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2023 (10) TMI 1231 - AT - Income TaxProportionate interest paid on borrowed funds - HELD THAT:- We noted that the funds advanced to assessee is a continuous process and these are old advances and these have been considered by the Tribunal from assessment year 1997-98 to 2004-05. There is no change in facts and hence, we feel that this issue is fully covered by the Tribunal’s decision. Hence, we find no infirmity in the order of CIT(A) and the appeal of the Revenue is dismissed. Disallowing the provisions made for raw materials, stores and spares treating the same as contingent liability - HELD THAT:- Before us, assessee could not explain how this is allowable and in our view, since the assessee has paid this amount of Rs. 50 lakhs towards demurrage charges already on 19.03.2008, the provision shown as payable cannot be allowed as deduction. Hence, we confirm the order of CIT(A) on this issue. As regards to balance provision assessee had paid a sum in the next financial year and for this, assessee has filed proof before CIT(A) and therefore, he allowed the same but sustained the balance amount being excess provision made in the accounts. Even now before us, the assessee could not file any evidence or could not explain how this amount is allowable. Hence, we confirm the order of CIT(A) on this issue. Thereby the total amount sustained on account of provision made for power division and the order of CIT(A) on this, is confirmed. Addition of non-existing sundry creditor liability - Difference in outstanding balance vis a vis the balance reflected in the books of the appellant company based on the statement of account obtained from the concerned supplier - HELD THAT:- CIT(A) noted that the assessee could not file any explanation as to why they have declared excess liability in its books of accounts. He also noted that there Thermodyne Technologies Pvt. Ltd., has declared liability to the extent of Rs. 18,68,421/- as against declared by assessee at Rs. 71,67,656/-. Since nothing was explained before AO or no evidence was filed to prove its claim, the CIT(A) also confirmed the order of AO. Even now before us, the assessee could not file any evidence or could not make any arguments to support its ground, hence we find no infirmity in the order of CIT(A) and affirm the order of CIT(A) on this issue. This issue of assessee’s appeal is dismissed. Non-existent liability on account of amount payable to Associated Traders - HELD THAT:- The assessee has made provision in its books of accounts by debiting the discount account and shown the same as outstanding liability. But the assessee could not file any evidence before AO or CIT(A) to explain the outstanding liability. We also noted that there is no evidence that the assessee has given discount to the party and shown only amount outstanding. We noted that assessee is contemplating recovery of the amount from the party and not treated the same as bad debit. Once the amount is shown as outstanding, the assessee is duty bound to explain the entry by filing evidences. As there is no evidence, the AO is justified in making addition and CIT(A) has confirmed the addition on non-existence of liability and we confirm the same. This issue of assessee’s appeal is dismissed. Provision made for excise duty on closing stock of finished goods - HELD THAT:- As assessee stated that she has no grievance against the order of CIT(A) and the AO will verify the factual position. Hence, this ground is dismissed. Addition of provision made by assessee for ocean freight from the value of closing stock - HELD THAT:- As claimed before AO and CIT(A) that assessee has paid a sum of Rs. 70,914/- on 24.03.2008 and if already paid during financial year relevant to assessment year 2008-09, then it was directed to AO to allow the claim after verification. We noted that this matter has already been referred back to the file of the AO for verification of facts and decide accordingly. We don’t want to interfere in the findings of CIT(A). Let AO will examine this issue afresh and will decide as per directions of CIT(A). This issue of assessee’s appeal is also dismissed. Estimated disallowance of 20% of total repair and maintenance - HELD THAT:- We have gone through the assessment order and noted that the AO has purely estimated disallowance at 20% but assessee explained that the assessee company is following a practice of claiming this expenditure towards building repairs and maintenance, plant repairs and maintenance and other maintenance and by this, it has incurred and claimed expenditure - AO has simply disallowed without verifying and without any basis. We are of the view that disallowance should have some basis. There can be a reason for some personal disallowance and for that estimated disallowance can be to the extent of 10% and hence, we restrict the disallowance at 10% and allow this issue of assessee’s appeal partly.
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