GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (6) TMI 936 - ITAT PUNE

2015 (6) TMI 936 - ITAT PUNE - TMI - Disallowance of breakage loss - assessee did not furnish party wise details of breakage/claim made 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 - CIT(A) deleted the disallowance - Held that:- 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 a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 such credit notes were issued towards breakage loss an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s the only issue raised by the revenue in the grounds of appeal. 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing of figured and wired glass at Nashik. It filed its return of income on 31-10-2005 declaring total income of ₹ 65,09,170/-. During the course of assessment proceedings, the AO observed that the assessee has claimed a sum of ₹ 54,80,239/- on account of claims/breakage. He observed that in the immediately preceding a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 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 exte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing the year, due to erratic supply of raw material items from the regular suppliers, several new sources were required to be tapped. Some of the suppliers were not quality conscious. Further, the power supply was also erratic resulting into frequent stoppages. Therefore, the glass produced was of uneven thickness giving rise to breakages. The assessee further submitted that this was the problem with almost each party in the year under appeal and this problem was unique for this particular asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat neither any reason was given by the AO nor any comparative instances pointed out by him to support his contention that the breakage loss at 1% is reasonable. 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 observi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l' of goods in the manufacturing sector due to defects in manufacturing process. It need not be a regular phenomenon. Such can be a one time affair. Further, the high number of dealers (246 dealers) making breakage claims itself evidences the business necessity of such loss for survival in the market. Confirmation of credit notes by dealers of assessee also supports the breakage claim of assessee. The AR of assessee has rightly pointed out that - in the case of Sheo Narain Dulichand v/s CIT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of breakage is written off in the books of accounts of assessee. Hence, I allow the second ground of appeal in favour of assessee. 6. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 7. The Ld. Departmental Representative heavily relied on the order of the AO. 8. The Ld. Counsel for the assessee while supporting the order of the CIT(A) submitted that despite filing all party wise details before him the AO had stated that assessee has not furnished the party wise detai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 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 procured raw materials from certain new parties who had supplied inferior quality of goods for which the glass produced was of uneven thickness giving rise to breakage. This was compounded also due to erratic supply of electricity. He submitted that since the assessee had issued credit notes to these customers, therefore, it has not rec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e ground raised by the revenue be dismissed. 9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute to be decided in the impugned appeal is regarding the allowability of the breakage loss disallowed by the AO at ₹ 21,01,279/-. On perusal of the record, we find the AO disallowed the breakage .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version