9911796707
TMI Blog2013 (8) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of special incentive to staff members ignoring that it has no basis for its payment is ex gratia and discriminative in nature and has no nexus to the services of these staff members. 3. The Ld CIT(A) erred in law and facts in deleting addition of Rs.30,20,263/- made by the Assessing Officer disallowing franchise charges. made 4. The Ld CIT(A) erred in law and facts in deleting addition of Rs.6,55,424/- made by the Assessing Officer treating them as expenses of capital nature. 5. The Ld CIT(A) erred in law and facts in deleting addition of Rs.5,28,984/- made on account of repair & maintenance of garments without appreciating the facts and without giving reasons for the deletion. 6. The Ld CIT(A) erred in law and facts in deleting addition of Rs.5,17,888/- made on account of expenses in share trading without appreciating the facts of the disallowance and without giving reasons for the disallowance. 2. The brief facts of the case are that the assessee is engaged in the running of Departmental Store at D-2, South Extn., Part-II, New Delhi. The company is engaged in the business of sale of ready to wear garments for men, women and kids. The assessee company runs a varie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not pointed out any specific defects. He has mainly relied on the findings made in the original assessment order. On perusal of the original assessment order, it is seen that the Assessing Officer had carried out an exhaustive exercise for verification of stock inventory. As the assessee is not maintaining any stock register, he was required to quantify the details of various stocks. After verification the Assessing Officer has given his findings on page 8 of the order as under:- "It is abundantly clear that the books of accounts of the assessee are complete and correct., However, it is seen that the method of valuation of stock at the end of the year is arbitrary and does not reflect the correct position. The stock as stated by the assessee is inventorized physically and is valued at the recognized method of accounting i.e. market price or cost price, whichever is less. However, it is seen that the assessee is deliberately showing a lesser price of the closing stock." It is evident from the above that the discrepancy has mainly been noticed with regard to the price of the closing stock. The Assessing Officer did not observe any defect in the quantitative details of the stock. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by him. In this respect our attention was invited to the Tribunals' order placed at paper book pages 215 to 219. 6. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that the dispute arose because of valuation of closing stock. The Hon'ble ITAT set aside the order of Ld CIT(A) with the directions to the assessee to submit the required information so as to arrive at the correct valuation of stock. However, the assessee did not file the required information. Therefore, the Assessing Officer made fresh assessment on the basis of earlier addition which was earlier made by the Assessing Officer by adopting GP rate. We further observe that ITAT in para 8 has held that at best the valuation could have been made by the Assessing Officer at Rs.1,29,28,299/- and not more than it as the method of valuation adopted by the assessee was cost or market price whichever is lower. The Ld CIT(A) has done the same and has taken this valuation to arrive at the disallowance. The Ld CIT(A) while taking this figure has ignored the discount of Rs.15,42,378/- as claimed by assessee in original assessment proceedings. Had the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition on the basis of assumptions only and no tangible material was brought forward for making the addition. The Ld CIT(A) had therefore rightly deleted the addition and we do not find any infirmity in the order. Therefore ground No.1 is dismissed. 13. The second addition on account of disallowance of sales incentives was made by the Assessing Officer on account of assessee's failure to provide the basis of giving such incentives and in the absence of assessee to furnish proper record and also in view of the fact that employees were already in receipts of other allowances to the tune of Rs.8,22,140/-. The Ld CIT(A) deleted the same holding that payment was made to sales staff and manager engaged in sales section on the basis of sales of respective Departments and inventive was part of total remuneration and full details of employees to whom these were paid was furnished. 14. Before us the Ld AR submitted that detail of staff to whom such incentive was paid was placed at paper book pages 70 to 73 and Form No.16 in respect of TDS deducted there from was placed at paper book pages 74 to 92. Therefore, it was argued that Ld CIT(A) has rightly deleted the addition. 15. The Ld DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... franchise charges payable as per the said agreement but we feel that in clause 10, the assessee has mentioned royalty charges instead of franchise charges. The Ld DR also did not bring to our notice that royalty charges @ 2% of sales were already debited in the Profit & Loss Account and therefore allowance of franchise charges will amount to double allowance. Moreover, we observe that franchise charges of Rs.30,20,263/- are exactly 2% of turnover of Rs.1,50,534289/- which is as per clause 10 of agreement. The assessee has either wrongly mentioned in agreement as royalty charges instead of franchise charges or vice versa, but the fact remains that expenditure is authorized by the agreement. Therefore, the Ld CIT(A) has rightly deleted the disallowance and we do not intend to interfere in the order of Ld CIT(A). Hence, ground No.3 is dismissed. 21. Ground No.4, relates to the disallowance of expenditure of repairs being of capital nature. The Assessing Officer held that property was not owned by the assessee and expenses was incurred for altering structure with a new set up to increase the capital value of the building. The Ld CIT(A) allowed the expenditure as regular wear and tear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any infirmity in the order of Ld CIT(A). Therefore, ground No.5 is dismissed. 27. The 6th ground relates to disallowance of expenses holding the same to be related to share trading. The Assessing Officer held that the business of trading of shares which was speculative in nature and the same business premises was being used by the assessee and no expenses on staff salary, rent, electricity etc. in respect of these transactions was attributed to share trading business. Therefore, he made addition @ 1% of value of share purchases during the year. The Ld CIT(A) deleted the addition on account of the fact that all transactions were in D-Mat form and no staff was required for such transaction. Before us, it was argued that no staff was utilized for share trading. The transaction took place only in four days in April, two days in January and eight days in February and six days in March. Further it was argued that no borrowings were made for share trading and therefore it was argued that allocation of expenses was unjustified. 28. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that Assessing Officer arbitrarily a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
