TMI Blog2016 (1) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... for as such is not in dispute, which precisely is the situation here, the items sold cannot be included in stock as well. In any case, just because a higher stock value is shown in bank statements as held in the case of Munish Kumar Bansal vs. JCIT (2015 (4) TMI 185 - ITAT AMRITSAR ), the difference cannot be added to the income of the assessee. - Decided in favour of assessee Additional depreciation on Plant and Machinery purchased disallowed - Held that:- We see no merits in ld. CIT(A)’s objection to the effect that the assessee cannot be granted deprecation because it cannot be treated as manufacturer and only job work is claimed by the assessee. No material has been brought on record to controvert the certificate from the manufacturer. As a matter of fact, this stand of the authorities below to the effect that machines are used machines is not supported by any material and is based on surmises and conjectures. In this view of the matter, we do not see any legally sustainable merit in the ld. CIT(A)’s stand or to decline the additional depreciation in question.- Decided in favour of assessee Addition on account of interest disallowance - CIT(A) deleted the addition - Held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machines being put to use. It is not elementary that the use of machine is linked to the production and not ales and, therefore, irrespective whether or not productions of a machine are same at a point of time. The assessee is eligible in respect of depreciation as long as machinery has been put to use. There is no cogent material brought on record to dispute the claim of the assessee that the machinery was put to use before 24th September, 2006. As a matter of fact, there is categorical finding of the ld. CIT(A) that production had commenced within the period. On these facts, the is assessee indeed eligible for depreciation in respect of whole year and ld. CIT(A) was, therefore, justified in deleting the impugned addition - Decided in favour of assessee Addition made on account of profit earned on preoperative sales - CIT(A) deleted the addition - Held that:- There is no material brought on record to controvert or even seriously dispute the finding of the ld. CIT(A) to the effect that expenses incurred by the assessee in earning this amount of rupees have been ignored altogether and that if such expenses are taken into account, they will be indicative figure. In this view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... differences but explanation of the assessee was rejected by the Assessing Officer by observing as follows: The reply of the assessee is carefully considered and it is noticed that he explanation provided by the assessee itself proves that adjustment have been made in the books of account after end of the financial year. This is apparent from the fact that bills have been issued in favour of M/s. Moms Outdoor Media Solutions Pvt. Ltd. after completion of March as explained by the assessee. These bills were issued to the party after submitting stock stalls and book debts details to the bank between 7th April to 10th April, 2007. means that the stock statement as submitted to the bank was factually correct and what is shown in the books of accounts have been shown after adjustments which is not allowable after end of financial year. The second explanation regarding stock of sample kits is also not acceptable because neither raw material nor the finished goods are more in the value as per audited accounts when compared to value as per statement submitted to bank. It means this value has not been considered in any of the stock in the audited books of accounts. The explanation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of actual sale till 31st March. Considering this the difference in stock is correctly added by the assessing officer and to that extent addition made is confirmed. 5. The assessee is not satisfied and is in further appeal before us. 6. We have considered the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 7. We find that so far as sample, valued at ₹ 80,000/- in bank statement, are concerned, it is different to understand rationale of the observation that As regards sample kits, I agree with the Assessing Officer that there is no question of sample kits distributed free for raw material and, therefore, quantity to that extent remains unexplained . The distribution of small quantities of samples is a commercial reality and it cannot simply be brushed aside as improbable. It was open to the authorities below to seek further clarification on the same but is could not have been dismissed as outright impossible. In any case, just because stock statement shows this quantity it does not become gospel truth. So far as sale of 37,953 ft. of material is concerned, contention of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inting. The Assessing Officer was of the view that the assessee is only printing on an existing object, and no new product comes into existence. It was in this backdrop and relying on judicial precedents in the cases of CIT vs. R. Shroff Consultants [(1999) 238 ITR 1018 (Bom)] and CIT vs. B N B Enterprises [(2000) 242 ITR 439 (Mad)] that the Assessing Officer declined additional depreciation claim. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) rejected this claim and, while doing so, observed as follows: 8.3 I have considered the facts of the case, assessment order and appellant's submission. Assessing officer disallowed additional depreciation on the machines purchased on the ground that appellant is not manufacturing articles or things. Assessing officer relied upon several decisions as per which printing activity are not considered as manufacturing articles or things. Considering these decisions I agree with the assessing officer that appellant is not eligible to claim additional depreciation on machinery purchased during the year since it is not manufacturing articles or things. Appellant relied upon several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. When this was put to the ld. Departmental Representative, he did not have much to say except placing his reliance on the stand of the authorities below. In this view of the matter, we see no merits in ld. CIT(A) s objection to the effect that the assessee cannot be granted deprecation because it cannot be treated as manufacturer and only job work is claimed by the assessee. 15. Coming to the question as to whether the assessee had used second-hand machinery, we find that the observation of the ld. CIT(A) are vague inasmuch as he stated that most of the machines are used machines . This kind of sweeping generalisation is not supported from the material on record. Quite to the contrary, the assessee has invited our attention to the certificate given by the manufacturer which inter alia states as follows:- TO WHOMSOEVER IT MAY CONCERN THIS IS TO CERTIFY THAT FOLLOWING TWO MACHINES WHICH WE HAVE SOLD TO DIAMOND DIGITAL SOLUTIONS PVT. LTD. ARE COMPLETELY NEW UNUSED MACHINES. SR.NO. MACHIANE NAME BILL NO. AMAOUNT DATE OF SALE 1. MACHINE VUTEK 3360-F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the facts of the case and over all fund available with company, the ld. CIT(A) deleted the disallowance of interest made by the Assessing Officer. The Assessing Officer is aggrieved and is in appeal before us. 22. Having heard the rival contentions and having perused the material available on record, we are decline to disturb the finding of the ld. CIT (A). We have noted that there is no finding to the effect that interest-bearing funds were used in granting these interest free advances to the directors. On the contrary, it is evident from the material on record that the assessee has received interest free advance from the directors as well. Bearing in mind these facts as also entirety of the case, we decline to interfere in the conclusion arrived at by the ld. CIT(A). Ground no.1 is thus dismissed. 23. In the second ground of appeal, the Assessing Officer is aggrieved of the ld. CIT(A) s deleting the disallowance of ₹ 2,07,935/- on account of difference in book debts. 24. So far as this disallowance is concerned, it is sufficient to take note that addition was made in respect of book debts as there was difference of ₹ 3,83,734/- between the amount s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecation, only two conditions are to be fulfilled the assets should be owned by the appellant and it should be used for the purpose of business. There is no doubt about ownership of the asset by the appellant. Assessing Officer only doubted the use of machine. Since the machine was purchased within first two months of the previous year and it was installed within first four months also, presuming that machine was not used or ready for use of business purpose is not correct. After installation, the UV machine was fully ready for use and therefore assessee was entitled to claim depreciation even at that stage. However, appellant submitted details of production and sale made out of this machine. Just by not mentioning the figures of production in audit report, one cannot assume that machine was not used. No one will make such huge investment in UV machine and keep it idle for the whole year. Considering the facts of the case, I find that appellant fulfils both the conditions required under section 32 of IT Act and therefore eligible to claim depreciation for this year. The addition made by the Assessing Officer is therefore deleted. 29. With the assistance of learned representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before 24th September, 2006 and accordingly deprecation was claimed for the full year. The Assessing Officer rejected this claim on the short ground that there is no significant change in sale, purchase figure during the month of September 2006 . The Assessing officer further observed that as a matter of fact there is a decline in the sale figure in September 2006. It was in this backdrop that the Assessing Officer was of the view that the claim of the assessee to the effect that machine was put to use before 24th September, 2006 was incorrect. It was noted that on perusal of monthly sale figure and daily sale figure on September 2006, no basis was noticed why the date of 24th September, 2006 has been chosen as date of commercial production but there is no sale of production by new machinery is shown. Therefore, according to the Assessing Officer, machinery could not have been put to use in the month of September, 2006, as claimed by the assessee. On this basis, the Assessing Officer disbelieved the claim of the assessee and proceeded to disallow the depreciation to the extent of 50%. The assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) deleted this pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative sales. 38. As evident from the plain perusal of the assessment record what has been added by the Assessing Officer as difference between the sale and production price treating the same a profit of the pre-operative sales. This clearly does not take care of other expenses. The ld. CIT(A) has referred the addition so made by the Assessing Officer on the short ground that expenditure incurred by the assessee are far in excess of this amount. The Assessing Officer is aggrieved of the action of the ld. CIT(A) and is in appeal before us. 39. Having heard the rival contentions and having perused the material on record, we find that there is no material brought on record to controvert or even seriously dispute the finding of the ld. CIT(A) to the effect that expenses incurred by the assessee in earning this amount of rupees have been ignored altogether and that if such expenses are taken into account, they will be indicative figure. In this view of the matter, the relief granted by the ld. CIT(A) does not call for any interference. We approve the action of the ld. CIT(A). Ground no.6 is also dismissed. 40. In the result, appeal filed by the Revenue is dismissed. 41. To s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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