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2016 (5) TMI 1087 - ITAT DELHIAddition on account of sales returns/warranty scraped at customers end - Held that:- The goods at the customers end who scrapped out the same and the assessee receives the net consideration. In this regard, the assessee had furnished confirmation from M/s. Vee Three North America, USA. After verifying the explanation of the assessee, the Learned CIT(Appeals) found that certain items which were shown as sales return, not shown in RGI registers at the end of the assessee itself supports the claim of the assessee that such items were not physically returned to the assessee keeping in view the high cost of shipping of the goods that were found defective and rejected were not physically returned to the assessee. The Learned CIT(Appeals) also found strength in the claim of the assessee on the basis that as a prudent businessman, the assessee considered it appropriate to not incur freight expenses and instead allowed the overseas customers to scrap the goods returned by them. Since necessary confirmation was also furnished by the assessee in support, we are of the view that the Learned CIT(Appeals) was justified in deleting the addition in question - Decided against revenue Addition made on account of excess depreciation on certain assets - Held that:- The claimed depreciation of the assessee was based upon its submission that it had not only installed but had also put to use the assets purchased in March 2009, which were considered as not having been used by the Assessing Officer while making the disallowance in question. The Learned CIT(Appeals) has, however, deleted the disallowance as the claim of user of the assets purchased in March 2009 was supported by copies of bills, GRN, PRR showing the testing and use of the assets. It was also submitted that the first appellate authority had already allowed the appeal on this ground in the assessment year 2006-07. We thus do not find infirmity in the first appellate order deleting the disallowance made on account of claimed depreciation. The same is upheld.- Decided against revenue Disallowance made under sec. 14A - Held that:- As per provisions of sec. 14A(2), the Assessing Officer was firstly required to record his dissatisfaction with the working of the assessee with cogent reason. The Learned CIT(Appeals) found that the assessee itself had made disallowance through the mechanism of Rule 8D in its return of income as per the details furnished before him. The contention of the assessee remained that the investment which had not resulted in tax exempt income ought to have been excluded from the terms “average investment” for calculating the disallowance under Rule 8D. The Learned CIT(Appeals) was of the view that interest on various borrowings that were relatable to specific purposes (other than earning of dividend income) ought not to have been considered for making disallowance under Rule 8D (2)(ii). Accordingly, he held that for making disallowance under Rule 8D(2))(ii) interest expenses of ₹ 3,88,932 alone is to be considered. He observed further that for the purpose of average investment, an amount of ₹ 71 lacs which was towards making investment resulting in taxable income are also to be excluded. He accordingly worked out disallowance under sec. 14A at ₹ 2,49,843 giving relief of ₹ 1,03,912 in this regard to the assessee. We thus find that the first appellate order on the issue is comprehensive and reasoned one. - Decided against revenue
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