TMI Blog2011 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of assessee company being approved by the Board of Directors and shareholders under the companies Act there should generally be no reason to doubt the appellant. - expenditure allowed Accrued interest on FD - Interest accrued to appellant on release of earnest money has been properly accounted for from year to year and income accruing has been disclosed by appellant in earlier years, previous year and subsequent war as per the method of accounting regularly followed by the appellant Therefore, the A.O. was not justified to disturb the accounting method Furthermore it was also claimed that there is mistake in amount calculated by the A.O. Disallowance u/s 14A for earning exempt dividend income should he restricted to 1% of dividend income. - 2111/Kol/2010, 2/Kol/2011 - - - Dated:- 11-2-2011 - Sri D.K.Tyagi, Sri.C.D.Rao, JJ. For the Revenue : Sri P.Kolhe For the Assessee : Sri D.K.Kothari ORDER This appeal and the Cross Objection filed by the revenue and the assessee arc directed against the order passed by the Ld. CIT(A), Kolkata dated 25.08.20 for assessment year 2007-08 Both these appeal and the cross objection arc disposed n h this consolidated orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer and submitted that the Ld. CIT(A) was wrong in allowing depreciation u/s. 32 of the I.T. Act when the fixed assets of the assessee was not used during the previous year and remained idle and there was no direct or indirect control of the assessee over the assets as it was under the custodian of Railway Authority. He, therefore, urged before the bench to set aside the order of the Ld. CIT (A) and restore that the Assessing Officer. 4. On the other hand, the Ld. Counsel for the assessee while reiterating his same submissions as submitted before the lower authorities relied on the order on the order of the Ld. CIT (A) and submitted that the assets in question formed part of block assets throughout the precious year, These are old assets brought forwarded from precious tear, held for business and carried forward to next year. depreciation has been allowed in earlier years and also in subsequent years and, therefore, depreciation is allowable in this year also without any question or doubt, He also contended that the assets continued to he owned and used for the purpose of business hence eligible for depreciation allowance He also contended that the assets continued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is also nut allowable on such capital expenditure as the asset was never owned and used by the assessee. In appeal, the Ld, CIT (A) deleted the addition. Aggrieved by the said order, now the revenue is in appeal before us. 7. At the time of hearing before u the Ld. DR relied on the order of the Assessing Officer and submitted that the Ld. CIT (A) was wrong in deleting the addition of Rs.1,16,029/- being expenditure related to capital asset by observing that the asset was purchased fur trading when assessee admitted during the course of hearing that the asset was imported for own manufacturing purpose. He, therefore, urged before the bench to set aside the order of the Ld. CIT (A) and restore that of the Assessing Officer. 8. On the other hand, the Ld. Counsel liar the assessee while relying on the order of the Ld. CIT (A) submitted that one machine namely Flash Butt welding Machine was imported for its trading business. According to the assessee the machine returned was a larger machine. Due to its slowing down the imported machine, which is of a large size. Could not be sold. Finding no pos of selling the machine in the near future at remunerative prices, the machine was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to deletion of addition of Rs.8,70,807/- on account of commission. The facts of the case are that the Assessing Officer disallowed the expenses of Rs.8,70,807/- on account of commission payment as the submissions of the assessee was found to be not acceptable as it was not stated anything about the nature and extent of services rendered by commission agents to effect sale of welding generator set. There was also nothing mentioned in the sale hills that assessee procured certain services form those agents to justify commission payment. In appeal, the Ld. CIT (A) deleted the addition. Aggrieved by the said order, the revenue is in appeal before us. 11. At the time of hearing before us. the Ld. DR placed heavy reliance on the order of the Assessing Officer and submitted that the Id. CIT(A) was unjust in deleting the addition of Rs.8,70,807/- on account of commission under irrelevant considerations a when there is no evidence brought in record to prove that the commission agents provided genuine services which are wholly and exclusively related to the commercial need of the business. He, therefore, urged before the bench to set aside the order of the Ld. CIT(A) and restore that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer are that the Assessing Officer during the course of scrutiny proceedings found that assessee had not declared interest income from earnest money of Rs.38,66,880/- deposited to Railway Authorities in the form of Bank fixed deposits. Since the assessee is maintaining mercantile system of accounting regularly interest on such fixed deposits is assessable on accrual basis. He, therefore, assessed the interest income @ 9% on Rs. 38,66,680/- which comes to Rs.3,48,020/- and added the same to the total in of the assessee. in appeal, the Ld. CIT (A) deleted the said addition. Aggrieved by the said order, now the revenue is in appeal before us. 15. At the time of bearing before us the Ld. DR while relying on the order of the Assessing Officer submitted that the Ld. CIT(A) has erred in deleting the addition of Rs.3,48,020/- on account of accrued interest on fixed deposit by saying that such accrued interest is contingent in nature when assesee itself is regularly showing income from fixed deposit on accrual basis. He also contended that since the assessee regularly employed mercantile system of accounting, interest on consideration FDs Rs.1,45,923/- was shown in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g regularly followed by the appellant Therefore, the A.O. was not justified to disturb the accounting method Furthermore it was also claimed that there is mistake in amount calculated by the A.O. In view of the facts narrated above, the addition of Rs.3,48,020/- on account of alleged accrued interest income cannot be sustained and deserves deletion. This ground succeeds. In view of the above and in absence of any cogent material to controvert the above findings of the Ld. CIT (A) being brought on record by the revenue authorities, we do not want to interfere with his order and the same is hereby upheld. The revenue, therefore, fails on this ground also. C. O. No. 2/Kol/2011 (Assessee s Cross Objection) 18. The sole ground of assessee s cross objection is in respect of confirming the disallowance u/s. 14A amounting to Rs.35,329/- After hearing the rival submissions and perusing the material available on record, we find that the Assessing Officer at the time of assessment proceedings found that during the year under consideration, the assesee has earned dividend income, which is exempt from tax but proportionate disallowance of administrative expenses was not made u/s. 14A in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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