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2020 (12) TMI 1183 - AT - Income TaxAddition to closing stock towards unutilized CENVAT credit u/s 145A - HELD THAT:- The availability of CENVAT credit is dependent on the extent of utilization of credit against the liability arising to an assessee on goods manufactured and has no co-relation to the closing stock. The Excise Duty component on closing stock is thus required to ascertained independently as per quantum of stock. CIT (A) has rightly approached the issue on determination of exact liability by either inclusive or exclusive method. No justification in the action of the CIT (A) in dismissing the plea of the assessee altogether on the point. CIT (A), in our view, ought to have given a reasonable opportunity to the assessee for substantiating its claim that method of accounting followed by the assessee does not impinge upon the provisions of Section 145A of the Act, in tandem with the action of the CIT (A) in AY 2010-11. We therefore consider it expedient to set aside the direction of the CIT (A) on the issue and remit the issue to the file of the AO for suitable verification of facts afresh. The AO may satisfy itself that while the assessee follows exclusive method of accounting towards purchase costs, such method does not impact the ultimate profit in any manner. Needless to say, the addition towards Excise Duty, VAT etc. will not be permissible by resorting to section 145A of the Act where the action of the assessee is found to be tax neutral. Addition on account of short receipts shown as per Form 26AS - HELD THAT:- In the absence of any cogent explanation offered on behalf of the assessee either before the CIT (A) or before us towards impugned difference detected by Revenue from the annual statement in Form 26AS, we decline to interfere with the order of CIT (A) in this regard. Disallowance towards reimbursement of travelling expenses paid to foreign parties without deduction tax at source - HELD THAT:- A contradictory version is coming to the fore. Hence, we consider it expedient that the issue is remitted back to the file of the AO for enabling the assessee to establish that the aforesaid amount of ₹ 17,21,392/- represents actual reimbursement of travelling expenses claimed to have been paid to foreign parties without any profit element embedded in it. AO shall provide reasonable opportunity to the assessee to make suitable representations and submissions to establish its case. Needless to say that a payment in the nature of a mere reimbursement of actual expenses would not be covered by the obligations cast under s. 195 of the Act in the absence of any chargeable income annexed to such payment and consequently Section 40(a)(i) would not be attracted in the light of decision in the case of CIT vs. Gujarat Narmada Valley Fertilizers Co. Ltd. [2014 (4) TMI 235 - GUJARAT HIGH COURT]. Hence, no part of amount in the nature of actual reimbursement can be disallowed owing to non-deduction of tax. TDS u/s 195 - disallowance on account of training expenses - HELD THAT- AO noticed that the training expenses is in the nature of fee for technical service and is covered by obligations of deduction of tax as stipulated u/s 195 of the Act. No reasons could be assigned for non-compliance of Section 195 of the Act. In the absence of any satisfactory explanation for non-deduction of TDS on such remittance, the expenses incurred were disallowed with the aid of Section 40(a)(i) of the Act. The assessee has failed to substantiate its action for non-deduction either before the CIT (A) or before the Tribunal with any reasonings. We thus decline to interfere with the action of the AO.
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