TMI Blog2015 (6) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... ection by the AO that the assessee has not furnished the party wise details is not existing. Further, the basis of allowing 1% of the turnover towards breakage charges by the AO is not understood. If the AO was not satisfied due to the reasons mentioned by him, he could have disallowed the entire amount. However, he has not done so and allowed 1% of the turnover towards breakage. This otherwise indicates that he also accepts that there would be breakages. Merely because the assessee has not claimed such breakage loss in the preceding assessment year, the same in our opinion cannot be a ground to deny a legitimate claim made by the assessee in the impugned assessment year especially when the assessee has furnished the list of dealers to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tune of ₹ 54,80,239/- represents the breakage incurred during transportation. It is nominal breakage and works out to 1.62% of the total sales. Since the assessee according to the AO failed to furnish party wise details of breakage/claims made by them and since in the immediately preceding assessment year no such expenditure was claimed on this account, the AO held that the breakage claimed at 1.62% is excessive. Further, the AO was of the opinion that this is such an item which can be recycled and reused for making glass. He therefore allowed breakage to the extent of 1% of the turnover which amounted to ₹ 33,78,960/-. Thus, he disallowed the balance amount of ₹ 21,01,279/-. 4. Before the CIT(A) the assessee subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Based on the arguments advanced by the assessee the Ld.CIT(A) called for a remand report from the AO who reiterated the same reasons for disallowance as stated in the assessment order. After considering the remand report of the AO and the response of the assessee to such remand report the Ld.CIT(A) deleted the disallowance by observing as under : 6. I have carefully considered the assessment order, appellant's submissions on the issue from time to time and the report of AO on the submissions of appellant. I find that AO has not been able to appreciate the facts relating to breakage completely. He has not appreciated the difference between breakages due to handling losses during transit and in the show rooms of dealers with the br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils before him the AO had stated that assessee has not furnished the party wise details giving the breakages. Referring to pages 5 to 10 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the list of parties giving details of credit Note Number and amounts. Referring to pages 11 to 15 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to some sample confirmations from the parties confirming receipt of credit notes towards breakage claim. He submitted that in the remand report the AO does not dispute the submission of details of parties giving the credit Note Number and amount towards breakage account. He submitted that during the impugned assessment year the assessee had pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de or offered, that no such claim was made in the preceding year and that this is such an item which can be recycled and reused for making glass. He therefore restricted the breakage loss at 1% of the turnover thus allowing an amount of ₹ 33,78,960/- out of the breakage loss claimed at ₹ 54,80,239/- and made disallowance of ₹ 21,01,279/-. From the various details furnished by the assessee in the paper book, we find the assessee has furnished the party wise details giving the credit note number and the amount allowed towards such breakage loss. The AO has not disputed the fact of filing of party wise details during the course of assessment proceedings in the remand proceedings. Therefore, the first objection by the AO that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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