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2011 (3) TMI 1630 - AT - Income TaxAddition on account of un-availed MODVAT Credit - In absence of documentary evidence filed by the assessee to substantiate the reduction in the profits, AO disallowed the claim - Assessee submitted he submitted that opening and closing modvat credit as stated in the computation of income are already there in the audit report. Also, most of the records, in the meantime were destroyed due to flood - HELD THAT:- We deem it proper to restore the matter back to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate its claim of un-availed Modvat credit. The AO shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee is accordingly allowed for statistical purpose - Matter Restored Disallowance of Amortization of the Premium Paid for Leasehold Land - Assessee, referring own case for AY 2001-02 submitted that this issue stands decided against the assessee - HELD THAT:- In view of the decision of the Tribunal in assessee’s own case in the immediately preceding assessment year on the same issue we hold that the CIT(A) is justified in confirming the disallowance of amortization of the premium paid for leasehold land. The ground raised by the assessee is accordingly dismissed. Disallowance of Inventory Written off - In absence of production of other details as to why the inventory has been written off and noting that the list contains certain items which cannot become obsolete, the Assessing Officer disallowed the claim - HELD THAT:- Admittedly, the reasons for such write off was not available before the AO or before the CIT(A) and filed for the first time before us. We, therefore, in the interest of justice, deem it proper to restore the matter back to the file of the AO. Ground of the assessee is accordingly allowed for statistical purpose. Disallowance of Set off of Loss in Computing Book Profit u/s 115JB - As per AO, assessee company has simply twisted the computation of figures of brought forward loss and unabsorbed deprecation so as to increase the amount of set off available, book profit arrived at of the earlier year is incorrect - CIT(A) confirmed the action of disallowance - HELD THAT:- After relying on the decision of AMLINE TEXTILES (P.) LTD. [2008 (11) TMI 438 - ITAT MUMBAI], we hold that aggregate amount of unabsorbed deprecation or brought forward losses of the years taken together which losses was to be reduced for the purpose of computing book profit u/s 115JB. It cannot be considered on a year to year basis. The ground raised by the assessee is allowed. Addition made while computing Book Profit u/s 115B - AO made an addition of amount claimed by the assessee as provision for gratuity, leave encashment and doubtful debts - HELD THAT:- We have considered the order of the Tribunal in assessee’s own case for AY 2001 where tribunal upheld order of CIT on ground that liability on account of provision for gratuity and leave encashment was not worked out on the basis of scientific method i.e. calculation made by an actuary and no documentary evidence was filed to support that the provision is based on definite liability - As provision made in the impugned year is different. The Auditors in their audit report have already mentioned that the liability for gratuity and leave encashment is provided on the basis of actuarial valuation. By following the decision of BHARAT EARTH MOVERS VERSUS COMMISSIONER OF INCOME-TAX [2000 (8) TMI 4 - SUPREME COURT], provision for gratuity and leave encashment having been made on the basis of actuarial valuation cannot be added while computing the book profit for the purpose of sec. 115JB of the act. Therefore, ground is allowed. Addition on account of doubtful debts is concerned, the same has to be upheld in view of the retrospective amendment to the act. Therefore, ground is dismissed. Disallowance of Depreciation u/s 32(1) on electric feeder lines - As per AO, since the ownership of the electric feeder lines do not vest with the assessee company, claim of depreciation over the same contravenes the conditions laid down in sec. 32(1) - CIT(A) deleted the disallowance - HELD THAT:- We find identical issue had come up before the Tribunal in assessee’s own case for the AY 2001-02, where it was held that, this expenditure has been incurred prior to commencement of business - As decided in SANGRUR VANASPATI MILLS LTD. [2006 (9) TMI 101 - PUNJAB AND HARYANA HIGH COURT]expenditure incurred by the assessee on the cost of power line for independent feeder, incurred prior to commencement of production has to be treated as part of plant and machinery being necessary for commencement of production and has to be capitalized. Therefore, ground raised by the revenue is dismissed. Manufacturing and Trading Expenses and Other Expenses - in spite of number of opportunities granted, the assessee failed to file the details called for - AO observed that the auditors have not quantified the expenses incurred by way of fine/penalty - HELD THAT:- It is the settled proposition of law that for claiming any expense; onus is always on the assessee to substantiate with evidence to the satisfaction of the Assessing Officer that such expenditure is wholly and exclusively for the purpose of business. However, in the instant case, the assessee admittedly has not discharged the onus cast on it. The CIT(A) has correctly held that such claims have to be either allowed or disallowed in toto. In absence of furnishing of full details before the Assessing Officer, in our opinion the order of the CIT(A) restricting the disallowance to 5% on the above items is justified.Order of the CIT(A) on this issue is upheld.
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