TMI Blog2014 (11) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 10BA is the eligible taxable profits from the industrial undertaking, if any disallowance of expenditure 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. Rejection of books of account u/s 145(3) - addition sales outside the books of account - CIT(A) deleted the addition - Held that:- As no infirmity in the order of the ld. CIT(A) inasmuch much there is no evidence on record to suggest any sales outside the books of account. The books of account are rejected because of non-maintenance of detailed particulars of closing stock. Consequently, the assessee's gross profit rate declared at 14.11% is adopted at 17.20% by ld. CIT(A) which is commensurate to the past history of the assessee. In view thereof, we see no infirmity in the order of the ld. CIT(A) on this issue which is upheld. Disallowance of C&F Agent - CIT(A) allowed the claim - Held that:- The C&F Agent expenditure is a controlled expenditure inasmuch as it is relatable to parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (x) The CIT (A) has passed a perverse order in holding the confirmed trading addition of ₹ 66,43,253/- as eligible for deduction u/s 10BA particularly when the enhanced profit was related to domestic sales. 3.1 The assessee vide its application dated 30-06-2014 prayed for admission of additional ground which has not been pressed by the ld. AR of the assessee on the date of hearing. 4.1 Brief facts of the case are that the assessee is a proprietorship concern known as M/s. Art Palace which is claimed to be an industrial undertaking engaged in the manufacturing and exporting of handmade articles which requires the use of Wood as main raw material. The sales are mainly export and small portion in India. The assessee was allowed 100% deduction from eligible manufacturing activities u/s 10BA of the Act in earlier years. 4.2 A survey was carried out in the premises of the assessee on 22-09- 2008. Assessment for assessment year 2006-07 was framed by the AO on 12-12-2008 disallowing the assessee's claim u/s 10BA of the Act. Assessments for assessment years 2007-08 and 2008-09 were framed on similar lines by disallowing assessee's claim u/s 10BA of the Act. 4.3 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 with the finding of ld. CIT (A). Accordingly findings of ld. CIT (A) are confirmed. On similar facts, the deduction under section 10BA was disallowed for assessment year 2007-08 also and on similar reasoning, the ld. CIT (A) has allowed the issue in favour of the assessee. Since facts and circumstances are similar and we have already confirmed the order of ld. CIT (A) for the assessment year 2006-07, therefore, for the same reasoning the order of ld. CIT (A) for the assessment year 2007- 08 also is confirmed. In view of the above, it is felt that, as per the established principle, the decision of jurisdictional Tribunal / High Court is binding on the lower authorities and under no circumstances such order can be ignored or violated. In other words for the sake of better judicial administration and unity, the decision given by Tribunal/ Courts are required to be followed by the lower appellate/ administrative authorities in letter and spirit of such order. The above ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out at ₹ 66,43,253/- (Rs. 3,70,18,212/- being 17.20% of the turnover to ₹ 21,52,22,166 ₹ 3,03,74,944/- GP declared by the appellant), in compare to ₹ 72,93,056/-, as estimated by the AO. However, it is also held that since the enhancement in the gross profit is basically related to export business of the appellant, which has been found as eligible undertaking u/s 10BA, therefore, he would be also eligible for the exemption u/s 10BA of the Act on the revised profit figures, as determined hereinabove. Consequently, the ground of appeal is partly held. 5.3 The Revenue challenged this order of the ld. CIT(A) relating to assessment year 2007-08. ITAT Jaipur Bench at page 32 in para 12 onwards dealt with this issue of estimation gross profit rate of 17.20% and upheld the findings of the ld. CIT(A) by following observations. 15. After considering the submissions, the ld. CIT (A) gave following finding recorded in para 5.3 at page 27 of his order are as under :- 5.3. I have carefully considered the facts of the case and submissions of Ld. AR. However, on perusal of relevant records, I find that the Ld. AO was fully justified in rejecting the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 available on record, we see no infirmity in the order of the ld. CIT(A) inasmuch much there is no evidence on record to suggest any sales outside the books of account. The books of account are rejected because of non-maintenance of detailed particulars of closing stock. Consequently, the assessee's gross profit rate declared at 14.11% is adopted at 17.20% by ld. CIT(A) which is commensurate to the past history of the assessee. In view thereof, we see no infirmity in the order of the ld. CIT(A) on this issue which is upheld. Thus Ground No. (vi) of the Revenue is dismissed. 6.1 The Ground No. (vii) of the Revenue pertains to disallowance of C F Agent for which the ld. DR relied on the order of the AO. 6.2 The ld. Counsel for the assessee contends that the entire C F Agent expenditure paid to M/s. Sachin Cargo Movers, is supported with proper debit note and no defect has been pointed out. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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 ₹ 40,52,766/- out of job work contract payments made in contravention to Section 40(a)(ia) of the Act ; ld. DR supported the order of the AO. 7.2 The ld. Counsel for the assessee contends that it is not disputed that TDS amount was paid before prescribed date of filing the return. Besides Section 40(a)(ia) of the Act, has been retrospectively amended by Finance Act, 2007 in this behalf. The ld. CIT(A) relying on the amendment in the Act and case laws, deleted the addition by following observation. Payment of Job Work Contractors :- In this regard considering the fact that the TDS was deducted and paid belated, however, before the due date of filing of return u/s 139 (1) of the Act and also the ratio upheld by the Supreme Court in the Allied Motors Pvt. Ltd. 224 ITR 677 and Atom Extrusions Pvt. Ltd. (185 Taxman 416). I agree with the contention of the Ld. AR that no disallowance u/s 40 (a) (ia) can be made under the given circumstances. Ld. AR further submitted that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 single date with a common person and having the aggregate amount involved of more than ₹ 20,000/-. Consequently this ground of appeal is upheld. 8.3 We have heard the rival contentions and perused the materials available on record. This Bench of ITAT in its earlier order (supra) has taken a view that the assessee can issue cash less than ₹ 20,000/- to same person at different interval during one day. Respectfully, following ITAT order, we uphold the order of the ld. CIT(A). Thus Ground No. (ix) of the Revenue is dismissed. 9.1 Coming to last ground no. (x) of the Revenue which challenges the order of ld. CIT(A) holding that trading additions of ₹ 66,43,253/- as eligible for deduction u/s 10BA of the Act on the ground that the enhanced profit was related to domestic sales. 9.2 In this ground, the ld. CIT(A) came t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. 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). 10.2 In appeal before ld. CIT (A), the assessee reiterated the facts, actual nature of payments and filed the chart in this behalf. It was contented the amount was not paid for any transport of goods for hiring any goods carriages to M/s Sachin Cargo Movers, Jaipur. They represented only reimbursement of expenses incurred by them on assesses behalf. Ld. CIT (A) did not appreciate the nature of expenses and rejected explanation of assessee and confirmed the addition. 10.3 Ld. Counsel reiterated the facts and referred to the paper book to buttress his submissions that these amounts were paid to Sachin Cargo Movers as reimbursements and not for hiring any goods vehicle. Merely because they were debited to C F a/c, they have been held to be liable for TDS. It was not the assessee but M/s Sachin Cargo Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
