Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (8) TMI 1009 - AT - Income TaxDisallowance of 25% of‘mining and processing charges’ - CIT(A) reduced disallowance to 10% - Held that:- On a bare perusal of the assessment order it becomes clear that AO himself has noted that out of the total expenditure claimed by the assessee some of the expenditure were found to be through selfmade vouchers. However, it is not known whether AO has conducted any enquiry or called for explanation from the assessee in respect of the alleged defects and deficiencies found in the bills and vouchers. It is also a fact that he has not pointed out any specific defects and deficiencies in the books of account. The CIT(A) after considering all these aspects and also taking into consideration the possible inflation in expenditure by the assessee has sustained the disallowance at 10% out of the total expenditure claimed. Having perused the order of the CIT(A) in the context of facts and materials on record, we are of the view that the order passed by the CIT(A) in restricting the disallowance to 10% is fair and reasonable and need not be interfered with. - Decided against revenue Disallowance of administrative expenses - CIT(A) deleted the disallowance - Held that:- No infirmity in the order of CIT(A) in deleting the addition made by the AO. Undisputedly, the expenditure incurred is towards salaries and benefits paid to the employees. That being the case, there is little scope for the assessee to inflate expenditure or make any bogus claim. In the aforesaid view of the matter, AO was not justified in making adhoc disallowance of 25% out of the total expenditure claimed without bringing any evidence on record that the expenditure claimed is either bogus or not supported by evidence.- Decided against revenue Disallowance made u/s 10B - CIT(A) deleted the disallowance - Held that:- So far as the observation that assessee has voluntarily offered not to claim any deduction u/s 10B is concerned, on a perusal of the statement recorded from Sri V.B Veera Reddy, dated 12/09/2008, we do not find any such specific reply given by him that no deduction would be claimed u/s 10B of the Act. In any case of the matter, it is clear from the assessment order that the assessee has shown more income in the return of income filed by him than what was offered at the time of search and in fact the AO has accepted the profit declared by the assessee in P&L a/c. Therefore, AO’s observation that the assessee has offered not to claim any deduction u/s 10B is of little relevance and as otherwise is also not borne out from the facts on record. So far as the second allegation of the AO that assessee has not claimed deduction u/s 10B for 10 consecutive assessment years is concerned, on a perusal of facts on record, it becomes clear that the iron ore mining activity was started by the assessee in FY 2007-08 corresponding to the AY under consideration. Therefore, the AO was not correct in observing that the assessee has not claimed any deduction in AY 2006-07. The third ground for denial of deduction u/s 10B is, assessee is not engaged in manufacturing activity. As can be seen from the elaborate discussion in the order of the CIT(A), the mining of iron ore as undertaken by the assessee passes through various processes and the final product is not similar to Iron ore in its natural form as found under the earth Considering the facts of the assessee’s case in the context of provision contained u/s 10B as well as in the light of ratio laid down by the Hon’ble Supreme Court in the case of Sesa Goa Ltd. (2004 (11) TMI 14 - SUPREME Court ) , wherein it was held that the word ‘production’ is wide enough to take in its ambit the mining activity as ore is a thing which is produced through human effort as a result of such activity and Instruction issued by the CBDT, we are of the opinion that the CIT(A) was correct in allowing the claim of deduction u/s 10B of the Act. - Decided against revenue
|