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2017 (11) TMI 1364 - AT - Income TaxNature of expenditure - Treatment to extension fee - Capital Expenditure or revenue expenditure - Held that:- CIT(Appeals) has given a categorical finding that the said extension fee was paid lump sum once before installation of the machine. This finding has also not been controverted by the Ld. counsel for assessee. In view of the same, we have no hesitation in holding that the expenditure incurred by the assessee was linked to the installation of machinery as held by the Ld.CIT(Appeals) and is attributable to the cost of machinery and is thus capital expenditure. - Decided against assessee. Rejection of books of account of the assessee u/s 145(3) - trading addition - Held that:- Assessee had explained each and every discrepancy pointed out by the Assessing Officer vis-à-vis the difference in the stock submitted to the bank and that recorded in the books of account. The contention of the Ld. counsel for assessee that the stocks reflected in the books were based on the stocks as per Excise record maintained, which were duly audited by the Excise Department and that all sales and purchases were duly vouched and supported by bills and even assessed by the Sales Tax Department, have not been controverted by the Revenue. The assessee has demonstrated by way of a certificate filed from the bank that the last inspection for the year was undertaken on 1.2.2010 for verifying the stock statement on 31.12.2009 which again has not been controverted by the Ld. DR. No cognizance therefore can be taken of this report for the purpose of determining the stock as at the end of the year. . There is therefore merit in the contention of the Ld. counsel for assessee that having furnished a satisfactory explanation, there was no reason to make any addition by relying on the stock statement submitted to the Bank . Thus the assessee has demonstrated by way of a certificate filed from the bank that the last inspection for the year was undertaken on 1.2.2010 for verifying the stock statement on 31.12.2009 which again has not been controverted by the Ld. DR. No cognizance therefore can be taken of this report for the purpose of determining the stock as at the end of the year. There is therefore merit in the contention of the Ld. counsel for assessee that having furnished a satisfactory explanation, there was no reason to make any addition by relying on the stock statement submitted to the Bank As far the non-maintenance of wages register, the assessee having produced the same pertaining to the months of April, 2009, October, 2009 and March, 2010 and also the challans in respect of EPF deposits, we hold that it cannot be said that the assessee was not maintaining primary records of wages register. Even the vouchers for firewood were duly produced before the lower authorities and were explained to them as to why no bills pertaining to the same were present since as explained by the assessee, firewood was purchased from petty farmers from the unorganized sector who did not raise or maintain any bill books. Therefore, in view of the above, it cannot be said that there was any material discrepancy in the books of account of the assessee by virtue of which the true profits of the assessee could not be determined so as to warrant the rejection of books of account u/s 145(3) of the Act. - Decided in favour of assessee.
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