TMI Blog2015 (2) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of revenue. Disallowance u/s.40(a)(ia) - non-deduction of TDS on the payment made for packing material - Held that:- The purchases on account of plastic trays, cups, spoons and plastic dishes etc. which did not carry the logo of the assessee and were in the nature of purchases. The purchases were of standardized material available in market. These submissions of the assessee could not be controverted by the Revenue by bringing any material evidence on record. We are, therefore, of the view that the purchases made by the assessee from the aforesaid three parties cannot be considered as being a case of contract which would require deduction of TDS u/s 194C of the Act and, therefore, no disallowance u/s 40(a) (ia) of the Act is called for. -Decided in fvaour of assessee. Late remittance of employees contribution to PF - disallowance confirmed - Held that:- ssue now stands covered against the assessee by the decision of the Hon’ble Gujarat High Court in the case of Commissioner of Income-tax-II Vs. Gujarat State Road Transport Corporation, (2014 (1) TMI 502 - GUJARAT HIGH COURT) wherein it was held that employees’ contribution to provident fund and/or state insura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SAINI, JJ. For the Appellant : Shri G.C. Pipara For the Respondent : Shri Dinesh Singh, Sr.DR ORDER PER N.S. SAINI, ACCOUNTANT MEMBER: These are cross appeals by the assessee and the Revenue against the order of the Commissioner of Income-Tax (Appeals)-XI, Ahmedabad dated 8.3.2011. 2. The Ground no.1 of the appeal of the assessee is as under: 1. The ld.CIT(A) has erred in confirming the estimation of sales at ₹ 3.75 crores as against sales as per books of ₹ 3,45,32,261/-. In view of facts and submissions filed, the ld.CIT() ought to have accepted the sales as per books of accounts. The ground no.1 of the appeal of the Revenue is as under: 1. The ld.CIT(A) has erred in law and on facts in estimating the sales at ₹ 3.75 crores as against ₹ 5 crores estimated by the AO. 3. The brief facts of the case are that the AO made addition by observing as under: 1. The assessee was asked to submit month-wise as well as item-wise breakup of purchase and consumption of raw materials, production, sales of finished goods and closing stock, for year under consideration. In response to the query rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot reliable and it is not possible to correctly verify or determine the profit from these books of accounts. The figures shown in the books of accounts are not supported by any substantiating documents. It is further seen that, even though the turnover has decreased as compared to immediately preceding assessment year, i.e. A.Y.2006-07, the expenses under the following heads have shown significant increase:- Expenses head A.Y.2006-07 A.Y.2007-08 Cold storage rent 25320 79341 Power supply charges 1887088 2014104 Coal Fuel expenses 110285 153008 Advertisement 347870 896505 Packing materials utilities 488794 735748 Decoration charges 154200 220580 4.6. As discussed above, the assessee is not maintaining any item-wise as well as quantity-wise details of purchases, consumption, production, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.79 6.0 3.79 4.25 2006-07 3.52 5.0 3.75 It is seen that during the year under appeal, the sales shown by the appellant company are ₹ 3.45 crores. On comparison of the same with the above chart, the sale during the year is almost in the range of sales shown by the appellant during the A.Ys. 2001- 02 to 2003-04 i.e. ₹ 3.28 crores to ₹ 3.56 crores. For the said A.Ys., estimate made by the Hon'ble ITAT was at ₹ 3.75 crores. The sales during the year under consideration are in the same range of sales during the previous year i.e. A.Y.2006-07 at ₹ 3.52 crores. For that year sales were estimated by me at ₹ 3.75 crores vide appellate order dated 22/03/2010. Keeping in view the estimate made by me and the Tribunal in earlier years, I am of the considered opinion that it is reasonable to estimate the sales at ₹ 3.75 crores as against the sales of the appellant company as per books of ₹ 3,45,32,261/-. The 2nd Ground of Appeal is thus partly allowed. Coming to the issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001-02, the assessee was having only two outlets at Ahmedabad one at Vijay Cross Roads, and other at Ahmedabad domestic airport. With these two outlets and a small number of franchisees, the assessee has shown a total sales at ₹ 3,51,41,387/- in that particular year. As compared to Asstt.Year 2001-02, during the year under consideration, with three outlets at Ahmedabad as well as distributorship at Kalol and Gandhinagar, the assessee is showing sales of only ₹ 3,45,32,261/-, while estimating the sales of the assessee of the year, when compared with sales of the preceding year. 10. We find that the assessee has not disputed the fact that one more outlet was opened during the year under consideration as well as distributorship was given for Kalol and Gandhinagar during the year under consideration. The assessee could not give any cogent reason as to why its sales were lesser than the sales of the preceding year, when one more outlets was opened and two franchisees were added by the assessee. Further, the CIT(A) has estimated the sales only on the basis of the sales of the preceding year without considering the change of the fact of the year under consideration to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee could not be controverted by the Revenue by bringing any material evidence on record. We are, therefore, of the view that the purchases made by the assessee from the aforesaid three parties cannot be considered as being a case of contract which would require deduction of TDS u/s 194C of the Act and, therefore, no disallowance u/s 40(a) (ia) of the Act is called for. We, therefore, direct the AO to delete the addition made on this count. This ground of assessee s Cross Objection is allowed. Facts being identical, respectfully following the precedent, we delete the disallowance of ₹ 1,24,270/-made on account of packing material. This ground of the assessee is allowed. 16. The Ground no.3 of the appeal of the assessee is as under: 3. The ld.CIT(A) has erred in law and on facts in confirming the addition of ₹ 18,602/- on account of late remittance of employees contribution to PF without proper consideration and appreciation of facts of the case as well as settled legal position. That keeping in view the ratio laid down by various courts of law including the Hon ble Supreme Court as cited by the appellant in the submissions filed before the learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to maintain the same gross profit year after year. Looking to the nature of business in our line of trade, the gross profit shown is correct based on books of accounts, evidence and the relevant details has already been furnished and therefore, there is no base for even estimating the gross profit rate. 5.2. The submission of the assessee is considered, but not found acceptable. During the course of assessment proceedings, though the assessee has been specifically asked; to give details of month-wise consumption of raw material and production, sales tax returns for comparison of actual production and sales, the same have not been .provided by the assessee. All these facts point towards deliberate omission on the part of the assessee so as not to enable the AO to find out the correct GP for the year under, consideration. In the circumstances, I am left with no other alternative but to follow the methodology adopted in earlier assessment years, for working out the GP for the year under consideration. Reliance is placed on the decision of Orissa High Court in the case of Ratanlal Omprakash Vs. CIT - 132 ITR 640, wherein it has been held that GP can be determined on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not in dispute that the liability for the said sales tax got crystalized during Asstt.Year 2007- 08. 28. The DR supported the order of the AO. 29. We find that the DR could not point out any specific error in the findings of the CIT(A). He also could not controvert the findings of the CIT(A) by bringing any positive material on record to show that the liability for sales tax had not crystallized during the year under consideration. We, therefore, do not find any good reason to interfere with the order of the CIT(A) on this issue, which is confirmed, and the ground of the appeal of the Revenue is dismissed. 30. The ground no.4 of the Revenue s appeal is as under: 4. The ld.CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 1,35,776/- being depreciation on motor vehicle. 31. Brief facts of the case are that the AO disallowed ₹ 1,35,776/- being depreciation on opening WDV of motor vehicle purchased in earlier years on the ground that the vehicle was purchased in the name of director, and accordingly, the ownership of the vehicle does not belong to the company, and therefore, no depreciation is allowable. 32. On appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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