TMI Blog2011 (8) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... o the totality of facts the addition is deleted. Disallowance of ₹ 17,45,865/- Provision for expenses - expenses are provided on the last date as the debit notes were issued only in the month of April 2004. Therefore, merely the debit notes issued in subsequent year, the expenses cannot be disallowed -The liability is in praesenti though it will be discharged at a future date - It does not make any difference if the future date on which the liability shall have to be discharged in not certain" - Therefore, respectfully following the decision of the Hon'ble Supreme Court in the case of Bharat Earth Movers 2000 (8) TMI 4 - SUPREME Court, the addition made by AO is deleted. Exemption u/s 10A - Evidence clearly proves that the goods were produced at special economic zone and the same were also exported outside India and the assessee had earned the receipts in foreign currency - Decided in favour of assessee. - 941 of 2010 - - - Dated:- 9-8-2011 - Akil Kureshi and Sonia Gokani, JJ Mauna M. Bhatt for the Appellant Manish J. Shah for the Respondent JUDGEMENT Akil Kureshi: 1. Revenue has filed this appeal challenging the judgment of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation of ₹ 3.74 crores. If such depreciation is considered separately, the profit of the assessee before depreciation would be at the rate of 14.31%. The Tribunal also recorded that in the assessee's own case for the assessment year 2003-04, the Tribunal had accepted the profit margin of 2.76%. Primarily on these grounds, the Tribunal was of the opinion that the Assessing Officer ought not to have rejected the books of accounts. Even if the accounts were to be ignored, the Assessing Officer must not make assessment arbitrary or without any basis. The Tribunal recorded that the assessee had shown higher rate of net profit than others in the same line of business. 4. With respect to disallowance of truck freight expenses, the Tribunal noted that the assessee was engaged in the business of clearing, forwarding and stevedoring activities and has been providing various kinds of services like receiving cargo from clients, loading and unloading the cargo at godown at Gandhidham, repacking the goods for export quantity, loading it to the trucks, transferring the goods to Kandla and Mundra port etc. The Tribunal, therefore, was of the opinion that the assessee was eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusions suffer from perversity. In the present case, we find that the Tribunal has given its findings on the basis of the evidence on record. No perversity is pointed out. This question is, therefore, not considered. 10. With respect to question no.B, we find that the Tribunal held in favour of the assessee making following observations:- We have considered the rival submission. The issue in the present ground is that the AO called for details of account from 19 parties and out of such 19 parties few of them not complied with some details and therefore the AO made addition. The assessee has provided detailed reconciliation as regards transactions with these parties. It was stated on page no.22 of the paper book and details are summarized in the tabular form. In case of Dhiraj M. Vaghela, it was stated that the AO wrongly considered the name, actually it is M/s. Dhiraj Tyres, the assessee has purchased tyres for the trucks. The assessee has furnished copy of bills, details of payment made to said party, it was also explained that the payments were made directly to M/s. J.K. Industries Ltd., the manufacturer and M/s. Dhiraj Tyres is only agent. In case of Tarun Shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for the local transportation to shift goods from one place to another. The assessee had to replace the body of dumper and such expenditure was claimed as revenue expenditure. The Tribunal taking note of Section 31 of the Income Tax Act, 1961 firmed the opinion that such expenditure would be in the nature of current repairs and thus, allowed the assessee's appeal on this aspect. 13. It is not in dispute that the vehicles in question were owned by the assessee and were being used for transportation of the goods in the course of its business. It is equally not in dispute that for carrying out repair works, the assessee had changed body of the dumper. The expenditure incurred in such repair was claimed by way of revenue expenditure or in the nature of current repairs. Section 31(1) of the Act reads as under:- 31. In respect of repairs and insurance of machinery, plant or furniture used for the purposes of the business or profession, the following deductions shall be allowed- (i) the amount paid on account of current repairs thereto; 14. In case of Saravana Spinning Mills P. Ltd. (supra), the said provision came up for consideration before the Apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the rival submission. We have also gone through various details furnished to claim such expenses. The assessee has provided such details on page no.28 of the paper book in the form of chart. It is found from such details that the said party has provided Stevedoring Services to various vessels arrived at Kandla Port, the bills are issued for three vessels arrived and services provided. The services are provided in the month of February 2004 and March 2004. The said party has issued debit note only in April 2004, however the services are provided in the earlier financial year, which can be found from the debit note and also the Administrative Body, details issued by Kandla Dock Labour Board. It is also found that the appellant has also made advance payment to such parties in the current financial years. The expenses are provided on the last date as the debit notes were issued only in the month of April 2004. Therefore, merely the debit notes issued in subsequent year, the expenses cannot be disallowed. In this regard, the Hon'ble Supreme Court has laid down the principle in the case of Bharat Earth Movers 245 ITR 428 (SC), it is held that the law is settled - if a busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct marketable. Therefore, the production as defined above is much wider terms than manufacturing. The section 10A also includes production of things, therefore the activity of the assessee is eligible as production as defined by the Hon'ble Supreme Court. The another issue raised by the AO is that the assessee is not earning in foreign currency, the assessee has furnished various documents and papers to prove that the earnings are in foreign currency the assessee has submitted the bank advice in which the amount are received and credited in foreign currency, the copy of bills are raised to various parties in foreign currency, in the shipping bill also the name of the assessee has been mentioned as processor. All these evidences clearly prove that the goods are proceeded at SEZ and the same is exported outside India and the assessee has earned the receipt in foreign currency. Therefore, all the conditions are duly fulfilled. Therefore, the assessee is eligible for deduction u/s. 10A of the I.T. Act. this ground of appeal is allowed. 19. From the above quoted portion of the Tribunal's order, it can be seen that the Tribunal on the basis of available evidence on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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