No. 5....
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....and no deduction or allowance shall be made in respect of such expenditure." Expenditure incurred by an assessee for the purpose of making payment of traffic Police Challans for No entry, red light, no parking etc. are clearly expenditure which are incurred for infringement of law. These expenses are hence not allowable and an amount of Rs. 2,25,51,980/- is added to the income of the assessee. Since, I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty proceedings under section 271(1)(c) are being initiated separately. (Addition of Rs. 2,25,51,980/-) 16. The Ld. CIT(A) while confirming the said addition for A.Y 2011-12 held as under:- "4.4.3.2. The submissions of the appellant have been considered and are not found to be tenable. The case laws cited have also been considered but are distinguishable in facts. The AO has rightly held that the expenditure incurred by the appellant company for the purpose of making payment of traffic Police Challans for No entry, red light, no parking etc. are clearly expenditure which are incurred for infringement of law and has correctly added back the amount of Rs.2,25,51,980/- to the i....
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....ting to no-entry areas, no parking zones etc. The issue which arises for consideration is, whether such payments made were for an offence or is prohibited by law. We find, the aforesaid issue has been decided in case of DCIT Vs. Bharat C Gandhi, 46 SPT 258 (Mum. Trib.). In the aforesaid decision, the Coordinate Bench while dealing with identical issue of payment of compounding fee for violation of provision under the Motor Vehicles Act, 1988 and Rules thereunder has held that such expenditure is allowable as business expenditure under section 37(1) of the Act. Thus, following the decision of the Coordinate Bench (supra), we delete the disallowance. Ground no. 4 is allowed. 27. Respectfully, following the decision of the coordinate bench, the Assessing Officer is directed to delete the disallowance of Rs. 2,18,81,852/-. This ground is accordingly allowed." 20. By following the order of the Tribunal for Assessment Year 2009-10 and 2010-11, we direct the A.O. to delete the disallowance made on account of Traffic Challan amounting to Rs. 2,25,51,980/- in A.Y 2011-12 and Rs. 1,51,16,561/- for A.Y 2013-14 accordingly the Ground No. 3 in ITA No. 5925/Del/2018 (A.Y 2011-12) and....
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....0-11 152,93,72,281 184,15,10,571 AY 2009-10 182,20,52,443 152,93,72,281 AY 2008-09 173,18,80,205 182,20,52,443 AY 2007-08 164,16,87,433 173,18,80,205 AY 2006-07 155,54,96,436 164,16,84,433 AY 2005-06 146,68,76,742 155,54,96,436 AY 2004-05 144,21,16,424 146,68,76,742 AY 2003-04 158,09,01,589 165,98,59,900 AY 2002-03 171,13,56,928 158,09,01,589 From the perusal of above noted details reveals that on the yearly basis the accumulated deposit are increasing and the same has been increased from 158 crores to 207 Crores in the assessment year during the year under reference. Since the assessee company failed to furnish any confirmation even the list of such deposits has not been furnished if appears that this amount is lying from so many years and there is no claimant of this amount. In the assessment year 2003-04 this amount was at Rs. 165,98,59,900/- and that amount is also more than 8 years. Therefore considering all the facts of the case there being no claimant of this huge amount. the amount payable in the assessment year 2003-04 is hereby added in the income of the assessee as liability cease to e....
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....No. 5671/Del/2018 wherein held as under:- "36. We are of the considered view that section 41(2) of the Act was inserted W.E.F 1.04.1998 to provide for a levy of balancing charge in respect of certain depreciable assets, namely, building, machinery, plant or furniture which is owned by the assessee in respect of which depreciation is claimed u/s 32(1)(i) of the Act, that is, assets of an undertaking engaged in generation or generation and distribution of power which was, or has been used for the purpose of business. 37. It is clear that section 41(2) of the Act applies only if the assets are owned by the power generating undertaking and since the assessee is not a power generating company, the ld. CIT(A) grossly erred in applying provisions of Section 41(2) of the Act. 38. Coming to the applicability of provision of Section 41(1) of the Act which is also not applicable on the facts of the case, as twin conditions have to be satisfied (i) deduction in respect of a trading liability should be claimed in the previous year and (ii) the subsequent year liability must be written back effectively resulting into a benefit. 39. Facts on record show that th....
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....ediate previous year the appellant company had debited Rs.9,29,17,122/- towards this head, therefore, the AO asked the appellant to furnish the details of these expenses, their nature, their position in the stock and also how the figures of Rs.10,67,24,494/- was arrived at. The AO has stated that the appellant had claimed the expenses of Rs. 10,67,24,494/-but did not produce any supporting evidence in support of its claim. Further, the details regarding the quantity of products and how these amount for inventory losses and leakages were ascertained were not produced for verification. The AO has observed that for claiming deduction u/s. 37(a) of the I.T. Act, 1961 the onus of proof lies on the appellant to prove that these have been incurred wholly and exclusively for the business purposes and since the appellant has failed to substantiate its claim by supporting evidence or documentary evidences regarding the claim made before the Income Tax authorities, the AO relying upon the following case law, the Hon'ble SC in the case of CIT vs Calcutta Agency Ltd. (SC) 19 ITR 191 and in the case of Lashinaratan Cotton mills Co. Ltd. Vs CIT (SC) 73 ITR 634, added back the amount claimed u....
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....(SC)] * CIT v. Indo Nippon [261 ITR 275 (SC)] The appellant has contended that adhoc disallowances are not allowed in the eye of law and has relied upon the Hon'ble ITAT-Mumbai latest judgment on this issue in the case of "ITO vs M/s Intertoll ICS India Pvt. Ltd. ITA 7700/Mum/2010. The appellant has also stated that no such adhoc disallowances were made in assessment of AY 2012-2013. The Year- wise details of Inventory losses as a percentage of sales is reproduced below: Assessment Year Sales Increase in sales %of Increase Inventory Loss & Leakaaes Increase % Of Increase %Expence (i) (ii) (iii) (iv) ( v) (v/iv) (iv/(i) AY 2008-09 20,535,425,616 23,118.160 0.11% AY 2009-10 27.429.903.560 6.894.477.944 33.57% 59.053,380 92,917,122 35,935,220 155.44% 0.22% AY 2010-11 38,456,209.427 11,026.305.867, 40.20% 33,863,742 57.34% 0.24% AY 2011-12 45.405.809.185 6.949.599.758 18.07% 106.724.494 13.807.372 14.86%....
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....,17,122/- in the year under consideration. 53. We find that the write off of inventory is based on actual loss and not on estimation. Therefore, in our considered view, the ld. CIT(A) was correct in allowing the same as business expenditure. Such action of the ld. CIT(A) cannot be faulted with. This ground is dismissed." 14. On finding parity of facts, respectfully following the findings of the co-ordinate bench [supra], we decline to interfere." 36. By following the above ratio laid down by the Tribunal in Assessee's own case, we find no reason to interfere with the findings of the Ld. CIT(A), accordingly, the Ground No. 1 of the Revenue in ITA No. 5903/Del/2018 and Ground No. 2 in ITA No. 6296/Del/2018 of the Revenue A.Y 2013-14 of the Revenue are dismissed. 37. Ground No. 2 is regarding deletion of addition of Rs.8,68,12,412/- made by the A.O. on account of repair and maintenance, the Ld. A.O. while making the above disallowance forA.Y 2011-12 held as under:- "4. Disallowance of Repair & Maintenance (Others) During the course of assessment proceedings it is noted that the assessee company has debited Rs. 43,40,62,060/- The assessee compa....
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....n it is held as under:- "62. We have carefully perused the orders of the authorities below. There is no dispute that the expenses have increased by 53% if compared to the immediately preceding year. It is also a fact that sales have increased by 35% but what is not acceptable is the comparison of the increase in sales with increase in repairs and maintenance expenses etc. 63. In our considered opinion, difference of 18% between 53% and 38% has no logic without pointing out any error or defect in the books of account which are audited and no adverse inference has been pointed out by the auditors. 64. Considering the facts in totality, we do not find any reason to interfere with the findings of the ld. CIT(A). This ground is dismissed. 42. Finding the parity, in the year under consideration and following the order of the Coordinate Bench of the Tribunal for Assessment Year 2010-11 (supra) we find no merit in the Ground No. 2 of the Revenue, accordingly, Ground No. 2 of the Revenue in ITA No. 5903/Del/2018 is dismissed. 43. Ground No. 3 in Revenue's Appeal in ITA No. 5903/Del/2018 (A.Y 2011-12) is regarding deletion of addition of Rs. 8,06,98,146/- mad....