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2016 (1) TMI 797 - ITAT MUMBAIAddition on account of estimation of annual letting value while computing the income from house property - Held that:- AO as well as CIT(A) have drawn adverse inference for enhancing the ALV, mainly on the ground that, firstly, the assessee has taken interest free deposit from the tenants and if such deposits would not have been taken, then the rental value would have been more; and secondly, the market rate at which the flat was rented to M/s Futura Polyester Ltd was much higher than the rent received from assessee from its other tenants i.e. Centurion Bank and Johnson & Johnson. Now the jurisdictional High Court has discussed similar kind of cases in detail in case of Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT ] and have laid down very detailed proposition on the determination of ALV. The Hon’ble High Court have accepted the contention of the assessee that, municipal valuation rate for determining the ALV is also an accepted method of valuation, which on the facts and circumstances of the case can be applied. They have even discussed whether, any adverse effect has to be drawn in the cases where interest free deposits have been accepted. Thus, in wake of the said judgment of Hon’ble Bombay High Court we are of the opinion that the matter should be restored back to the file of the AO to determine the ALV as per the guidelines proposed - Decided in favour of assessee for statistical purposes. Disallowance of overseas commission u/s 40(a)(ia) - non deduction of tds - Held that:- AO has not given any specific finding qua the said provision of payment of overseas commission in the assessment order, nor the CIT(A) has given any finding as to how the amount is exigible to tax in the hands of the recipient. Therefore, in the interest of justice, we feel that this matter should be restored back to the file of the AO to examine the chargeability of tax in the hands of the recipient on the payment of commission and then decide, whether the TDS is to be deducted or not. - Decided in favour of assessee for statistical purposes. Disallowance made for treating current repair as a ‘capital expenditure’ - Held that:- we find that no specific finding with regard to the expenditure aggregating to ₹ 8,78,595/- has been given by the CIT(A) when the cost of construction of boundary wall itself was only ₹ 1,63,048/-, which was the basis for the disallowance by the Ld. CIT(A). Hence, in the interest of justice, we feel that this matter should also be restored back to the file of the AO to decide the issue afresh after calling for the details and examine the nature of the expenditure aggregating ₹ 8,78,595/-. If such expenditure are purely for repairs without creating any capital asset of enduring nature, then such expenditure should be allowed as revenue expenditure - Decided in favour of assessee for statistical purposes. Addition on account of delayed payment of ESIC and PF respectively - Held that:- All these payments have been made within the grace period prescribed under the respective acts and in any case, all the payments have been made much before the due date of the filing of the return of u/s 139(1) and accordingly, such payment are allowable u/s 43B. - Decided in favour of assessee. Disallowance of expenditure claimed as deduction u/s 35AB(2AB) - CIT(A) allowed the claim - Held that:- If the entire expenditure incurred by the assessee on development of facility has been approved then the said expenditure to be allowed for the purpose of weighted deduction. The approval here in this case was granted during the previous year relevant to the assessment year, thus the assessee was entitled to claim weighted deduction in respect of the entire expenditure incurred under section 35AB of the Act. Nowhere it has been provided under the section that R&D facility is to be approved from a particular date and then only it would be allowable from that date only. Moreover, it is also clear from Form 3CM, which does not give any cut off date for the approval. Accordingly, respectfully following the same, we uphold the order of the CIT(A) on this score allowing the claim.- Decided in favour of assessee. Rejection of books of accounts - exclusive method of CENVAT & VAT - CIT(A) deleted the rejection - Held that:- So far as the AO’s observation on the exclusive method of CENVAT & VAT and that the assessee should provide each and every item of stock corresponding to CENVAT & VAT in proof thereof, the assessee’s contentions had been that the products manufactured by the assessee are very huge and numerous and accordingly, item to item correlation was not really feasible. Under such circumstance, when the details of opening stock, closing stock, quantity, value, rates are available, which are subjected to verification and cross check then it is suffice to hold that CIT(A) was correct in holding that there is no reason for rejecting the books of accounts. On the issue of accounting on scrap, it has been found that assessee has been recording the same at the time of sale and not at the time of generation of scrap. The assessee was following a particular method of accounting of scrap, from last several years which cannot be rejected, unless such a method of accounting is not correct. Further, as pointed out by the Ld. Counsel, this method of accounting is followed and accepted by the department. Lastly, Ld. Counsel before us submitted that, right from AY 2001-02 to AY 2006-07, the assessments have been completed u/s 143(3), wherein the income has been assessed without rejection of books of accounts or estimation of gross profit on similar method of accounting and on similar facts. The Ld. AO has not pointed out any difference in this year. - Decided in favour of assessee.
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