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2017 (8) TMI 949 - ITAT MUMBAIAddition of processing charges - as per AO turnover of the assessee had increased only 10% whereas the processing charges had increased multiple time - Held that:- We have observed that the A.O. has not brought on record any cogent incriminating material, reasons or justifications while making adhoc disallowance of 10% of processing charges except taking a view that turnover of the assessee increased by 10% while processing charges increased in multiples which is not sufficient to sustain disallowance and fasten tax liability on the assessee, which additions in our considered view was rightly deleted by learned CIT(A) vide appellate order dated 19-09-2011. Thus, under these circumstances, we do not find any reason to deviate from the decision taken by the ld. CIT(A) vide appellate order dated 19-09-2011 with which we concur and appellate order of learned CIT(A) is hereby confirmed. We, therefore, dismiss the ground raised by the Revenue. Thus, Revenue fails on this ground. Disallowance of ice charges - Held that:- Upward movement of turnover is not indicative of any overt attempt by the assessee to conceals his income, inflate expenses or to defraud revenue calling for adhoc disallowance in the absence of incriminating material brought on record by the AO for which onus was on the AO as the assessee discharged its primary onus by bringing on record the relevant material. We have observed that the A.O. has not brought on record any cogent incriminating material, reasons or justifications while making adhoc disallowance of 25% of ice charges except taking a view that turnover of the assessee increased by 10% while ice charges increased in multiples which is not sufficient to sustain disallowance and fasten tax liability on the assessee, which additions in our considered view was rightly deleted by learned CIT(A) Disallowance of chemical expenses - Held that:- We have observed that the A.O. has not brought on record any cogent incriminating material, reasons or justifications while making adhoc disallowance of 10% of chemical expenses except taking a view that turnover of the assessee increased by 10% while chemical expenses increased in multiples which is not sufficient to sustain disallowance and fasten tax liability on the assessee, which additions in our considered view was rightly deleted by learned CIT(A) Disallowance being paid by the assessee to workmen under the head ‘employees death’ - Held that:- We are inclined to agree with the appellate order of learned CIT(A) with whom we concur and find no reason to deviate from a view taken by learned CIT(A) deleting the addition made by the AO. The AO has given a reasoning that since employee family will get compensation under PF and ESIC Act’s, hence the compensation paid by the assessee is not an business expenses calling for disallowance u/s 37(1) of the 1961 Act is a view which is totally unsustainable view in the eyes of law as this expenses in infact is an expenses which is incurred wholly and exclusively for the business of the assessee within mandate of provisions of Section 37(1) of the 1961 Act, because firstly the compensation is paid to family of any employee who died in an accident in factory premises occurred which occurred during conducting business of the assessee during the previous year relevant to the impugned assessment year secondly the liability has arisen under the statute i.e. Workmen Compensation Act which the assessee is obliged under law to discharge, thereby fulfilling mandate of Section 37(1) of the 1961 Act from which ever angle it is seen, as it is a business expenses incurred wholly and exclusively for the purposes of business. We affirm well reasoned order of learned CIT(A) and refused to take a different view Disallowance of terminal handling charges and documentation handling charges - sec 172 applicability - tds liability - Held that:- We have observed that with respect to these 22 parties, evidences w.r.t. only six parties have been enclosed in the paper book filed with the tribunal to claim that these payouts were to nonresident shipping companies and/or their agents which are covered by provisions of Section 172 of the 1961 Act and no disallowance is called for u/s 40(a)(ia) of the 1961 Act, and this claim of the assessee requires proper verification and examination both on facts and on law, by the AO. Thus, we deem it fit to set aside and restore the matter back to the file of the A.O. for de-novo determination of the issue on merit in accordance with law. The assessee is directed to appear before the A.O. and produce all cogent and relevant evidences to justify the claim that these amounts are not covered by 194C & 195 of the Act and thus, no disallowance is called for by filing details w.r.t. all twenty two parties which shall be evaluated/examined by the AO on merits both on facts and in law. The AO shall admit all evidences / explanations submitted by the assessee in the interest of justice and shall adjudicated the same on merits in accordance with law. Disallowance of interest expenses treating the same to be capital in nature - Held that:- The assesee submitted the detail before the ld. CIT(A) as to the dates on which the fixed assets were put to use and the interest capitalized by the assessee. We have observed that details were not furnished before the AO and these details require verification by the A.O. as the said details were not filed before the A.O. as is emerging from records. The ld. CIT(A) has not called for any remand report from the AO nor these details were forwarded by learned CIT(A) to the AO for verification/examination, as is contemplated by Rule 46A of the Income-tax Rules, 1962. In our considered view, this matter is to be set aside and restored to the file of the A.O. for de-novo determination of the issue on merits after verification / examination of the details filed by the assessee . Needless to say proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law. This ground raised by Revenue is allowed for statistical purposes
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