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2015 (10) TMI 2244 - AT - Income TaxDisallowance of consumable stores expenses and disallowance out of raw material expenses - CIT(A) deleted addition - Held that:- The assessee had produced a chart of prices of consumable stores for the year under consideration and of the preceding year, which was not considered by the A.O. The A.O just compared the percentage of the costs of consumable stores in the year under consideration and for the preceding year, making an addition of ₹ 1,59,912/-. The sales made by the assessee were accepted. All these facts were duly taking into consideration by the learned CIT(A) and it was rightly observed by him that it was not necessary that the expenses regarding consumable stores should also come down proportionately with the decrease in sales, since the assessee could not pre-suppose or envisage that its sales were going to the fall. The learned CIT(A) has also taken into account that the genuineness of the expenses was not challenged by the A.O. Therefore, finding no error therewith, uphold the action of the learned CIT(A) in deleting the addition on account of disallowance out of consumable stores expenses and that on account of disallowance out of raw material expenses. - Decided in favour of assessee. Disallowance out of free sample expenses and on account of value of goods returned by customers to the assessee - CIT(A) deleted addition - Held that:- These additions were made by the A.O. on an estimated basis. In this regard, it is seen that the A.O had himself accepted giving of free samples to be a part of the assessee’s business. So much so, the A.O had himself allowed 50% of the expenses concerning free sample given. In fact, the disallowance for the other 50% was not based on any clear justification or reasoning. Thus, this disallowance was clearly without application of mind by the A.O. Likewise, the A.O took 25% of the sale value of the good returned, to make the addition of ₹ 29,000/-. This was also without any basis and without any application of mind. Therefore, the learned CIT(A) was correct in deleting these additions. - Decided in favour of assessee. Disallowance out of job work expenses - CIT(A) deleted addition - Held that:- The rates of the job work of the assessee were not compared with those of other similarly placed assessees which ought to have been done. Again, it is nowhere disputed that the payments made were all through account payee cheques and were verifiable from not only the assessee’s books of account, but also from its bank accounts and those of the persons the doing the job work. Though the assessee had provided complete details of the persons doing the job work, including their names and addresses, the A.O did not deem it fit to make any enquiry whatsoever from them. The A.O made a selfanalysis of the matter, but even this analysis was not put to the assessee. The learned CIT(A), however, duly took into consideration these facts and circumstances while dealing the addition and the action of the learned CIT(A) is, accordingly, uphold.- Decided in favour of assessee. Disallowance out of wages expenses - CIT(A) deleted addition - Held that:- The A.O worked out the difference in money terms at ₹ 2,65,220/-, being 2.72% of ₹ 97,50,761/- and made addition of ₹ 92,827/-. The learned CIT deleted this addition. Here also, the addition was made by the A.O without any basis, without doubting either the factum of incurrence, or the genuineness of the expenditure claimed. Therefore, the learned CIT(A) is perfectly justified in deleting this addition also. - Decided in favour of assessee. Disallowance of purchase expenses - CIT(A) deleted addition - Held that:- CIT(A) observed that the amount had been written off by the assessee in its books of account even before the effective start of the assessment proceedings for the year under consideration. Apropos the additional evidence filed in the shape of the copies of bills, the learned CIT(A) observed that these bills had been raised in the name of the assessee company by M/s Flint Group India Pvt. Ltd. It was on considering these factors that the learned CIT(A) deleted the addition made. Do not find anything wrong with this action of the learned CIT(A) also and the deletion is upheld. - Decided in favour of assessee. Difference in account with different parties - CIT(A) deleted addition - Held that:-Difference was on account of opening balances in the accounts of the party. This difference stood duly reconciled by the A.O. This was precisely the reason why no comment was offered in the remand report. Besides, part of the explanation had also been accepted by the A.O., concerning the difference in the accounts. However, no further enquiry had been made. Still, the amounts were added without considering that since the difference was on account of opening balances, no addition could be made in the year under consideration. All these factors were duly taken into consideration by the learned CIT(A) while ordering the addition to be deleted. Finding no error here also, the action of the learned CIT(A) is confirmed. - Decided in favour of assessee. Disallowance out of payment made to internal auditor - CIT(A) deleted addition - Held that:- No comments were offered by the A.O. The learned CIT(A) found the genuineness of the expenses to have not been doubted by the A.O. The payment was also not found to have been made to any related person. The factum of TDS having been made and deposited also went in favour of the assessee. The certification/ confirmation by Sh. Daljit Singh also remained unchallenged. It was all these points which led the learned CIT(A) to delete the addition made. This deletion is also upheld.- Decided in favour of assessee.
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