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TMI Blog2015 (10) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 2. On the facts and in the circumstances of the case, the Ld. CST(A) is not justified in deleting the addition of Rs,19,84,192/ made by the AO on account of suppression of the value of concrete sleepers by the assessee. 3. On the facts and in the circumstances of the case, the Ld, CIT(A) is not Justified in accepting the contentions of the assessee and not accepting the findings of the AO in violation of Rule 46A, of the IT Rules, 2. The short facts of the case are that the assessee company is engaged in the business of manufacturing of PSC (Pre-stressed concrete) railway sleepers, PSC polls and execution construction contracts. During the course of assessment proceedings, the Assessing Officer noticed that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under deemed dividend under section 2(22)(e) of the Act: i) Rungta Agencies Pvt Ltd (RAPL) has given a loan or an advance in the nature of loan to the assessee company ii) The assessee company does not hold any shares in RAPL and is not a shareholder member in RAPL. iii) Shri B.P.Runta holds 12.9% of equity shares in the assessee company and 28.2% of equity shares in RAPL. iv) RAPL is not a company in which public are substantially interested. v) As the conditions stipulated in section 2(22)(e) of the I.T.Act are not satisfied, the loan of Rs. 40,50,000/- given by RAPL to the assessee company does not attract the provisions of section deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cannot be said to be a person who has a "Substantial interest" in the company. Accordingly, Mr. Rungta does not have substantial interest in the appellant company M/s.OCP which is the payee of the advance. So in this case, the. concerned payment by M/s. RAPL to M/s.OCP has to be examined on facts that the impugned share holders Mr. Rungta, though is a member/share holder, does not have a "Substantial interest" in M/s.OCP. Therefore, the payment will not fall in the ambit of Sec 2(22)(3). Accordingly, the AO is directed to delete the addition. 6. Not satisfied by the reliefs so granted by the CIT (A), the Assessing officer is in appeal before us. 7. Having heard the rival contentions and having perused the material on record, we find fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities Since railway authorities are the main customer of the product, and they do not accept any rejected sleepers, the said sleepers are not in use for railway track and are having no sale value. Occasionally if any private party requires sleepers for their own use inside their factory siding, they purchase the rejected sleepers. Otherwise these are dumped inside our factory premises for indefinite period. Such rejected sleepers are accounted for on realization basis in their books of account. The above contention was not accepted by the AO and he held that assessee has sold rejected PSC sleepers 7390 pcs for value of Rs. 50,84,200/- at an average rate of Rs. 688/-. Therefore, he has taken the value of closing stock of 2844 pcs of PS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a stray sale of one lot of rejected sleepers once in a while, it will be unfair to say that regular valuation should be done for the rejected sleepers at the end of every year. Accordingly, I am inclined to agree with the version of the AR in this regard and I direct the AO to delete this addition also." Hence, the department is in appeal before us. 10. We have considered the rival contentions and perused the record of the case. We find that the assessee has shown the value of 2884 numbers at Nil. The assessee admitted that this rejected sleepers occasionally sold to private parties. The company sales the PSC sleepers to Indian Railways and when the sleepers are found to be defected after testing, they are rejected by the railway author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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