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2016 (1) TMI 779 - AT - Income TaxAddition on account of difference in the Closing stock - addition on basis of value as submitted to bank and as per the final accounts - undisclosed income of the appellant u/s. 69C - Held that:- The distribution of small quantities of samples is a commercial reality and it cannot simply be brushed aside as improbable. It was open to the authorities below to seek further clarification on the same but is could not have been dismissed as outright impossible. In any case, just because stock statement shows this quantity it does not become gospel truth. So far as sale of 37,953 ft. of material is concerned, contention of the assessee is that since sale took place on 31st March but before taking figures for stock statement, this variation in stock statement to bank and stock figures as per books of accounts is fully explained. We see merits in this explanation. There is no contradiction in this approach. In any event, an item cannot be included in sale and yet in closing stock as well. As long as fact of sale being dated 31st March and being accounted for as such is not in dispute, which precisely is the situation here, the items sold cannot be included in stock as well. In any case, just because a higher stock value is shown in bank statements as held in the case of Munish Kumar Bansal vs. JCIT (2015 (4) TMI 185 - ITAT AMRITSAR ), the difference cannot be added to the income of the assessee. - Decided in favour of assessee Additional depreciation on Plant and Machinery purchased disallowed - Held that:- We see no merits in ld. CIT(A)’s objection to the effect that the assessee cannot be granted deprecation because it cannot be treated as manufacturer and only job work is claimed by the assessee. No material has been brought on record to controvert the certificate from the manufacturer. As a matter of fact, this stand of the authorities below to the effect that machines are used machines is not supported by any material and is based on surmises and conjectures. In this view of the matter, we do not see any legally sustainable merit in the ld. CIT(A)’s stand or to decline the additional depreciation in question.- Decided in favour of assessee Addition on account of interest disallowance - CIT(A) deleted the addition - Held that:- As we are decline to disturb the finding of the ld. CIT (A). We have noted that there is no finding to the effect that interest-bearing funds were used in granting these interest free advances to the directors. On the contrary, it is evident from the material on record that the assessee has received interest free advance from the directors as well. Bearing in mind these facts as also entirety of the case, we decline to interfere in the conclusion arrived at by the ld. CIT(A) - Decided in favour of assessee Disallowance on account of difference in book debts - CIT(A) deleted the addition - Held that:- CIT(A) was quite justified in deleting the impugned addition inasmuch as a difference simpliciter between the bank statement and the audited books of account cannot be reason enough to make an addition particularly when difference is reasonably explained by the assessee. - Decided in favour of assessee Disallowance of depreciation on UV machine - CIT(A) deleted the addition - Held that:- We have gone through the records carefully. Sale of a product cannot be used as a pre-condition to ascertain whether the machine was used by the assessee for the purpose of production. The very approach of the Assessing Officer was vitiated in law, and, in any case. the first appellate authority has recorded finding of fact that machine was put to use and it was ready to use for the purpose of business. On the facts of this case, therefore, depreciation cannot be denied to the assessee. After going through the well reasoned order of the ld. CIT(A), we do not see any reason to interfere in the same. - Decided in favour of assessee Addition on account of excess deprecation claimed on old machinery - CIT(A) deleted the addition - Held that:- We are unable to see any legally sustainable merits in this grievance. It is admitted position that the permission of the JCIT which is sine qua non was not obtained on the facts of this case. In this view of the matter, the ld. CIT(A) was legally justified in deleting the impugned disallowance. - Decided in favour of assessee Disallowance of depreciation on machines claimed to be put to use before 30th September, 2006 - CIT(A) deleted the addition - Held that:- We find that the Assessing Officer was indeed in error in proceeding on the basis that sale of production can be taken to be reasonable basis for ascertaining the machines being put to use. It is not elementary that the use of machine is linked to the production and not ales and, therefore, irrespective whether or not productions of a machine are same at a point of time. The assessee is eligible in respect of depreciation as long as machinery has been put to use. There is no cogent material brought on record to dispute the claim of the assessee that the machinery was put to use before 24th September, 2006. As a matter of fact, there is categorical finding of the ld. CIT(A) that production had commenced within the period. On these facts, the is assessee indeed eligible for depreciation in respect of whole year and ld. CIT(A) was, therefore, justified in deleting the impugned addition - Decided in favour of assessee Addition made on account of profit earned on preoperative sales - CIT(A) deleted the addition - Held that:- There is no material brought on record to controvert or even seriously dispute the finding of the ld. CIT(A) to the effect that expenses incurred by the assessee in earning this amount of rupees have been ignored altogether and that if such expenses are taken into account, they will be indicative figure. In this view of the matter, the relief granted by the ld. CIT(A) does not call for any interference.- Decided in favour of assessee
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