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2015 (7) TMI 728 - ITAT DELHI

2015 (7) TMI 728 - ITAT DELHI - TMI - Addition of expenses as penal in nature - forfeiture of the Bank Guarantee - CIT(A) deleted the addition - Held that:- In the present case, it appears that the AO himself in his remand report accepted on the basis of evidence furnished by the assessee that the forfeiture of the Bank Guarantee was a sort of compensation for nonfulfillment/ shortfall of certain conditions in export obligations. Therefore, it was related to the business activities of the assess .....

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is between NDMC and STC. There is no dispute between the NDMC and the assessee. Thus, the liability of the assessee is towards STC and not to NDMC. As raising of demand, by STC and acceptance of liability amounting to ₹ 11,40,958/- by the assessee has not been disputed by the revenue. We are of the considered opinion that the impugned amount has accrued during the year under consideration and such amount was allowable as a deduction in the year under consideration. In this view of the mat .....

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respective order that the impugned amount relates to the foreign exchange fluctuation. In our opinion this issue requires a fresh examination at the level of the AO. We, therefore, set aside the impugned order and remand this limited issue to the file of the AO for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purposes. - ITA No. 2440/Del/2013,CO No. 62/Del/2014 - Dated:- 16 .....

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ddition of ₹ 3,79,958/- made by the AO being amount penal in nature. 2. On the facts and in the circumstances of the case and in law the learned CIT(A) has erred in deleting the addition of ₹ 28,87,000/- made by the AO being provision for House tax, an unascertained liability. 3. On the facts and in the circumstances of the case and in law the learned CIT(A) has erred in deleting the addition of ₹ 1,75,95,258/- made by the AO being amount deducted by the assessee from the sales .....

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; 3,01,07,060/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO asked the assessee to justify as to why the forfeiture of Bansa Guarantee amounting to ₹ 3,79,958/- be not disallowed since it was not found incidental to the business activities. In response the assessee submitted as under: The outcome of forfeiture of bank guarantee is due to reve .....

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incurred in normal course of business. The ld. CIT(A) asked the remand report from the AO who vide report dated 02.03.2012 stated that the assessee had furnished evidence with respect to forfeiture of ₹ 3.80 lacs which was a sort of compensation for non-fulfillment/shortfall of certain conditions in export obligations. In view of the above submissions, the ld. CIT(A) held that forfeiture of the Bank Guarantee of ₹ 3,79,958/- was revenue in nature hence it was allowable. 7. Now the de .....

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carefully gone through the material available on the record. In the present case, it appears that the AO himself in his remand report accepted on the basis of evidence furnished by the assessee that the forfeiture of the Bank Guarantee was a sort of compensation for nonfulfillment/ shortfall of certain conditions in export obligations. Therefore, it was related to the business activities of the assessee and was revenue in nature. In that view of the matter, we do not see any infirmity in the ord .....

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ively (copies of the said orders were furnished). The ld. DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 11. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that a similar issue having identical facts has been decided in favour of the assessee in the aforesaid referred to orders of the ITAT. We deem it appropriate to reproduce the .....

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dispute between the NDMC and the assessee. Thus, the liability of the assessee is towards STC and not to NDMC. As raising of demand, by STC and acceptance of liability amounting to ₹ 11,40,958/- by the assessee has not been disputed by the revenue. We are of the considered opinion that the impugned amount has accrued during the year under consideration and such amount was allowable as a deduction in the year under consideration. In this view of the matter, we do not find any infirmity in .....

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rse of assessment proceedings noticed that the assessee had debited the sales account of its Jaipur Branch under the head sales local silver . He asked the assessee to justify the sum of ₹ 1,75,95,258/- which was deducted in the sales account of its Jaipur Branch under the head sales local silver. The assessee submitted as under: On 31.03.2005 a sum of ₹ 1,75,95,258/- has been deducted in the sales account of Jaipur Branch under the head sales-local silver. Justification is enclosed .....

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is prevailing at the time of booking of an order for delivery in a proforma invoice is never the same at the time of actual delivery of goods i.e. passing of title, the very basis of the contract of sale in letter and spirits of recognition of revenue based on prevailing accounting standards. The assessee corporation facilities import of bullion on service charge basis and such service charges are routed through sales and purchases and which as per accounting policy were booked at unfixed metal .....

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eal value transaction so as to recognize correct profits. Further it is not a unilateral adjustment, but a proper correction within the financial year for arriving at a correct sum claimable from customers. This can be understood by a simple trading account: To Purchases XXX By sales XXX Less: Purchases Reversed 1,69,49,269 Less: Sales Reversed (and not 1,75,95,258 as alleged and wrongly added) 1,65,01,557 Thus, the resultant income reported was ₹ 4,47,712/- as addition in our profits i.e. .....

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.2.2005 sum totaling to ₹ 10,93,701. Thus net sales adjustment has been corrected to ₹ 1,65,01,557/- as report u/s 46A and again over looked by ACIT. Further the same bears a corresponding debit in purchases adjustment (Dr) to the tune of ₹ 1,69,49,269/- showing net increase of ₹ 4,47,712/- in profit report thereby making whole of additions of ₹ 1,75,95,258/- as uncalled for and unsupportive. Keeping in view of the above stated facts, the disallowance made by the As .....

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