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2018 (10) TMI 237 - AT - Income TaxAddition of loss claimed on account of under valuation of sales returns received from various dealers - sales returns claimed by the assessee is not substantiated with necessary evidences - Held that:- The fact remains unchanged. The revenue failed to bring on record any further evidence to controvert the findings of facts recorded by the CIT(A) in the light of remand report furnished by the AO. Therefore, we are of the considered view that there is no error or infirmity in the findings of CIT(A) and hence, we are inclined to uphold findings of the CIT(A) and reject grounds taken by the assessee as well as the revenue. Disallowance of losses claimed on account of slow moving stocks - addition towards loss claimed on slow moving stocks for the reason that there was no mention of outward entry No. on the stamps affixed on the delivery challans - Held that:- CIT(A), after considering relevant facts and also taking into account the remand report deleted addition made by the AO, except to the extent of ₹ 8,42,020 in respect of 3 parties from whom no information has been received. Facts remains unchanged. The revenue failed to bring on any evidence to controvert the findings of fact recorded by the Ld.CIT(A) in the light of remand report issued by the AO. When the parties, who appeared before the AO confirmed the transactions, merely for the reason that few parties did not appear before the AO, there is no reason to suspect total transactions made by the assessee in respect of slow moving stocks. We further notice that the assessee has filed necessary evidences including fact finding report of sales team manager and also the quotations received from prospective buyers of the goods which prove the real valuation of slow moving items. There is no error or infirmity in the findings given by the AO and accordingly we confirm the findings of Ld.CIT(A) and reject ground taken by the revenue as well as the assessee. Addition towards transportation charges paid by the assessee which is consequential to the loss on sales returns claimed for the year - AO has disallowed transportation charges incurred by the assessee for the same reasons, on which he has disallowed loss claimed on sales returns - Held that:- AO has given categorical finding in respect of transportation charges paid by the assessee where he has admitted that the parties, who have appeared before him have accepted the fact that they transported goods and also received payments. The fact that certain parties have not appeared before the AO may not be a solid reason for disbelieving total transactions. CIT(A), after considering relevant facts and also taking into account remand report of the AO allowed relief towards addition made by the AO, except to the extent of ₹ 6,09,917 in respect of two parties from whom no information has been received. Facts remain unchanged. The revenue fails to bring on record any evidence to controvert the findings of fact recorded by the CIT(A). Hence, we are inclined to uphold findings of CIT(A) and reject ground taken by the assessee as well as the revenue. Addition made by the AO towards alleged unproved purchases - Held that:- AO has examined the issue by calling for various details for which the parties have appeared before the AO and admitted of having done transactions with the assessee. Although, certain parties have not appeared before the AO, but those who appeared before the AO has admitted that the observations made by the AO in his assessment order is incorrect and the transaction with the assessee is genuine for which they have furnished necessary evidence. CIT(A) has considered all these facts and came to the conclusion that the loss claimed by the assessee on account of sale of sale of returned goods is genuine in nature and accordingly, deleted addition made by the AO, except to the extent of ₹ 9,85,76,986 in respect of 3 parties. Disallowance of depreciation claimed on texturised unit - unit has not functioned during the year and such finding is based on the fact that there was no sale / income from this unit - Held that:-Hon’ble Delhi High Court in the case of CIT vs Oswal Agro Mills Ltd [2010 (12) TMI 947 - DELHI HIGH COURT] where it was held that depreciation is allowed on block of asset and the revenue cannot segregate a particular asset therefrom on the ground that it was not put to use. In this case, on perusal of facts it is clear that the texturised unit is part of the textile plant of the assessee and the unit was functioning in the earlier years. Once a particular machinery has been put to use for the purpose of business, it is immaterial whether such plant & machinery has been used in the year under consideration and any revenue has been generated from such unit. The expression used “for the purpose of business” includes user of assets in the earlier years. Once, the machinery was available for use, though not actually used, falls within the expression used “for the purpose of business of the assessee” and claim the benefit of depreciation. The lower authorities without appreciating the fact, disallowed depreciation claimed on texturised unit, hence, we direct the AO to delete addition made towards depreciation claimed on texturised unit.
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