TMI Blog2011 (5) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... ough of the bad debt is written off as irrecoverable in the accounts of the assessee - as the AO, in absence of any relevant details, has not examined the issue it is to be send back the matter to the file of the AO to examine the same afresh - in favour of assessee by way of remand. Unrecorded sales - Held that:- Nothing is found during the course of survey to show that the assessee has made a sale out of the books of account. The milk fat is subject matter of excise regulations and assessee is showing the same to the excise authorities and the said record. i.e. excise register etc supports the case of the assessee that whatever the production of the milk fat is shown is correct. Also as per the statement filed by the assessee, the assessee has given the detailed break-up of the cans. There is also some force in the argument of Ld. Counsel that the weight of each and every filed-in can is not taken. There is some variation and it cannot be presumed that in each and every can the weight of the milk fat is 50 KGs. Even presuming that each and every can is having the milk fat of 50 Kgs. then on the basis of the production log-sheet, the total fat produced during the year come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders both dated 1.09.2004 passed by the learned CIT(A)-V, Mumbai for the assessment years 1999-2000 and 2000-01. Since facts are identical and issues involved are common, both these appeals are being disposed of by this common order for the sake of convenience. ITA No. 8486/Mum/2004 (AY 1999-00):- 2. Briefly stated facts of the case are that the assessee company is engaged in the business of manufacturing of chocolates, bournvita and other such products. It filed return declaring total in come at Rs.33,65,75,480/- which was revised at an income of Rs.33,61,43,791/- on account of claim of depreciation and deduction u/s 80HHC. However, assessment was completed at an income of Rs.35,47,26,291/- vide order dated 14.03.2002 passed under section 143(3) of the Income Tax Act, 1961, in short the Act. On appeal, the learned Commissioner of Income Tax (A) partly allowed the appeal. 3. Being aggrieved by the order of the learned Commissioner of Income Tax (A), the assessee is in appeal before us. 4. Ground no.1 is against the sustenance of disallowance of expenditure of rural development Rs.1,09,270/-. 5. It was disallowed by the AO on the ground that the expenditure ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, the learned counsel for the assessee submits that the Tribunal in assessee's own case has decided the issue against the assessee and in favour of the revenue, therefore, the issue may be decided accordingly. 12. On the other hand, the learned DR supports the order of the AO, learned Commissioner of Income Tax (A) for the Assessment years 1992-93 to 1994-95 and 1996-97 to 1998- 99. 13. Having carefully heard the submissions of the rival parties and perusing the material available on record, we find that the Tribunal in assessee's own case has discussed the similar issue at length and held vide paragraph 49 of its order dated 30.6.2010 (supra) that the said liability was a contingent liability and it was not deductible while computing the income of the assessee and accordingly confirmed the disallowance made by the AO. Respectfully following the said order of the Tribunal (supra) we are inclined to uphold the order passed by the learned Commissioner of Income Tax (A) in confirming the disallowance made by the AO. The ground taken by the assessee is therefore, rejected. 14. Ground no.3 is against sustenance of disallowance of bad debts of Rs.5,33,452/-. 15. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of the AO and accordingly, we set aside the orders passed by the revenue authorities on this account and send back the matter to the file of the AO to examine the same afresh in the light of the decision of the Hon'ble Supreme Court (supra) and according to law after providing the reasonable opportunity of being heard to the assessee. The ground taken by the assessee is therefore partly allowed for statistical purposes. 19. Ground no.4 is against sustenance of addition of unrecorded sales amounting to Rs.41,50,000/-. 20. Brief facts of the issue are that the survey u/s 133A was under taken against the one of the sister concern subsidiary Company of the assessee company viz. Indury Farm Limited, which was engaged in purchase of milk from outside parties and was selling it mainly to the assessee company. From the verification of the records of the assessee company at Indury, it was found that the production log sheet of fat maintained at the factory compared with the figures shown in the books of accounts/excise register showed a difference of 52,826 kgs. The assessee was asked to explain these discrepancies in response to which it was submitted that the quantity as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the books of account. The milk fat is subject matter of excise regulations and assessee is showing the same to the excise authorities and the said record. i.e. excise register etc supports the case of the assessee that whatever the production of the milk fat is shown is correct. Moreover, as per the statement filed by the assessee, the assessee has given the detailed break-up of the cans. There is also some force in the argument of Ld. Counsel that the weight of each and every filed-in can is not taken. There is some variation and it cannot be presumed that in each and every can the weight of the milk fat is 50 KGs. Even presuming that each and every can is having the milk fat of 50 Kgs. then on the basis of the production log-sheet, the total fat produced during the year come to 4,17,476 kgs. only and while as per the excise register the total milk fat production is declared at 4,70,674 kgs. In our opinion, production log sheet (PLS) which was found during the course of survey action cannot be said to be conclusive as even as per the AO it is normally 50Kgs. It is also seen that the ld. CIT(A) raised certain queries in respect of certain dates viz 9th April, 11th April and 13th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore submits that the issue may be decided accordingly. 27. On the other hand, the learned DR supports the order of the AO and the learned Commissioner of Income Tax (A) 28. After hearing submissions of the rival parties and perusing the material available on record, we find that the facts are not in dispute. We further find that the Tribunal in assessee's own case in ITA No.2298/Mum/2000 for the assessment year 1995-96, vide order dated 8.10.2010 in paragraph 11 of the order has held as under:- "11. .........So far as the issue of 'miscellaneous income' is concerned, this income has direct nexus with the manufacturing activity of the assessee and this income is generated from the Cocoa seeds which is the raw material of the assessee. In our opinion, the miscellaneous income is to be included in the total turnover. At the same time, Explanation (baa) to sect ion 80HHC is not applicable to this income as it is an operational income and as well as it is not in the nature of interest, commission or brokerage etc as contemplated in the Explanation (baa). We, therefore, direct the AO that the miscellaneous income shown by the assessee should be included in the total tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s covered by the order of the Tribunal in assessee's own case (supra), wherein the Tribunal has observed and held the similar issue in paragraphs 43 and 44 of the order dated 8.10.2010 as under:- "43. So far as ground 6(b) is concerned, the grievance of the assessee is that while computing the deduction u/s 80HHC, the AO excluded 90% of the following amount by applying Explanation (baa) to sec.80HHC and in consequence 'profits of the business' was reduced. (i) Insurance claim Rs. 16,41,826/- (ii) Discount Rs. 63,127/- (iii) Leave and License fees Rs. 13500/- 44. We have heard the parties. The argument of the ld. Counsel is that the above items are not alike or analogous to the items mentioned in Explanation (baa) below section 80HHC, hence, 90% exclusion is not correct. So far as the Leave and License fee of Rs.13,500/ - is concerned, in our opinion, it is like a rent only and it is an independent income having no nexus with the export of the assessee. Hence, the AO has rightly excluded 90% of the same. So far as discount is concerned, nothing is placed before us to show that it has got some nexus with the export of the assessee. We, therefore, confirmed the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.1,17,185/- being the expenditure incurred on rural development. Your appellants submit that having regard to the facts and circumstances of the case, the CIT(A) should have held that the expenditure is allowable as revenue deduction. Your appellants pray that the AO be directed accordingly. 2. The CIT(A) erred in holding that the AO was justified in not granting a deduction of Rs.29,52,968/- to your appellants representing their contractual liability to the third party converters Your appellants submit that having regard to the facts and circumstances of the case the CIT(A) ought to have directed the AO to grant them a deduction of Rs.29,52,968/-. Your appellant pray that the AO be directed accordingly. 3. The CIT(A) erred in holding that the AO was justified in not granting a deduction of Rs.1,39,753/- being bad debts written off during the year. Your appellants submit that having regard to the facts and circumstances of the case and the provisions of law, the CIT(A) ought to have directed the AO to grant your appellants the deduction of Rs.1,39,753 in computing their business income. Your appellant pray that the AO be directed accordingly. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraphs 18 of this order set aside the issue to the file of the AO to follow our direction mentioned therein and accordingly ground no.3 taken by the assessee is partly allowed for statistical purposes. 41. With regard to ground no.4, we for the reasons as mentioned in paragraph 23 of this order delete the addition made by the AO and accordingly allow the ground taken by the assessee. 42. With regard to ground no.5(a), we for the reasons as mentioned in paragraph 28 of this order reject the ground no.5(a) taken by the assessee. 43. With regard to ground no.5(b), we for the reasons as mentioned in paragraph 33 of this order hold that the AO was justified in excluding 90% of the receipt of interest of Interest Rs.1,63,01,564/- and other income of Rs.23,85,267/- in view of the Explanation (baa) to Section 80HHC of the Act. However, the issue of insurance claim, for the reasons as mentioned in paragraph 33 of this order set aside the issue to the file of the AO to follow our direction mentioned therein and hence the ground taken by the assessee is partly allowed for statistical purpose. 44. Ground no.6 is against the computation of capital gain on sale of land at T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (A). 51. Having carefully heard the submissions of the rival parties and perusing the material available on record, we find that the Tribunal vide paragraph 30 of its order (supra) after following certain decisions in Grasim Industries Ltd in ITA No.8221/Bom/1989, Sandvik Asia Ltd reported in 82 ITD 330, and the decision of Delhi Bench of ITAT in the case of N. Agarwal V. ITO-1 SOT 361, directed the AO to tax only the net interest income in the hands of the assessee. However, in the year under consideration, in the absence of section-wise details of interest paid or received by the assessee and keeping in view the plea of the learned counsel for the assessee that the Learned Commissioner of income Tax (A) has not dealt with the issue, we are of the view that in the interest of justice the matter should go back to the file of the learned Commissioner of Income Tax(A) and accordingly, we set aide the order passed by the learned Commissioner of Income Tax (A) on this account and send the matter back his file to decide the issue afresh in the light of our observations hereinabove and according to law after providing reasonable opportunity of being heard to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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