TaxTMI 
TaxTMI 
2025 (11) TMI 2010
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..../- being 10% of total expenses consumed, manufacturing and direct cost, employees cost benefits, administrative & general expenses, and selling & distribution expenses on ad hoc basis and purely on presumption. (2) That on facts, in law and on evidence on record, since no defects are pointed in Audited Accounts, the entire expenses as claimed ought to have been allowed, as prayed for. (3) That appellant craves leave to add, alter, amend any ground of appeal." 3. The brief facts of the case are that the assessee, Anupam Industries Limited, filed its return of income on 29.09.2022 declaring a loss of Rs. 10,56,35,105/- for A.Y. 2022-23. During assessment proceedings, after examining the information filed, the Assessing Officer passed an order under section 143(3) r.w.s. 144B determining the total income at Nil and reducing the returned loss to Rs. 5,18,07,905/-. This reduction was due to an addition of Rs. 5,59,39,900/-, being 10% of the total expenditure of Rs. 5,593.99 lakhs claimed under major heads such as raw material cost (Rs. 3,294.58 lakhs), manufacturing and direct expenses (Rs. 552.16 lakhs), employees' cost (Rs. 916.72 lakhs), administrative and genera....
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....of 10% made by the AO amounting to Rs. 5,59,39,900/- was upheld. As regards the levy of interest under sections 234A, 234B, 234C and 234D, the CIT(A) held that it was purely consequential and required no separate adjudication. The other grounds were found to be general in nature. Accordingly, the appeal was dismissed. 6. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 7. We have heard the rival contentions and perused the material on record, and we find that the sole issue for consideration is whether the adhoc disallowance of 10% of total expenditure amounting to Rs. 5,59,39,900/- sustained by the CIT(A) is justified. The assessee has placed on record detailed comparative figures of earlier years showing that income from operations increased substantially from Rs. 31.64 crores in the preceding year to Rs. 47.28 crores in the present year an increase of nearly 50% while total expenditure increased only from Rs. 40.62 crores to Rs. 50.21 crores, which is an increase of about 24%. The assessee also demonstrated that the previous year contained a one-time exceptional non-operating income of Rs. 15.01 crores, the....
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....c disallowance of 5 per cent by Assessing Officer without pointing out discrepancies in books or producing evidence of personal element, such disallowance was to be deleted. 9. In the present case, the Assessing Officer has neither pointed out any instance of bogus expenditure nor invoked section 145(3). He has accepted the audited books of account and yet proceeded to make a flat disallowance of 10% of total expenditure. Such an action is clearly contrary to the settled legal position. The comparative data furnished by the assessee also shows that the increase in expenses is reasonable and in line with business growth. Therefore, in our considered view, the addition made by the AO and sustained by the CIT(A) is purely ad-hoc and not supported by any cogent reasoning or legal basis. 10. In view of the above discussion and applying the ratio of the judicial precedents cited herein, we hold that the disallowance of Rs. 5,59,39,900/- made on an ad-hoc basis is liable to be deleted. We accordingly set aside the order of the CIT(A) and direct the Assessing Officer to delete the entire addition. The grounds relating to interest under sections 234A, 234B, 234C and 234D are consequen....
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....obligations, and relied on the Supreme Court decision in Rotork Controls India (P.) Ltd. v. CIT. However, the CIT(A) held that the assessee had not furnished any historical trend, details of past provisions, reversals, or evidence of warranty obligations. Since the assessee failed to bring supporting material and did not satisfy the conditions laid down in Rotork Controls (where historical trend and systematic data are mandatory), the disallowance was confirmed. 15. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted that he shall not be pressing Ground Numbers 1 and 2 (addition of Rs. 2 lakhs towards sale value of land and disallowance of Rs. 44 lakhs towards brokerage expenditure) and accordingly, Grounds Number 1 and 2 are being dismissed as "Not Pressed". 16. The only surviving issue before us is the disallowance of Rs. 12,00,000/- relating to the provision for warranty expenses. 17. The record shows that the Assessing Officer disallowed the provision on the ground that no working, historical data, basis of estimation, or agreement terms were furnished. The....
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.... National Faceless Appeal Centre (NFAC) has grievously erred in confirming the disallowance made u/s 43B of the Act of Rs. 4,09,590/-., (2) That on facts, in law, and on evidence on record, the learned National Faceless Appeal Centre (NFAC) has grievously erred in confirming the disallowance of Rs. 44,00,000/- being interest as inadmissible u/s 23 of Micro, Small & Medium Enterprises Development (MSMED), Act, 2006. (3) That on facts, in law, and on evidence on record, the learned National Faceless Appeal Centre (NFAC) has grievously erred in confirming the disallowance made u/s 43B of the Act of Bonus of Rs. 30,69,781/-, Leave Encashment Rs. 59,24,017/- Gratuity Rs. 38,66,670/- CST Rs. 89,27,589/- and Excise Duty Rs. 4,70,41,546/-. (4) That, in the alternate, and without prejudice to the above ground of appeal, if any disallowance is sustained u/s 43B of the Act, then, a direction ought to be given to allow the respective amount in the year of actual payment made. (5) That on facts, in law, and on evidence on record, the learned National Faceless Appeal Centre (NFAC) has grievously erred in confirming the disallowance made u/s 2(24)(x) of the Act....
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....e taxed as perquisites in the hands of the directors, were supported by Form 16 and Form 12BA, and hence were not personal in nature. Accordingly, the disallowance was deleted. On the section 40A(3) addition of Rs. 4,09,590/-, the CIT(A) held that the assessee failed to produce supporting evidence such as bills, vouchers or proof of applicability of Rule 6DD, and upheld the entire disallowance. As regards the interest of Rs. 46,47,106/- under the MSMED Act, the CIT(A) agreed with the AO that section 23 of the MSMED Act expressly prohibits such interest from being allowed as a deduction under the Income Tax Act, and noted that the assessee had not provided any contrary material; therefore, the disallowance was confirmed. On the disallowance under section 43B, the assessee admitted that bonus of Rs. 30,69,781/- and professional tax of Rs. 3,65,795/- were not paid on time, and the CIT(A) upheld those disallowances. The CIT(A) accepted the assessee's contention that the balance bonus of Rs. 19,15,199/- had been paid before the due date of filing the return and deleted that portion subject to verification. However, for leave encashment of Rs. 59,24,017/-, gratuity of Rs. 38,66,670/-, CS....
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....eposits of employees' contributions, even if made before the due date of filing the return of income, are not allowable. In the present case, the assessee has not shown that the payments were made within the statutory due dates, and therefore the disallowance made by the Assessing Officer and confirmed by the CIT(A) is in accordance with law. 27. In these circumstances, and respectfully following the binding decision of the Hon'ble Supreme Court in Checkmate Services, we find no infirmity in the order of the CIT(A). Accordingly, the appeal of the assessee on this issue is dismissed. Now we shall discuss Department's appeal (in ITA Number 1015/Ahd/2023) 28. The Department has raised the following Grounds of Appeal: "1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 9,90,24,205/- without appreciating the fact that the amounts paid represent fraudulent claims made by the assessee, which are penal in nature, and the same cannot be allowed as expenditure as per the provisions of Section 37(1) of the Income-tax Act, 1961? 2. The appellant craves leaves to add, modify, amend or alter any gr....