Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (5) TMI 22 - ITAT AHMEDABADAddition as excessive payment u/s 40A(2)(b) - HELD THAT:- Provisions of Section 40A(2)(b) of the Act are applicable on expenses claimed as deduction whereas the assessee had purchased a capital asset and therefore, learned CIT(A) had rightly allowed relief to the assessee.Provisions of S,40A(2){b) of the Act are applicable on expenses claimed as deduction. As the appellant has not claimed any deduction out of the related party transaction, the provisions of S.40A(2)(b) cannot be applied. Disallowance of expenses as same related to SEZ unit only - assessee had apportioned the same between two units - HELD THAT:- Before the learned CIT(A), the assessee filed detailed explanations and also filed additional evidences and also filed detailed calculations of cost per unit in SEZ unit as well as in non SEZ unit. From the submissions made before the learned CIT(A), we have observed that cost per unit in both units were almost same and therefore, he rightly deleted the addition There is hardly any difference between the cost of total raw material including the accessories. Even the product mix of the appellant is quite different in both the Units which has also not been taken into account by the AO while making the addition. In such circumstances, the addition made by the AO is not based on the facts of the case and therefore, the addition made by the AO is directed to deleted Negative adjustment made by AO to the eligible profits u/s 10AA - HELD THAT:- It is a well settled rule that the expenses have to be apportioned on actual basis, however when such apportionment is not possible, then the assesse has to retort to other methods. In the present case the appellant submitted the list of expenses which were apportioned on the actual basis and the details of such expenses and the justification for accounting it on actual basis. Regarding the segregation on the actual basis of the appellant, the AO has not found any fault with the basis of allocation on actual basis. If the expenses are allocated on the actual basis, then it is the best method of allocation. If any expense cannot be bifurcated on the actual basis, then only the allocation has to be resorted to. Since the appellant has booked all these expenses on the basis of actual, and the AO has not pointed out any specific fault in such actual basis of booking, the same cannot be disallowed on the basis of general observation by the AO until and unless some defects in the booking of expenses on actual basis is pointed out. Accordingly, the negative adjustment made by AO to the eligible profits u/s 10AA is not justified. Disallowance on account of notional interest - HELD THAT:- CIT(A) has allowed relief to the assessee by holding that assessee had furnished factual submissions and the advances were given for business purposes and therefore, same cannot be treated as non-business purposes. Moreover, the assessee had sufficient interest free reserves to finance interest free advances. In view of the above, ground is also dismissed. Addition of bad debts - HELD THAT:- AO had made this addition by holding that the sale was made out of SEZ unit whereas the fact is otherwise as the sale was made from non SEZ unit. The learned CIT(A) has made a finding of fact that sale to the party was made out of non SEZ unit. Finding no infirmity in the order of leaned CIT(A), ground is also dismissed. EPF penalty and penalty on late submission of excise return - suo moto disallowance made by assessee - HELD THAT:- Observation has been specifically made by learned CIT(A) in his order. We further find that the remaining amount of penalty related to interest on sales tax and re-connection charges of electricity board and learned CIT(A) had rightly held that interest charged by sales tax was compensatory in nature and re-connection charges charged by electricity board were also compensatory in nature and were not penal in nature and therefore had rightly allowed the relief. Disallowing employees’ contribution PF & ESIC - HELD THAT:- We find that learned CIT(A) has dismissed this ground of appeal by relying on the judgment of Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] and no argument was advanced by the learned AR, therefore, there is no infirmity in the order of learned CIT(A). In view of the above, ground nos. 1 to 4 are dismissed.
|