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TMI Blog2014 (11) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by the assessing officer that disallowances made u/s 40 (a) (ia) of the I. T. Act, 1961 does not qualify for deduction u/s 10BA of the I. T. Act, 1961. " 2.3 Ground Nos. (i) to (vi) of the Revenue raise only ground as under:- ''the ld. CIT(A) has erred in allowing deduction of Rs. 1,13,07,214/- u/s 10BA of the Act on the basis of unsubstantiated claim of assessee and ignoring the detailed facts and reasons given in the assessment order.'' 2.4 The remaining grounds of the Revenue are as under:- (vii) The CIT (A) has passed a perverse order in deleting the disallowance of Rs. 47,74,561/- made out of C & F charges (viii) The CIT (A) has passed a perverse order in deleting the disallowance of Rs. 40,52,766/- out of job work contract payments made in contravention of section 40 (a) (ia) of the Act. (ix) The CIT (A) has passed a perverse order in deleting the disallowance of Rs. 2,96,883/- made u/s 40A(3) of the Act in respect of cash payments in excess of Rs. 20,000/- per day to single person. (x) The CIT (A) has passed a perverse order in holding the confirmed trading addition of Rs. 66,43,253/- as eligible for deduction u/s 10BA particularly when the enhanced profit wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved, in this ground of appeal, is as to whether the appellant is entitled to the claimed deduction of Rs. 1,13,07,214/- u/s 10BA of the I.T. Act. In this regard, the AO has held that the appellant did not fulfill the conditions as mentioned in clauses (a), (b), (c) and (d) of such Section (2) of Section 10BA of the I.T. Act. However, on the other hand, the ld. AR has claimed that the appellant has fulfilled all the conditions of the aforesaid clauses of Section 10BA(2) of the I.T. Act. In this regard, it was submitted by the ld. AR that the similar issue has been decided by Hon'ble ITAT Jaipur Bench in their cases in assessment year 2005-06 t 2007-08, in their favour. The copy of the order dated 31-10-2011, of the Hon'ble ITAT , Jaipur Bench for assessment year 2006-07 and 2007- 08 (ITA No. 315 & 316/JP/2011) was also furnished in their support. The relevant para of the above order, reads as under:- ''11. Findings of the Tribunal are in consonance with the finding of Tribunal for assessment year 2005-06 as they have been given after considering the order of Tribunal for assessment year 2005-06. There is no change in material facts, therefore, we see no reason to interfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue are dismissed. 5.1 Adverting to Ground No. (vi) of the Revenue's appeal wherein the ld. DR has relied on the order of the AO. 5.2 The ld. Counsel for the assessee contends that the ld. CIT(A) after following his predecessor order for assessment year 2007-08, partly allowed relief, by following observations. ''4.3.1 In view of the facts that the relevant issues and other aspects of the current year are exactly similar to such matter of the assessment year 2007-08, therefore, I am also in agreement with the findings given by my predecessor on such dispute. Accordingly, it is held that the rejection of books of account u/s 145(3) is done of valid grounds thus the same is upheld, thus the applicability of gross profit rate 17.20% is also found in order. However, I find no jurisdiction in enhancement of the turnover from Rs. 21,52,22,166/- to Rs. 21.90 crores, as assumed by the AO. In view of the same, the addition of gross profit is reworked out at Rs. 66,43,253/- (Rs. 3,70,18,212/- being 17.20% of the turnover to Rs. 21,52,22,166 - Rs. 3,03,74,944/- GP declared by the appellant), in compare to Rs. 72,93,056/-, as estimated by the AO. However, it is also held that since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 1OBA of the I. T. Act, as a result of this decision. Consequently, this ground of appeal is treated as partly allowed." 16. These findings of ld. CIT (A) remained uncontroverted and do not require any interference. Accordingly we confirm the findings of ld. CIT (A). 17. Similar ground as taken in assessment year 2006-07, has been taken for assessment year 2007-08 though the figure of addition is different but the issue is same. For the same reasoning as discussed in assessment year 2006-07, we confirm the order of ld. CIT (A) for assessment year 2007-08 also.'' 5.4 The ld. AR pleaded that facts and circumstances are same in comparison to earlier years. No infirmity is found in the books of account of the assessee in respect of sales or purchases. In this eventuality, the estimation of sales has been rightly rejected by the ld. CIT(A) and looking at the past history the gross profit rate of 17.20% has been adopted by the ld. CIT(A) which is in order and ld. CIT(A) has followed his predecessor order and ITAT order in rejecting the estimation of sales. Thus there is no infirmity in the order of the ld. CIT(A). 5.5 After hearing both the parties and perusing the materials a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard is found based on assumption and surmises on the part of the AO, which can not be ratified under the given circumstances. Accordingly, the addition of Rs. 4774561/- made no account of disallowance of partial C & F expenses is found unjustified, thus, deleted accordingly. Consequently, this ground of appeal is upheld." 6.4 It is pleaded by the ld. AR of the assessee that expenditure to C&F Agent is fully vouched and verifiable. Thus the ld. CIT(A) is justified in deleting the addition made by the AO. 6.5 We have heard the rival contentions and perused the materials available on record. The C&F Agent expenditure is a controlled expenditure inasmuch as it is relatable to particular export consignments. The AO has not pointed out any particular item of expenditure or export consignments or any mismatch therein. In view thereof, we uphold the order of the ld. CIT(A) and hold that relief has been given just and proper consideration. Thus Ground No. (vii) of the Revenue is dismissed. 7.1 Apropos Ground No. (viii) of the Revenue regarding deletion of disallowance of Rs. 40,52,766/- out of job work contract payments made in contravention to Section 40(a)(ia) of the Act ; ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vation. "7.1 I have gone through the observation of the AO in this regard and the arguments extended by the Ld. A.O. AR, in support of their appeal. The brief facts of the issue under consideration are that the AO observed that the appellant has made cash payment to single person in a particular day and the total of such payments was more than Rs. 20000/-, as such. In view of the same, the AO held that the provision of Sec. 40A(3) would be applicable on such transactions, amounting to Rs. 1484416/- and 20% of the same, i.e. Rs. 296883/-, was disallowed accordingly. However, the Ld. A.O. contended that these payments, through made in single day, were made at different times with different vouchers, thus provisions of Sec. 40A (3) is not applicable on such transactions. Before going into the merits of the rival stands, as discussed above, in this regard, it is found that the Hon'ble ITAT, Jaipur Bench, in the appellant's own case for A.Y. 2006-07 & 2007-08, has decided the similar issue in the favour of the appellant. Accordingly while following the principle judicial discipline, I also uphold that the provision of Sec. 40A (3) are not applicable on the transactions entered on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure is made it increases the eligible undertakings taxable income. Ld. CIT(A) has rightly held that after any disallowance of expenditure the resultant income of the industrial undertaking will be eligible for deduction u/s 10BA. We find no infirmity in the order of ld. CIT(A) on this issue. Consequently ground No. (x) of the revenue is dismissed. 10.1 Adverting to the assessee's appeal relating to Ground No. 3 wherein the ld. AR of the assessee contends that no transportation expenses of Rs. 27,03,977/- has been debited separately in P & L A/c of assessee. This amount was paid to M/s Sachin Cargo Movers, Jaipur (clearing and forwarding Agent of assessee) which were debited under the head clearing & forwarding charges. The payments are in the nature of reimbursement of expenses incurred by said C & F agent. The headwise details of these expenses in this behalf were furnished before AO and CIT (A). The AO did not appreciate assessee's explanation and held them as contractual payments liable for TDS. As they were in the nature of reimbursement therefore, assessee did not deduct TDS from the said amount and AO disallowed the same by invoking provisions of section 40 (a) (ia). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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