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2017 (1) TMI 563 - ITAT RAJKOTDisallowance excess payment made u/s 40 A(2)(b) - payment to the specified person - excessive and unreasonable expenditure - Held that:- We have gone through the submission of both the sides and find that the assessee has made payment excess by 3% to the three above stated related parties because of sourcing of double filter edible oil. We observed that it is clear that double filter oil is more costly than the filter oil and it also fetch more price in the market than the filtered oil. We find that learned CIT appeal has justified his decision keeping in view the nature of business, volume and quality of products involved. In view of above facts and findings, we do not find any reason to interfere in the finding of the learned Commissioner of Income Tax (appeal). Disallowance out of Kharagat expenses - Held that:- We noticed that the assessing officer had disallowed 10% of the Kaharjat expenses incurred in cash of ₹ 2, 72,8,756 - incurred in cash on the ground that most of the expenses were incurred in cash and the vouchers not contained the detail of rate of payment and the destination where the oil was delivered. We find that the assessing officer had not pointed out any specific defects and the disallowance was made on general assumption that expenses were incurred in cash and the vouchers not contained the detail of rate of payment and the destination where the oil was delivered for want of proper maintenance of vouchers. Looking to the volume of expenditure incurred in cash and the facts reported by the Ld. CIT(A), we uphold the decision of the ld. CIT(A) to restrict the disallowance to the extent of being 3% of the Khargat expenses incurred in cash. Shortage in loose ground nut oil and cotton seeds oil - Held that:- We noticed that the assessee’s claim of shortage of oil in percentage term comes to 0.19% to 0.23% which was not unusual. We observed that the shortage in oil had been taken place in the process of transforming the oil from the tankers to storage tanks and therefore into the packing material such as bottles, jars tins and pouches. We find that the assessing officer had disallowed the shortage in oil without any supporting material just on the basis of presumption and guess work. In view of the above stated facts and findings, we considered that the Ld. Commissioner of Income Tax(A) is justified in allowing the claim of the assessee.
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