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2016 (10) TMI 921 - AT - Income TaxDisallowance of trading losses - non maintenance of day to day stock register - Held that:- Being the first year of operation, there are certain inherent challenges in terms of procurement and supply of milk and related products as well as pricing thereof given the market dynamics which have been encountered by the assessee and duly explained in the instant year which has resulted in manufacturing/ trading losses which have been reduced in the subsequent years once the operations have been stabilized. Further the assessee has submitted quantitative details of milk procured and the subsequent sale of milk and milk products and the AO should have considered the revised quantitative tally duly submitted by the assessee during the course of assessment proceedings. Further the processing and handling loss is as per the industry standard and other direct expenses not challenged by the AO are duly supported by the books of accounts. In light of above, we are of the view that the AO was not right in rejecting the books of accounts and disallowing the whole of the manufacturing/trading loss - Decided in favour of assessee Disallowance of Telephone expenses and staff welfare expenses and travelling expenses - Held that:- Considering the submission of assessee that it has paid FBT on telephone, staff welfare and travelling expenses and when the same have been considered for the purposes of Fringe Benefit Tax (FBT), the same are provided by the employer to its employees as part of its employment/contractual relationship and the same have been incurred wholly and exclusively for the purpose of business and has relied on the CBDT Circular No.8/2005 dated 29/8/2005 we agree with the contention of the assessee and in any case, these are adhoc disallowances.- Decided in favour of assessee
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