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2014 (5) TMI 1078 - AT - Income TaxCapital subsidy - whether subsidy received was of a Revenue nature as per CIT(A)? - Held that:- In case before us, the subsidy was given in the category of small scale industry and under further sub head export oriented units. The subsidy is directly related to plant & Machinery. Therefore in our opinion, in this background the subsidy is clearly of capital nature and accordingly we set aside the order of the Ld. CIT(A) and hold that subsidy received by the assessee from Government of Punjab is in nature of capital receipt. Disallowance on account of salary and wages on account of inflation of expenses - Held that:- The assessee has successfully explained the existence of extra attendance cards in respect of the number of the cards found during the survey but however, at the same time if we consider the case of 26 persons who had left the job in the month of August and Sept 2008 full explanation is not available. Therefore inflation of salary and wages cannot be ruled out totally. Considering overall explanation of the assessee and circumstances of the case, we are of the opinion that ends of justice would meet if a disallowance of ₹ 8 lakhs is made in respect of inflation of salary and wages in this case. This proposal was accepted by the Ld. Counsel for the assessee as well as the Managing Director of the company who was present in the Court, therefore we set aside the order of the Ld. CIT(A) and confirm the disallowance of ₹ 8 lakhs on account of salary and wages on account of inflation of expenses - Decided partly in favour of assessee Addition on shortage of stock - Held that:- Assessing officer has not given any adverse comments and simply brushed aside the objection of the assessee by stating that item dealt by the assessee are numerous and are of different sizes. This is totally high handed approach by the Revenue. Whatever evidence is being filed, is not examined and simply brushed aside. Even before us, the Revenue could not point out any error in the valuation and the differences given by the assessee at page 323 to 329 of the paper book which were filed before the Assessing officer during assessment proceedings.Therefore in our opinion, these differences amounting to ₹ 12736887/- should have been accepted by the Ld. CIT(A). If these were supported by the copies of bills which have been filed in the paper book then same cannot be rejected. Undisclosed sales - Held that:- Some stock was lying in Madhya Pradesh for which proper evidence has been filed. One more aspect was considered for determining of undisclosed sales and it was that assessee had employed more workers then actually shown in the books of accounts and for which addition of ₹ 86,57,239/- was made on that account which was reduced to ₹ 43,69,886/- by the Ld. CIT(A) because he accepted the contention regarding duplication of workers and contractor workers. However, we have already adjudicated this ground in above noted paras and addition has been reduced to only ₹ 8 Lakhs which was made only on estimated basis by us. Therefore this factor is also not available for the conclusion that the assessee had undisclosed sales. We also find force in the submission that during survey proceedings or otherwise the Revenue has not brought any material on record in form of any sales bill or diary notings that some sales have been conducted outside the books of accounts. Therefore in our opinion, this addition is totally uncalled for and accordingly we delete the same. Therefore this ground of assessee is allowed
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