TMI Blog2012 (8) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of the assessee is availing exemption u/s 80IB - that neither AO has brought any material on record to say that fair market value of warehousing charges paid was lower nor the assessee has placed on record the operative rate of cotton charges prevailing in the market - restore this ground to the file of AO for reconsider the issue with reference to the provisions of Section 40A(2B) Disallowance u/s 40A(2)(b) - Held that:- AO has given detailed calculation of payment made to the sister concern on account of purchases made with reference to the market rate prevailing on the date of purchase and nothing was brought on record to dislodge the finding of AO - confirm the disallowance made on account of purchase made from sister concern und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantity as well as average purchase price. On the basis of submission made by the assessee, the Assessing Officer observed that the value of closing stock on account of purchase of wheat and purchase of coal is understated compared to average purchase price during the year. 4. Contention of the assessee was that the assessee is consistently valuing closing stock by applying FIFO method at cost or market price whichever is lower, but the Assessing Officer has changed the method of valuation and by taking average rate an addition has been made, which was confirmed by the ld.CIT(A). 5. We have considered the rival submissions and found from record that the Assessing Officer has made an addition on account of valuation of difference in clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, since the payment has been made to the sister concern income of which is exempt u/s 80IB, therefore, to the extent of exemption availed by the sister concern, the disallowance is warranted in assessee s hands. The relevant observations of the Assessing Officer was as under :- As per the return of income of the assesse warehousing payment debited are Rs. 96,62,315/- warehousing expenses to Shrinathji warehousing corporation as per Form 3CD enclosed with the return of income are Rs. 32,20,149/- the recipient M/s. Shrinathji Warehousing Corporation is claiming warehousing receipt submitted during the course of assessment proceeding in the case of Natural Shrinarayan (entity claiming to be running Shrinathji Warehousing Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the fair market value. Thus, such disallowance can be merely made on the basis of provisions of Section 40A(3) by comparing the amount paid to the assessee with the fair market value of the services so availed by the assessee. 8. The ld. Authorized Representative also placed on record the order of I.T.A.T. in assessee s own case, wherein similar disallowance made by the Assessing Officer were restricted to Rs. 5 lakhs by the ld.CIT(A) and his order was confirmed by the Tribunal in the assessment year 2006-07 2007-08. In view of these facts, the ld. Authorized Representative contended that the disallowance should be restricted to Rs. 5 lakhs at the most. After going through the entire material placed on record, we found that neither ..... X X X X Extracts X X X X X X X X Extracts X X X X
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