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2013 (2) TMI 91 - AT - Income TaxMethod of accounting - Adjustment of MODVAT Credit - Clause 22(a) of the Form 3CD – Inclusion or exclusion of Excise receivable, Service tax receivable and VAT receivable in closing stock - Whether the assessee has adopted “exclusive method” or the “inclusive method – Held that:- Following the decision in case of Narmada Chematur Petrochemicals Ltd. (2010 (8) TMI 263 - GUJARAT HIGH COURT) that unless and until the amount of the Duty is not entered on one side as an item of cost, it cannot be taken as a component of the value of the closing stock on the either side. The true purpose of crediting the value of unsold stock is to balance to cost of those goods entered into other side of account. As decides in case of UNIQUE INDUSTRIES (2008 (5) TMI 238 - GUJARAT HIGH COURT) that the Excise duty, Sales Tax and other duties form part of the closing stock when the same are incurred. The question of including the excise duty in the value of stock arises only if the purchases debited to P&L account are inclusive of excise duty. The basic question which is yet to be ascertained is that whether the assessee has adopted “exclusive method” or the “inclusive method” and decides on the basis given decided cases – Remand back to A.O. Disallowance of commission - Genuineness of the payment of sales commission – Burden of proving the expense - Ground of commercial expediency for the ultimate benefit of the business – Held that:- Following the decision in case of Shahzada Nand And Sons (1977 (4) TMI 4 - SUPREME COURT) that the requirement of commercial expediency must be judged in the context of socio-economic thinking. In deciding whether a payment was made for the purpose of business, the correct approach would be to see whether it was made on the ground of commercial expediency for the ultimate benefit of the business. As concluding from the facts of the case Assessee contains several correspondence, copies of the debit-notes, information about the work done by those persons, their PANs, the basis of payment of commission on the supply of the machinery or the orders procured and the amount of TDS deducted on the payment of commission – In favour of assessee Disallowance u/s 40(a)(ia) – Fail to deduct TDS u/s 194 J – u/s 194 I - Payment for consultancy charges – Payment for Rent - Assessee is an individual – Held that:- the issue of deduction of tax at source has been mixed up between the applicability of section 194-I & Sec.194-J. It is worth to note that both these provisions have an exception, therefore, not to apply in the case of an “Individual” assessee. This aspect has to be re-considered by the Revenue Authorities. Next, is the determination of nature of “Professional” Services. As per assessee if a person does not have any professional qualification then how can he render professional services. This plea was not before the A.O., therefore the qualification of these persons alleged not to fall within this category has not been examined – Remand back to A.O. Disallowance of Foreign Travelling expense – Personal expenditure - Travel of wife and daughter – Held that:- The part relief was granted by CIT(A) in respect of disallowance pertained to the travel expenditure of wife. However, in respect of the expenditure incurred for travel of the daughter the disallowance was confirmed. A query was raised about the purpose of visit of the daughter which remained unanswered, hence we are also of the opinion that the disallowance was correctly made as per law – In favour of revenue
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