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2016 (5) TMI 1320 - AT - Income TaxDisallowance of inventory written off - Held that:- We are of the view that it will be just and proper to set aside this issue to the file of Assessing Officer for verification to the limited extent and the assessee shall put before him necessary details which can prove that some process has been followed for selling such scrap items and specific scrap value of the inventory written off has been accounted for as an income in the books of account. Ld. AR agreed to the same and no objection was raised by the ld. DR to this fact and accordingly, we set aside this issue to the file of Assessing Officer as discussed and needless to say that proper opportunity of being heard to the assessee would be given by Assessing Officer. This ground is allowed for statistical purposes. Disallowance on account of depreciation on plant and machinery covered under sale lease back transaction with RSEB - Held that:- We find that in the case before us the invoices are in the name of the assessee as is clear copy of these invoices therefore, transaction in question is held to be genuine one and , therefore, we set aside the order of the CJT(A) and direct the assessing officer to allow depreciation to the assessee. Disallowance on account of proportionate interest and administrative expenses - Held that:- Calculation of disallowance u/s 14A as per Rule 8D of the IT Rules, is applicable w.e.f. Asst. Year 2007-08 and we are dealing with appeal for Asst. Year 2005-06 and accordingly the decision of the co-ordinate bench squarely applies on this ground taken up by Revenue and therefore, in the given circumstances, when there is no satisfaction placed on record by Assessing Officer during assessment proceedings nor any specific defect has been pointed out, disallowance made by assessee at its own ₹ 6 lacs. should have been accepted by the Assessing Officer and no further disallowance was called for. Accordingly this ground of Revenue is dismissed. Disallowance on account of reimbursement of holiday home expenses - Held that:- CIT(A) has rightly observed that expenditure on holiday home has been incurred for the purposes of keeping healthy relation with its employees and therefore the same is purely business expenses. Ld. Assessing Officer has not been able to substantiate the claim of such disallowance and could not prove the same as bogus or non-business expenses. Accordingly in these circumstances, when there is no specific detection of any mistake in the books of account of assessee, such estimated disallowance is uncalled for. We, therefore, find no reason to interfere with the order of ld. CIT(A). Accordingly this ground of Revenue is dismissed. Disallowance on account of Gas day expenses and Family meet expenses - Held that:- Disallowance of 20% was made by ld. Assessing Officer on estimate basis, without pointing out any defect in the books of account of assessee. Applying our decision of ground no.3 on this issue, the ground raised by the Revenue is dismissed. Addition on account of unutilized modvat/cenvat credit - Held that:- Unutilized modvat payment is in the nature of advance payment and should not be treated as income and, therefore, we find no reason to interfere with the order of ld. CIT(A) and uphold the same. Disallowance on account of provision of traveling expenses - Held that:- From going through the submissions made by ld. AR, we find that at the time of finalizing of accounts at the end of the year some provisions are required in respect of expenses which have been incurred in the last month of the financial year but the bills/claim in respect thereof are still awaited and, therefore, provisions of such expenses are necessary to be made. Certainly the provisions involve some elements of estimation but in the next year such provisions are reversed and actual expenses are booked and accordingly if there is any expenditure the same is adjusted in the next year. This accounting practice has been followed consistently by the assessee. We are, therefore, of the view that ld. CIT(A) has rightly deleted the disallowance. Addition on account of project loss in relation to amount receivable from Mahanagar Gas Ltd. - Held that:- We are of the view that regular books are being maintained by the assessee and accounting policies and standards are consistently followed and looking to the past history of assessments of assessee, we understand that such claim was allowed by the Revenue in the past also. We, therefore, find no reason to interfere with the order of ld. CIT(A) who has rightly deleted the disallowance made on account of project loss from MGL. Disallowance u/s 14A should be sustained at ₹ 6,00,000/- only which has been suo moto accepted by the assessee as disallowance u/s 14A of the Act while furnishing of income tax return. As the ground of revenue has already been dismissed, the Cross Objection raised by the assessee has become infractuous and is dismissed accordingly.
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