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2012 (4) TMI 416 - ITAT, AHMEDABADDepreciation on intangible assets - AO disallowed the depreciation - various assets including integrated software - During the survey, it was found by the survey team that these assets were not there in the premises and if the appellant had any objection regarding the list of the assets in the survey report, the same has to be objected there itself and ought to have corrected - AO denied claim of the assessee because no fixed assets register was maintained by the assessee but same was produced before the AO subsequently - held that:- Merely because the parties who had supplied assets to the assessee have not responded to the notice of the AO may not be a ground for denying claim of the assessee on tangible assets - the material supplied by the assessee is not examined in detail and complete details of the assets are recorded in the report of valuation prepared prior to the survey at the instance of IDBI, therefore, we are of the view the matter as regards depreciation on tangible assets requires reconsideration at the level of the AO Regarding deduction u/s 80HHC and 80 IA - Held that: assessee made a claim of deduction under these provisions when income is computed at profit. The learned CIT(A), therefore, rightly directed the AO to consider this issue particularly when the assessee fulfilled conditions under these provisions. The learned CIT(A) merely directed the AO to allow the claim of the assessee as per law Regarding bad debts u/s 36 (1) (vii) - Held that: debts having been written off in the books of accounts in the year under consideration, the claim of bad debts is allowable to the assessee - Appeal is allowed Disallowance of insurance expense - AO rejected the claim of the assessee because the insurance cover was taken for loss of production and expected profit whereas insurance expenses were debited on estimate basis relating to destruction of machinery, building, raw material and finished goods. - held that:- Once assessee has shown income on account of insurance receipts out of the same incident and claimed expenses out of the same incident relating thereto, the claim of the assessee should have been appreciated and considered for both i.e. income and the expenditure on account of insurance. Similarly, assessee shall have to satisfy the AO as to how expenses have been claimed and should have filed the supporting evidences. - matter remanded back. Regarding disallowance to the extent of 25% on disallowance of Rs.3,08,17,231/- made by the AO on account of nongenuine purchases - arned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that search was carried out by central excise department on 15-02-2002 which is prior to the start of the financial year relevant to the assessment year under appeal 2003-04 - It is not in dispute that search was carried out by central excise department prior to start of the financial year in appeal. The financial year starts from 01-04-2002 and would end on 31-03-2003 for assessment year 2003-04 under appeal - In the absence of any material on record against the assessee, we do not find any justification to sustain even part addition against the assessee - Decided in favor of the assessee Disallowance of various expenses - assessee Company filed return of income in response to notice u/s 148 of the IT Act and has made additional claims on these expenses. Such claims were not made in the original return of income. - held that:- the proceedings u/s 147 are meant for the benefit of revenue and not for assessee, the assessee cannot be permitted to convert the re-assessment proceedings into an appeal or revision in disguise and sick leave in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to escaped income. Regarding addition of Rs.10,55,53,967/- u/s 36(1) (iii) - It was submitted before the learned CIT(A) that the AO did not issue any show cause notice on this issue and that all the advances were made for business purposes either for purchase of materials or plant and machinery - The learned Counsel for the assessee submitted that the entire disallowance has been made by the AO purely on estimate basis without establishing any nexus between the funds borrowed and advances granted - It was submitted that recently the Hon’ble Supreme Court has held that in case of loans to associate concerns and/or outside parties, commercial expediency from the businessman’s point of view has to be taken into consideration and while doing so, revenue cannot sit in the arm-chair of the assessee - Held that: the assessee is having sufficient own funds, therefore, there is no question of diversion of interest-bearing funds for giving loans and advances - Decided in favor of the assessee Regarding addition on account of loss on sale of raw materials of Rs.2,69,86,470 - After verification of the evidences produced by the assessee the AO had come to the conclusion that the loss claimed in respect of such sales of raw material is fictitious and therefore, the same has been disallowed and as per the clear finding in the assessment order, the AO stated that the addition made be confirmed - learned Counsel for the assessee also submitted that huge volumes of additional evidences are in order and the AO did not find any mistake in the same and hence, he has not commented on any of them - Held that: CIT(A) considering the details furnished found that the assessee has suffered loss and such findings of the learned CIT(A) have not been rebutted through any evidence or material on record - Appeal is dismissed
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