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2014 (6) TMI 1056 - AT - Income TaxDisallowance on account of extraction/rescreening charges - AO found that the explanation offered by the assessee in respect of substantially higher extraction/rescreening charges claimed during the year under consideration was not reliable - there was a substantial difference between the sales and purchases declared by the assessee for the year under consideration showing higher gross profit (GP) rate as compared to the GP rate declared by the assessee in the immediately preceding year - HELD THAT:- Extraction/rescreening charges were paid by the assessee @ ₹ 38 and ₹ 55 per m.t. in the A.Ys. 2008-09 & 2010-11 respectively and the AO already having allowed the claim of the assessee for such charges @ ₹ 200 per m.t. during the year under consideration, we are of the view that even if the various reasons advanced by the assessee in support of its claim for higher extraction/rescreening charges are assumed to be correct, the same are already covered and taken care of by the fact that the higher extraction/rescreening charges @ ₹ 200 per m.t. are allowed by the AO himself, as compared to ₹ 38 as claimed by the assessee himself in the immediately preceding year. Most of the adverse findings recorded by the AO while disallowing the claim of the assessee on account of extraction/rescreening charges to the extent of about ₹ 45 lakhs were found to be correct by the ld. CIT(A), but she still restricted the disallowance made by the AO on this issue to ₹ 23 lakhs, giving a relief of about ₹ 22 lakhs to the assessee on this issue, without giving any cogent or convincing reasons and without appreciating the fact that the claim of the assessee for higher extraction/rescreening charges was allowed by the AO by adopting the rate of ₹ 200 per m.t., as compared to the rate of ₹ 38 per m.t. claimed by the assessee in the immediately preceding year. We are of the view that the disallowance made by the AO on account of extraction/rescreening charges was fair and reasonable and the ld. CIT(Appeals) was not justified in restricting the same to ₹ 23 lakhs. We, therefore, modify the impugned order of the ld. CIT(Appeals) on this issue and confirm the disallowance of ₹ 45,05,867 made by the AO on account of extraction/rescreening charges. - Decided in favour of revenue. Disallowance u/s 40(a)(ia) - labour charges paid by the assessee to at least 17 persons were exceeding ₹ 50,000 - HELD THAT:- As out of the total expenses of ₹ 1.09 crores claimed by the assessee on account of extraction charges, expenses to the extent of ₹ 45.05 lakhs are already disallowed and it is not possible to ascertain precisely as to whether the expenses of ₹ 9,76,185, which were again disallowed by the AO u/s. 40(a)(ia) of the Act, are forming part of the expenses allowed or disallowed. We are of the view that the benefit of doubt should go to the assessee and since substantial portion of the expenses claimed by the assessee on extraction charges are already disallowed, it would not be fair and proper to make a disallowance on account of extraction charges again u/s. 40(a)(ia), which may result into double disallowance of the same expenses. We, therefore, uphold the impugned order of the ld. CIT(A), deleting the disallowance made by the AO on account of extraction charges by invoking the provisions of section 40(a)(ia) and dismiss grounds of the revenue’s appeal.
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