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2017 (12) TMI 990 - AT - Income TaxDisallowance of depreciation - gurgoan unit had suspended working during the year - Held that:- Under the law claim of the depreciation on the entire block of assets has been rightly made by the assessee and should have been allowed. The AO‟s contention that Gurgoan assets were not used therefore, depreciation should not be allowed is not in accordance with the provisions of the Act - Decided against revenue Disallowance of deprecation on electric fittings - rate of 15% OR 25% as claimed by the assessee - Held that:- After careful consideration of the facts of the case, these fittings cannot be equated with normal electrical fittings. The items in question are related to plant and machinery and as such eligible for higher rate of depreciation i.e. 25%. The action of the AO is not upheld. Allowable business expenditure - Held that:- CIT(A) has deleted holding that these expenditure was incurred for the purposes of the business and they are minimum amounts as per the rules. In view of this we do not find any infirmity in the order of the ld CIT(A) in deleting the above addition. accordingly, ground No. 3 of the appeal of the revenue is dismissed. Suppression of stocks with respect to dyes and moulds which was shown at opening stock but not in closing stock - Held that:- CIT(A) has deleted the addition holding that the stocks not shown in the closing stock were in fact sold during the year and same were also supported by copy of the invoice as well as the correspondence. In view of this we do not find any infirmity in the order of the ld CIT(A) in deleting the above addition. Consequently, ground No. 4 of the appeal of revenue is dismissed. Addition on account of lower gross profit - Held that:- The appellant has furnished the details called for. The books of account as prescribed are maintained and also the books of account are audited as seen from the 3 CA and 3 CD reports. Lower G.P. compared to earlier years may be one of the factors to be taken into account while resorting to rejection of trading results but it should not be the sole basis. The AO made some theoretical calculations and proceeded to estimate income. The action of the AO is not in accordance with the legal position as on date on the issue. In view of the above discussion, the AO is hereby directed to accept the G.P. declared by the appellant Disallowing on account of payment of ESI - Held that:- The above payment is on additional payment of ESI and not at all in any way can be said that it is penalty or infringement. Therefore, disallowance of this payment is totally devoid of merits and should be deleted. Disallowance of bad debts with respect to two parties who are the customers of the assessee and whose accounts have been written off - Held that:- CIT(A) allowed the claimed of the assessee as it satisfied necessary conditions. The ld AO disallowed it as the assessee could not file copies of the account of the assessee from the books of those parties. We do not find any justification for making this addition and hence, ld CIT(A) has rightly deleted the above disallowance. In the result ground No. 7 of the appeal is dismissed. Addition as expenses on freight and cartage extremely high as compared to previous year - Held that:- The above disallowance was deleted by the ld CIT(A) holding that AO has not pointed out any mistake in the details furnished but has made disallowance on ad hoc basis. We do not find any infirmity in the order of the ld CIT(A) in deleting the above addition. in the result ground No. 8 of the appeal is dismissed. Addition holding that club subscription did not have any nexus with the business of the assessee - Held that:- CIT(A) deleted the above disallowance holding that AO has not given any reason for the disallowance. Therefore, we confirm the order of the ld CIT(A) in deleting for which we also could not find any reason in the assessment order. In the result ground No. 9 of the appeal is dismissed.
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