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2013 (11) TMI 524 - AT - Income TaxDisallowance due to shortage of material – Held that:- Shortage is inherent in the chemical business due to evaporation loss of highly inflammable materials, weigh bridge differences etc - Disallowance made by the Assessing Officer is on the basis of surmises and conjectures - CIT(A) has noted that the disallowances was restricted by predecessor at lump sum amounts for various assessment years - Noted that the orders of predecessors for A.Ys. 1998-99 1999-2000 have been confirmed by Hon. Tribunal - Thus following the order of predecessors, restricted the disallowance to Rs. 50,000/- - In the present case, out of the claim of Rs. around 31 lakhs. CIT(A) has restricted the disallowance to Rs. 50,000/- which appears to be reasonable considering the disallowances made in the past. Accrual of income - interest on sundry debtors – Held that:- Amount has been classified as “other debtors” the same are not in the nature of debtors. The transactions with the aforesaid parties are not with respect to the sales but are with respect to financial transactions - Assessing Officer has worked out the interest at 12% on the total outstanding of Rs. 1,65,65,363/-. Since the Assessee has already charged interest from Sarojben Shah and Shah Investments as evident from the copy of ledger placed on record, the charging of interest from those parties again would amount to duplication - With respect to advance from H.M. Shah, it is submitted that he is an employee of Assessee and the advance was given to him for carrying due business dealing at Bharuch. This submission of the Assessee could not controverted by Revenue - Interest could have been charged by the Assessing Officer on the so called debtors after excluding balance of the aforesaid three parties namely Sarojbeh Shah, Shah Finance and Investments and H.M. Shah, Bharuch - Assessing Officer is therefore directed to re-work the interest in view of the aforesaid facts.
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