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2014 (3) TMI 693 - AT - Income TaxConfirmation of notional addition – Excise duty added in the value of the closing stock of finished goods – Held that:- The decision of English Electric Co. India Ltd. [1999 (2) TMI 24 - MADRAS High Court] followed – a liability cannot be converted into an asset - If the assessee is to show in the accounts the liability incurred by it in relation to excise duty that is to be done by showing separately the extent of liability incurred in that year towards payment of excise duty - The liability, if so exhibited, would become an item which would have to be deducted for the purpose of arriving at the profit for the year - It is only when such deduction is given that the amount may be added to the value of the closing stock - Decided in favour of Assessee. Disallowance of printing and stationary expenses – Held that:- The contention of the AO that the increase in expenditure under the head "printing and stationery" as compared to the earlier years were not proportionate with the increase in sales during the year, is not sustainable in law - the CIT(A) has recorded a finding that full supporting evidence were not produced before the AO – the disallowance is restricted to 40,000/- as against Rs.85,722/- sustained by the CIT(A) – Decided partly in favour of Assessee. Disallowance of conveyance expenses – Held that:- The CIT(A) has recorded that maximum expenses were incurred in cash and are fully verifiable - but, the CIT(A) in his order has also recorded a contradictory finding that all claims were not verifiable - no case of disallowance could be made out by the Revenue – Decided in favour of Assessee. Disallowance because of difference in closing balance – Bogus purchases – Held that:- After considering the volume of the business conducted by the assessee and the fact that the difference in the accounts does not pertain to this year, it has been held that no case of disallowance for the relevant assessment year could be made out by the Revenue – Decided in favour of Assessee. Disallowance of sales promotion expenses – Held that:- The disallowance out of sales promotion expenses at the rate of 10% thereof was made on the plea that the assessee could not furnish any details of the sales made through these parties and the basis for incurring the expenditure - the genuineness of the expenditure was not doubted by the Revenue - Considering volume of the business of the assessee, and that the reasoning of the AO regarding the sales made through these parties for whom these expenditure were incurred being untenable, and that the ad hoc disallowance was made - the disallowance made is not justified – Decided in favour of Assessee.
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