Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 868 - AT - Income TaxAd hoc disallowance of processing of material and handling charges - Held that:- It is undisputed fact that the assessee’s expenses under the head processing and handling had gone up twice compared to preceding year but during the year under consideration, a new product namely Nickel Plated Dument Wire had been started by the assessee, for which the assessee had taken services from its sister concerns namely M/s Gem Electro Mechanical Pvt. Ltd. and M/s New Age Alloys Pvt. Ltd. The assessee’s sale has slightly gone down but in quantity production has gone up. This fact has not disputed by the revenue even GP as well as NP has gone up compared to preceding year. The assessee’s new product was got manufactured from M/s Gem Electro Mechanical Pvt. Ltd. who has facility of platting and oxidizing, which was not available with the assessee. It was claimed by the assessee that it is an import substitute item and no one was manufacturing in the India. Therefore, the assessee had to pay these charges to it to get the services done. The remaining payments were made to other sister concern namely M/s New Age Alloys Pvt. Ltd. for wire drawing, annealing and spooling processing work made per kg whereas platting and oxidizing, the payments were made in per meter. The assessee did not have sufficient capacity for drawing, annealing and spooling, therefore, he had outsourced this work to M/s New Age. The assessee’s manufacturing activities are under the supervision of the excise department. The ld Assessing Officer had not brought on record any evidence that payments made to the sister concerns were more than fair market value, as such no comparable case has been considered by the Assessing Officer or ld CIT(A). The recipient company also paying maximum marginal rate of tax, as such there is no revenue loss. A similar claim was also allowed in subsequent years by the Assessing Officer even in scrutiny assessment. - Decided in favour of assessee Addition of staff welfare expenses - Held that:- There is a substantial increase in the staff welfare expenses during the year under consideration but the assessee has justified the increase under this head. There is an agreement between the assessee and the worker regarding staff welfare is to be incurred on the employee. Accordingly, the assessee had provided uniform and shows during the year under consideration. The assessee has produced all the bill and vouchers but the Assessing Officer made disallowance on surmises and conjecture, which is not justified. Therefore, we delete the addition confirmed by the ld CIT(A).- Decided in favour of assessee Disallowance under the head prior period expenses - Held that:- AR of the assessee had not been able to prove these expenses were crystallized during the year under consideration. - Decided against assessee Addition on account of additional interest income from bank on the basis of TDS certificate - Held that:- It is undisputed fact that the interest has been shown as income by the assessee in earlier year on FDRs and these FDRs were encashed by the appellant, therefore bank has charged interest on premature FDRs. The AR tried to explain on the basis of evidence that how the bank had debited the interest expenses on FDRs. Accordingly, this issue is required to verify from the record with reference to disclosure of the interest income of FDRs and claiming interest expenses on premature of the FDRs. It appears that the liability is pertained to F.Y. 2007-08 whereas the assessee has claimed this expenditure in A.Y. 2009-10. Therefore, Assessing Officer is directed to verify the claim of the assessee and decide the issue as per law. Accordingly, this ground of appeal is set aside to the Assessing Officer for denovo.
|