TMI Blog2013 (6) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2007-08 which comes to 25.50% would be applied for the year under consideration - partly in favour of revenue. Accident related expenses disallowed - Held that:- As apparent from the reasoning given by the CIT(A) which manifests that when the expenditure on the repair of existing vehicle whether major or minor has to be treated as Revenue expenditure and not capital. Even otherwise, when the expenditure is incurred for the repair of the accidental vehicle, the same cannot be treated as capital nature. Accordingly, no reason to interfere with the order of CIT(A) whereby the said addition was directed to be deleted. Against revenue. Disallowance of expenditure for replacement of old and damaged body of trucks - Held that:- The replacement of body of the trucks is accumulated wear and tear expenditure and therefore, it does not fall under expression current repair in terms of Section 31 of the Act. However, since expenditure has been incurred for replacement of the parts of the truck which does not bring any new asset into the existence but only made the existing asset as fit for use in the business of the assessee. Therefore, the expenditure is allowable under the provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case in directing to apply GP rate of 30.50% (as applied by the AO) as against 24.98% declared by the assessee and thus there by partly confirming trading addition of Rs.50,000/-. The addition so made by the ld. CIT(A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 3. Rs.1,68,690/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowances upto Rs.1,68,690/- on account of following expenses. S.No. Head of Expenses Claimed by the assessee 20% Disallowed by the AO Sustained by the Id. CIT(A) 3.1 Vehicle expenses and depreciation Rs.2,36,629/- Rs.47, 326/- Rs.47, 326/- 3.2 Diwali Office expenses Rs.61, 818/- Rs.1,21,364/- Rs.1,21,364/- Total Rs.1,68,690/- The disallowances so made and partly confirmed by the ld. CIT (A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 4. The Id. AO erred in law as well as on the facts of the case in confirming the charging interest u/s 234A, B, C 234D of the Act. The appellant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further the assessee failed to furnish proper bills for purchases of stones and therefore, in the absence of verifiable documents for purchases of stones as well as proper maintenance of books of account and the discrepancies in the stock, we are of the view that AO has rightly invoked the provision of Section 145(3) of the Act. Accordingly, we dismiss the Ground No. 1 of the C.O. of the assessee. 3.6 As regards the addition on account of gross profit rate, we noted that the AO has applied the gross profit rate at 30.50% but there is nothing on record to support the gross profit rate applied by the AO that the same is prevailing in the industry. Further when the assessee has shown the gross profit rate at 25.85% and 25.16% for the assessment year 2006-07 and 2007-08 respectively then the gross profit rate applied by the AO at 30.50% in our view is excessive. When the assessee's own comparable gross profit rate accepted by the Revenue is available then in the facts and circumstances of the case, the average of earlier years gross profit rate would be reasonable and proper gross profit rate for the purpose of determining the income by applying the provision of Section 145(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be treated as capital nature. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A) whereby the said addition was directed to be deleted. Thus Ground No. 2 of the Revenue is dismissed. 5.1 Ground No. 3 of the Revenue's appeal is regarding deleting the disallowance of expenditure of Rs. 2,07,340/-. 5.2 The brief facts of the case are that the assessee made payments of Rs. 1,40,200/-, Rs. 98,800/- and Rs. 57,20/- to M/s. Gani Body Builders and Repairing Works. The AO held that the expenditure is capital in nature because it brings an advantage for the enduring benefit. Further the expenditures are not related to normal wear and tear but related to newly made bodies. 5.3 On appeal, the ld. CIT(A) deleted the addition by accepting the assessee's contention that the trucks and machineries were very old and some worn out parts/ body were replaced 5.4 We have heard the ld. DR as well as the ld. DR and carefully gone through the materials on record. There is no dispute that the expenditure was incurred for replacement of old and damaged body of trucks which were already in existence and used by the assessee in his business. Once an existing asset ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
