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Dy. Commissioner of Income-tax Versus M/s. Pooja Paper Craft

2015 (4) TMI 540 - ITAT AHMEDABAD

Disallowance of processing charges paid to Shri Shivcharan Sharma - genuineness of expenditure - CIT(A) deleted the addition - Held that:- Assessee's products can not be manufactured without preparation of gum. Assessing Officer has brought nothing on record to suggest that any other person was paid for preparation of gum so as to negate the version of assessee to establish that Shri Shivcharan Sharma was not paid for preparation of gum. Moreover, assessee also filed affidavit of Shri Shivch .....

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these facts and circumstances, AO was not justified in negating the claim of assessee. Once a certain claim has been accepted adverse to the interest of assessee, same can be retracted by way of deposition in affidavit and Assessing Officer ought to have made further inquiries in respect of same. Without making further inquiries, contents of affidavit should not be rejected. In case before us, once statement was retracted by Shri Shivcharan Sharma by filing an affidavit, burden was upon revenue .....

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vour of assessee.

Disallowance of production incentives - CIT(A) deleted the addition - Held that:- It is evident from the assessment order that only one of the workers i.e. Jat Rampratap Chokaram has stated that he has not received production incentives, while other two have stated regarding themselves that they have not received more than stated above. So, it cannot be presumed that this one worker Jat Rampratap Chokaram was speaking on behalf of all other workers. There is no denia .....

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Assessing Officer was not justified in making addition on account of rejecting production incentives to all and same was rightly directed to be deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side.- Decided in favour of assessee. - ITA. No. 2144/Ahd/2008, ITA. Nos. 678, 679, 681 & 682/Ahd/2011 - Dated:- 30-3-2015 - Shri Shailendra Kumar Yadav And Shri Anil Chaturvedi. JJ For the Appellant : Shri M. K. Singh, Sr. D.R. For the Respondent : Shri S. N. Sop .....

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g charges of ₹ 5,73,477/- out of processing charges claimed ₹ 11,73,477/- paid to Shri Shivcharan Sharma. 2. The Ld. CIT (A) has erred in law and in facts by deleting the addition on account of disallowance of production incentives amounting to ₹ 13,04,998/-. 3. Assessee is engaged in the business of manufacturing and trading paper tubes. First issue is with regards to addition on account of disallowance of processing charges of ₹ 5,73,477/- out of processing charges clai .....

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made to Shri Shivcharan Sharma was for four activities i.e. box packing, loading, unloading and preparation of gum which is supported by bills raised by Shri Shivcharan Sharma. During survey, he was very afraid and was in confused state so he has mentioned that payment of ₹ 6 to 6.5 lakhs has been received only for first three activities i.e. box packing, loading and unloading. He regularly assessed to tax. Ultimately, rejecting the stand of assessee, addition was made of ₹ 5,73,477 .....

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st Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) deleted the addition in question. Same has been opposed on behalf of Revenue inter alia submitted that CIT(A) was not justified in deleting addition made on account of disallowance of processing charges of ₹ 5,73,477/- out of processing charges claimed ₹ 11,73,477/- paid to Shri Shivcharan Sharma. Learned Departmental Representative submitted that Shri Shivchar .....

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or box packing, loading and unloading only and rest of the payment was for preparation of gum. On perusal of the statement of Shri Shivcharan Sharma, it is evident that he has been paid amount of ₹ 6.5 lacs for work of box packing, loading and unloading i.e. three activities. He has not mentioned that this payment includes payment towards preparation of gum even the statement of Shri Nitinbhai, partner relied upon by Assessing Officer reproduced on page-7 of assessment order reveals that h .....

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e which is used in the spindles and consistency of gum is essential requirement in keeping the tube intact. Assessee gave the detailed process of gum making and bills for purchase of gum. Assessee's products can not be manufactured without preparation of gum. Assessing Officer has brought nothing on record to suggest that any other person was paid for preparation of gum so as to negate the version of assessee to establish that Shri Shivcharan Sharma was not paid for preparation of gum. Moreo .....

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raising of bills by Shri Shivcharan Sharma. Under these facts and circumstances, Assessing Officer was not justified in negating the claim of assessee. Once a certain claim has been accepted adverse to the interest of assessee, same can be retracted by way of deposition in affidavit and Assessing Officer ought to have made further inquiries in respect of same. Without making further inquiries, contents of affidavit should not be rejected. In case before us, once statement was retracted by Shri S .....

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y, CIT(A) was justified in deleting the addition in question. This reasoned factual finding CIT(A) needs no interference from our side. We uphold the same. 4. Next issue is with regards to disallowance of production incentives of ₹ 13,04,998/-. Assessing Officer relied upon the statement of three workers i.e. S/Shri Rathod Balwantsingh, Jat Ramprasad Chokharam and Garasia Vinod Tejsingh recorded during survey and rejected the claim of assessee that incentives of 0.13 per tube was paid to w .....

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ers are not paid anything excess of whatever is stated by him. Shri Nitinbhai or Vipulbhai at the time of survey did not bring anybody from the workers at factory who could mention that they had received anything in excess of whatever is stated by the three workers. The copies of affidavit filed have no relevance particularly in this background as it is an after thought not supported by any evidence of statements recorded at the time of survey as narrated in detail above. The claim of assessee r .....

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eting addition made on account of disallowance of production incentives amounting to ₹ 13,04,998/-. Accordingly, he requested to set aside the order of CIT(A) and that of Assessing Officer be restored. On other hand, learned Authorized Representative reiterated the submissions made before CIT(A) and submitted that order of CIT(A) be upheld. 4.2 After going through rival submissions and material on record, we find that there were three categories of workers. i. One category is of three work .....

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ot received any production incentives. As regards other workers who have filed affidavits, due inquiries should have been made before disallowing production incentives to them. As there was nothing to record to suggest that affidavits were not correct as they have not earlier made any statement to the effect that production incentives were not received by them. As regards the rest of the workers, no inquiries, whatsoever, have been carried out or evidences gathered in support of finding that the .....

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s correct and true. Further, based on statement of three workers only production incentives in case of all other workers cannot be disallowed when others have filed affidavits for having received production incentives and there is no adverse evidence in regard to 3rd category of workers as discussed above. It is evident from the assessment order that only one of the workers i.e. Jat Rampratap Chokaram has stated that he has not received production incentives, while other two have stated regardin .....

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roduction incentives was liable to be disallowed and not for other workers. Assessee himself has staled that production incentives were not paid to three of them and also not claimed. Accordingly, Assessing Officer was not justified in making addition on account of rejecting production incentives to all and same was rightly directed to be deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same. 5. As a result, appeal filed by Revenue is .....

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e disallowance if any be made then restricted to ₹ 3,05,182/- (Rs. 9,05,182 - ₹ 6,00,000/-) 2. Ld. CIT (A) erred in confirming disallowance of production incentive of ₹ 14, 39, 028/- merely on basis of the statements recorded of three workers during the course of survey ignoring the receipts and affidavits of remaining workers. 6.1 First issue is with regards to disallowance of processing charges of ₹ 11,05,491/- out of total processing charges of ₹ 17,05,491/-. We .....

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orded of three workers during course of survey ignoring the receipts and affidavits of remaining workers. We have discussed and decided this issue in favour of assessee in A.Y. 2004-05 vide para 4 of this order. Facts being similar so following same reasoning, we are not inclined to concur with the finding of CIT(A) who has confirmed the disallowance of production incentive of ₹ 14,39,028/- merely on the basis of statements recorded of three workers during course of survey ignoring the rec .....

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he above, the appellant submits that out of total processing charges only ₹ 11,90,880/- is paid to Shiv Charan Sharma, therefore disallowance if any be made then restricted to ₹ 5,90,880/- (Rs. 11,90,880 - ₹ 6,00,000/-) 2. Ld. CIT (A) erred in confirming disallowance of production incentive of ₹ 10,62,324/- merely on basis of the statements recorded of three workers during the course of survey ignoring the receipts and affidavits of remaining workers. 9. First issue is wi .....

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eleted. 10. Next issue is with regards to disallowance of production incentive of ₹ 10,62,324/- on the basis of statements recorded of three workers during course of survey ignoring the receipts and affidavits of remaining workers. We have discussed and decided this issue in favour of assessee in A.Y. 2004-05 vide para 4 of this order. Facts being similar so following same reasoning, we are not inclined to concur with the finding of CIT(A) who has confirmed the disallowance of production i .....

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allowance of processing charges of ₹ 22,14,800/- out of total processing charges of ₹ 28,14,800/-. Without prejudice to the above, the appellant submits that out of total processing charges only ₹ 14,17,934/- is paid to Shiv Charan Sharma, therefore disallowance if any be made then restricted to ₹ 8,17,934/- (Rs. 14,17,934 - ₹ 6,00,000/-) 2. Ld. CIT (A) erred in confirming disallowance of production incentive of ₹ 14,74,217/- merely on basis of the statements .....

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llowance of processing charges of ₹ 22,14,800/- out of total processing charges of ₹ 28,14,800/-. Same is directed to be deleted. 14. Next issue is with regards to disallowance of production incentive of ₹ 14,74,217/- on the basis of statements recorded of three workers during course of survey ignoring the receipts and affidavits of remaining workers. We have discussed and decided this issue in favour of assessee in A.Y. 2004-05 vide para 4 of this order. Facts being similar so .....

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