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TMI Blog2010 (9) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in manufacture of thermocol packing/duplex cartons and corrugated boxes. For the assessment year 2005-06, the assessee filed return of income declaring total income of Rs. nil. The return was taken up for scrutiny. The assessment was completed under section 143(3) of the Act, vide order dated December 31, 2007, at an income of Rs. 39,65,890. The Assessing Officer made an addition of Rs. 2,57,417 on account of deferred revenue expenditure on the ground that the assessee had failed to furnish any evidence in support of its claim despite repeated opportunities. The Assessing Officer made another addition of Rs. 50,18,599 on account of bogus purchases as it was observed that the assessee had failed to prove the genuineness of the said purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of ISO expenses even though the expenditure incurred were capital expenditure, passed by the Assessing Officer and deleted by the Comissioner of Income-tax (Appeals) was also upheld by the Tribunal by order dated November 13, 2009. 5. This is how the Revenue has claimed that the following substantial questions of law arise in this appeal for consideration of this court : "1. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in law in upholding the order of the learned Commissioner of Income-tax (Appeals) in deleting the addition of Rs. 2,57,417 made by the Assessing Officer on account of deferred revenue expenditure even though the assessee had failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 147 of the Act for the assessment years 2001-02 and 2002-03, the Assessing Officer had taken a view that the assessee was to be allowed depreciation on moulds and dyes as against the deferred revenue expenditure claimed by him. It was further observed that on the basis of the written down value so worked out, the depreciation allowable during the assessment year under reference would be Rs.9,60,358. The Commissioner of Income-tax (Appeals) further observed that in the light of the said position, deduction was to be allowed by way of depreciation or by invoking section 32(1)(iii) of the Act and since depreciation was found to be higher than the deduction claimed by the assessee at Rs. 6,43,542, disallowance of Rs. 2,57,417 being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05 (Rs.11,53,049) 2,30,610 20 per cent. of the purchases for the assessment year 2003-04 (Rs. 5,58,823) 1,04,178 Total 6,43,542 However, if depreciation is to be allowed in the manner provided under section 32(1)(iii) and as decided by the Assessing Officer, it is found that deduction would work out at Rs. 8,56,373, as demonstrated below : Rs. B. F. value of dyes and moulds is Rs. 9,12,715 as per the balance-sheet (page 16 of the paper book) and if 40 per cent. of it is disallowed, 60 per cent. of it would work out at 5,47,629 In addition, additions of dyes/moulds during the year are at 15,43,771 (6 of the paper book and depreciation as per Appendix 1 of the Income-tax Rules would work at 3,08,744 Total 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred revenue expenditure. Yet I am not inclined to allow deduction of the higher amount than what is claimed in the return of income, but in my firm opinion, on the facts of the case, no addition is called for from the claim of deduction made at Rs. 6,43,542. Accordingly, the addition of Rs. 2,57,417 is cancelled. Ground No. 2 is thus, allowed." 9. The Tribunal affirmed the order of the Commissioner of Income-tax (Appeals) deleting the deduction. 10. No error or perversity could be pointed out by the counsel for the appellant in the above finding of the Commissioner of Income-tax (Appeals) as affirmed by the Tribunal. Thus, it cannot be said to be a substantial question of law. Regarding question No. 2 11. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous evidence and materials in support of purchases made from various parties, and has considered the respective evidence in support of the contention that all the purchases were genuine and have been duly confirmed by the respective parties. In the light of the detailed verification made by the learned Commissioner of Income-tax (Appeals) and in the absence of any material rebutting the learned Commissioner of Income-tax (Appeals)'s finding, we are inclined to uphold the order of the learned Commissioner of Income-tax (Appeals) in deleting the addition of Rs.50,18,599 made on account of bogus purchases." 12. The appellate authorities on appreciation of material on record had arrived at a conclusion that the purchases from the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X
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