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M/s. Magan Electro Castings Ltd Versus The ACIT, Circle –I (1) , Coimbatore.

Disallowance invoking the provision of Section 40(a)(ia) - CIT(A) treating the expenditure incurred towards debit notes raised by with M/s. S & V Industries Inc., USA as unexplained and not genuine - Bad debts u/s 36(1)(vii) - Held that:- On perusal of the facts it is crystal clear that M/s. S & V Industries Inc., USA had raised the debit notes against the assessee for whatever reasons it may be and it has become extremely difficult for the assessee to recover its entire sales proceeds. In order .....

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he expenditure or accept the same as bad debt. Apparently the assessee has also debited the expenditure account and credited M/s. S & V Industries Inc.,USA account, thereby satisfying the conditions laid by the Hon’ble Apex Court in the case TRF LTd. Vs. Ld. CIT (2010 (2) TMI 211 - SUPREME COURT) as pointed out by the Ld. A.R. Therefore, we do not have any hesitation to accept the contention of the Ld. A.R and accordingly we hereby delete the addition of ₹ 44,83,941/- made by the Ld. Asses .....

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No.305/10-11 passed under section 143(3) read with section 250 of the Act. 2. The assessee has raised three elaborate grounds in its appeal; however the crux of the issues is that the Ld. CIT (A) had erred in upholding the order of the Ld.A.O wherein he had disallowed ₹ 44,83,941/- invoking the provision of Section 40(a)(ia) of the Act and also by treating the expenditure incurred towards debit notes raised by with M/s. S & V Industries Inc., USA as unexplained and not genuine. 3. The .....

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xpenditure relating to the debit notes raised by M/s.S&V Industries Inc., USA and also by treating the same as unexplained expenditure. 3.2 During the course of assessment proceedings, it was noticed by the Ld. Assessing Officer that the assessee had made payment to M/s. S & V Industries Inc. USA towards re-work and other manufacturing expenses on account of supply of defective castings. It was explained by the assessee that these payments were made outside the country for the services r .....

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debit notes were raised by M/s. S & V Industries Inc. USA against the assessee after M/s. S & V Industries Inc. USA had sold the products to other companies based in USA with whom the assessee did not have any transactions. Further it was observed by the Ld. Assessing Officer that, even if such expenses were allowable as deduction they pertained to assessment year 2007-08 and not for the assessment year 2008-09 because all the invoices were dated during the assessment year 2007-08. 3.3. .....

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ing Officer and the Ld. CIT (A) and reiterated the submissions that were advanced before the Revenue authorizes on the earlier instances. He further submitted that the assessee had exported the goods to USA. The foreign buyer had carried out minor repairs on the products exported by the assessee and raised debit notes against the assessee. Though the assessee has disputed against the debit notes raised, the foreign buyer viz., M/s. S & V Industries Inc., USA agreed to pay the sale proceeds o .....

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ction while computing the profits of the assessee. 5. The DR on the other hand vehemently argued in support of the orders of the Revenue authorities. He further submitted that since the exact nature of transaction were not brought to the knowledge of the revenue authorities with cogent evidence; they did not have any other opt ion but to disallow the expenses. 6. We have heard both the parties and carefully perused the materials available on record. It is apparent from the order of the Ld. Asses .....

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he sales made by the assessee as observed by the Ld. Assessing Officer in his order para-4 as follows:- 4.- A Perusal of the invoices produced by the assessee revealed that the invoices are dated 12/11/2006, 20/12/2006, 19/01/2007, 27/12/2006, 15/01/2007, 22/01/2007 and also in foreign cur rency. Consequently the assessee would have debited the party M/s. S & V Industries Inc., USA and credited sales account. The apprehensions of the Revenue was that it is not clear as to where the services .....

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ed by M/s. S & V Industries Inc., USA against which its accounts were credited, is not made clear as to where the service was rendered, i.e., either in India or abroad. iii) The nature of transactions is not known in the absence of details, since they were not furnished by the assessee. With these presumptions/observations the Revenue was of the view that for the services rendered by M/s. S & V Industries Inc., USA against which its account was credited by the assessee, Tax ought to have .....

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