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2023 (6) TMI 1265 - AT - Income TaxDisallowance being 10% of office expenses - HELD THAT:- As we note that ITAT Ahmedabad in the assessee’s own case for assessment year 2007- 08 [2010 (7) TMI 1222 - ITAT AHMEDABAD] allowed the appeal of the assessee on this identical issue as held no quantum of amount is specified as to how which expenditure was not supported by any bills/vouchers. AO has also not pointed out as to which of the expenditure was inadmissible in nature. It, therefore, appears that the AO has made ad hoc addition of 15% out of the total expenditure. - Decided in favour of assessee. Disallowance of Attimari Coolie expenses - CIT(Appeals) held that considering the fact that the entire expenditure has been made in cash, the genuineness of expense cannot be verified, accordingly disallowed 25% of such expenses u/s 37 - HELD THAT:- As decided in assessee own case [2018 (7) TMI 2312 - ITAT MUMBAI] as held as the assessee filed ledger account of Attimari Coolie Expenses and also vouchers for payment of such charges on sample basis.Going by the decision of G.G. Joshi [1993 (9) TMI 39 - GUJARAT HIGH COURT] and findings of CIT(A), we find no infirmity in the order of CIT(A). Hence, this issue of Revenue’s appeal is dismissed. Inclusion of excise duty component in the closing stock of consumables - HELD THAT:- As excise law, an assessee incurs liability to pay excise duty only upon both events taking place, namely, manufacture of excisable goods and removal of excisable goods and for purpose of Income-tax Act, position in law is not different. Therefore, excise duty cannot be included in value of closing stock of finished goods at end of accounting period. In view of the above decisions including one rendered by the jurisdictional Gujarat High Court in the case of Narmada Chematur Petrochemicals [2010 (4) TMI 1198 - GUJARAT HIGH COURT] ground number 4 of the assessee’s appeal is allowed. Disallowance out of consultancy expenses by treating the expenses as capital in nature - HELD THAT:- The assessee has produced copy of the contract with M/s B.J. Services for our perusal as wellwhich indicates that these expenses have been incurred for carrying out high pressure pneumatic testing of piping system by use of liquid / gaseous nitrogen and the same have been incurred during the course of business of the assessee. As in the appellate order, Ld. CIT(A) has not given any specific reason why these expenses are required to be capitalized by the assessee, incurred during the course of execution of contract of the assessee with M/s Toyo Engineering. Therefore, services are revenue in nature - CIT(A) also required the assessee to capitalize some other expenses viz. management consultancy for software development and management consultancy fee for finance matters etc., however no specific reason has been assigned why the above expenses were required to be capitalized by the assessee. We are of the considered view that the expenses are revenue in nature and in the light of above discussion, ground Number 5 of the assessee’s appeal is allowed. Penalty u/s 271(1)(c) - ITAT has restricted the disallowance to 25% of the expenses on estimated basis - HELD THAT:- In the case of Vision Research & Management (P.) Ltd [2014 (11) TMI 1228 - ITAT LUCKNOW] ITAT held that imposition of penalty upon assessee u/s 271(1)(c) on basis of ad hoc and estimated disallowance/addition, without bringing any clinching material suggesting concealment of income or furnishing of inaccurate particulars of income, was not justified. Again, in the case of Gurunanak Oil Agency [2013 (3) TMI 718 - ITAT JODHPUR]held that where additions were based on estimated disallowance of expenses, penalty under section 271(1)(c) could not be imposed. In view of the above, we are of the considered view that this is not a fit case of imposition of penalty. Decided in favour of assessee.
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