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2017 (12) TMI 1225 - ITAT MUMBAIAddition u/s 69C as unexplained expenditure - Held that:- We find that the coordinate benches of the Tribunal have been taking a consistent view while making sustaining the part addition ranging from 5% to 12.50% or a reasonable percentage of the bogus purchases depending upon the facts of the case in order to tax the savings which the assessee might have made by purchasing the material from gray market by way non payment of VAT and other incidental taxes. Taking the consistent view with the decision of the Co-ordinate Benches of the Tribunal, we are also of the view that 100% addition is not sustainable but only profit on the said purchases could be assessed. We are therefore of the considered view it would be fair and reasonable to make addition at the rate of 12.5% of the said unexplained expenditure. As a result, the appeal of the department is partly allowed. The AO is directed to make the addition at the rate of 12.5% of such purchases. Addition treating the sale of scrap as unaccounted sales - Held that:- We find from the order of the Co-ordinate Bench of the Tribunal in assessee’s own case for the assessment year 2009-10 held that CIT(A) has allowed the scrap sale in view of the norms prescribed by the DGFT of foreign trade wherein the normal scrap can be allowed to the extent of 5%. The scrap of the assessee was to the extent of 2.91% which was found within the limit. The scrap record was maintained by the assessee in RG 1 which was verified by the excise department. Moreover, in earlier years also the scrap was sold and accepted by DCIT u/s.143(3) of the Act in view of the order dated 30.12.2010 for A.Y.2008-09. In view of the above said reasons, we are of the view that the CIT(A) has decided this issue judiciously and correctly Disallowance of expenditure incurred in relation to exempt income u/s 14A - Held that:- We find that the ld.CIT(A) deleted the addition by recording the findings of facts that the assessee’s own funds were far more than the investments made in the securities yielding tax free income. Therefore, the disallowance u/s 14A r.w.rule 8D(2)(ii) was not called for. See CIT V/s RELIANCE UTILITIES AND POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT V/s HDFC Bank Ltd (2014 (8) TMI 119 - BOMBAY HIGH COURT)
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