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2016 (2) TMI 198 - ITAT AHMEDABAD

2016 (2) TMI 198 - ITAT AHMEDABAD - TMI - Disallowance of Directorsí remuneration - CIT(A) deleted the addition - Held that:- A.O had disallowed the expenses on comparing the expenses with that of earlier year. We further find that apart from the absolute increase in terms of expenses no material has been brought on record to demonstrate the excessiveness of remuneration. We also find that ld. CIT(A) while deleting the addition has noted that the two Directorsí to whom the remuneration was paid .....

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enses - CIT(A) deleted the addition - Held that:- The perusal of provisions of Section 251(1)(a) reveals that CIT(A) in an appeal against an order of assessment can confirm, reduce, enhance or annul the assessment. The power of setting aside which was available to CIT(A), is no more available to CIT(A) by virtue of amendment made by Finance Act 2001 with effect from 1.06.2001. Thus it can be seen that in the present case CIT(A) has set aside the issue to the file of A.O, the powers of which are .....

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eld that:- As decided in case of GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT] any sum with respect to the employees contribution as mentioned in s. 36(l)(va), assessee shall be entitled to the deduction of such sum towards the employees contribution if the same is deposited in the accounts of the concerned employees and in the concerned fund such as Provident Fund, ESI Contribution fund, etc provided the said sum is credited by the assessee to the employees accounts in the relevant fund or fund .....

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1 - Dated:- 8-1-2016 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER For The Appellant : None For The Respondent : Shri Dinesh Singh, Sr. D.R. ORDER 1. This appeal of Revenue and C.O of Assessee are against the order of CIT(A)-XI, Ahmedabad dated 15.02.2011 for A.Y. 2006-07. 2. On the date of hearing, none appeared on behalf of the Assessee nor any adjournment application was filed on their behalf. We therefore proceed to decide the appeal, ex parte qua the Assess .....

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and the total income was determined at Rs. Nil. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 15.02.2011 granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us and Assessee has also filed C.O. The grounds raised by the Revenue in ITA No.1144/Ahd/2011 reads as under:- 1. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of Directors' remuneration of .....

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/- being increase in unsecured loans from shareholder and directors , thus in effect setting-aside the issue to the file of AO, which is beyond the powers of CIT(A) u/s 251. 4. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of loss of ₹ 18,30,727/-. 5. On the other hand the grounds by the Assessee in C.O reads as under:- 1. The ld. CIT(A) has grossly erred in law and facts is passing the order. 2. In law and in the facts and circumstances in the case of responden .....

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emuneration 6. During the course of assessment proceedings and on perusing the details of administrative expenses, A.O noticed that Assessee has claimed Directors remuneration of ₹ 5,40,000/- as against ₹ 2,40,000/- claimed in immediate preceding year and that the claim of Directors remuneration had thus increased by almost 125%. He also noticed that the expenses in respect of payment to employees and various expenses in general has gone down and the turnover of the Assessee had also .....

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e. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who deleted the addition by holding as under:- 4.2. I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer in the assessment order. I am inclined to accept the contentions put forth by the A. R. of the appellant. The appellant company returned loss of over ₹ 44 lakhs. The assessed income as per the impugned order is NIL. The two directors - Riddhi M. .....

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ance is unwarranted. It is deleted. This ground of appeal is allowed. 7. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 8. Before us, ld. D.R. pointed to the observations made by the A.O and supported his order. 9. We have heard the ld. D.R. and perused the material on record. The issue in the present case is about disallowance of Directors remuneration. A.O had disallowed the expenses on comparing the expenses with that of earlier year. We further find that apart from .....

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. Before us, Revenue has not placed any material on record to controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A). Thus the ground of Revenue is dismissed. 2nd ground is with respect to deletion of disallowance of various expenses. 10. During the course of assessment proceedings, A.O noticed that Assessee has debited ₹ 6,64,509/- towards miscellaneous store purchases, ₹ 7,23,690/- towards professional and .....

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ad shown downward trend and in view of the abnormality in the claim of expenses he considered ₹ 6,64,509/- towards miscellaneous store purchases, ₹ 1,51,144/- towards telephone expenses and ₹ 5,58,292/- towards professional and legal expenses to be not allowable and accordingly disallowed the aggregate amount of ₹ 13,73,945/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who deleted the addition by holding as under:- 8.2 I have considered .....

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nd therefore the action of setting aside the issue to the file of A.O is beyond the powers of ld. CIT(A). 13. We have heard the ld. D.R. and perused the material on record. We find that ld. CIT(A) by a cryptic order has directed the A.O to verify the assessee s contention and delete the disallowance. It is thus seen that ld. CIT(A) while deciding the issue had directed the A.O to verify the contentions of the Assessee and thereafter delete the addition. At this moment it will be relevant to refe .....

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was available to CIT(A), is no more available to CIT(A) by virtue of amendment made by Finance Act 2001 with effect from 1.06.2001. Thus it can be seen that in the present case CIT(A) has set aside the issue to the file of A.O, the powers of which are not available to him at the relevant time. We therefore are of the view that the matter needs to be restored to the file of CIT(A) for considering the submissions of the Assessee and thereafter deciding the issue on the basis of facts and circumst .....

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ls, A.O treated the increase as unproved cash credit and added it to the income. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who deleted the addition by holding as under:- 9.2 I have considered the submissions made by the A.R. of the appellant and the observations of the assessing officer in the assessment order. A.O is directed to verify the appellant s contentions and delete the addition made by him. Subject to verification, this ground of appeal is allowed. 1 .....

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ete the disallowance . It is thus seen that ld. CIT(A) while deciding the issue had directed the A.O to verify the contentions of the Assessee and thereafter delete the addition. At this moment it will be relevant to refer to relevant provisions of Section 251 which reads as under:- Powers of the Commissioner (Appeals) 251 (1) in disposing of an appeal, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or .....

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the relevant time. We therefore are of the view that the matter needs to be restored to the file of CIT(A) for considering the submissions of the Assessee and thereafter deciding the issue on the basis of facts and circumstances of the case and in accordance with law and after recording a clear finding on the issue. In the result, the ground of Revenue is allowed for statistical purposes. 20. In the result, the ground of appeal is allowed for statistical purposes. Ground no. 4 is with respect to .....

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er before ld. CIT(A) who deleted the addition by holding as under:- 11.3.2. I have considered the submissions made by the A. R. of the appellant and the observations made by the A.O. at para-9 of the assessment order. In the assessment order, at para-9, A.O. observed that" Since the assesses has not proved the loss by furnishing information as called for nor produced any books of accounts, after considering the disallowance of ₹ 26,68,137/- as discussed above, further addition of S .....

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rd the ld. D.R. and perused the material on record. We find that the present ground of Revenue is connected to the ground nos. 2 & 3 raised by Revenue before us. Since grounds no. 2 & 3 of Revenue for the reasons stated hereinabove are set aside to the file of ld. CIT(A), we feel that this ground also needs to be set aside to ld. CIT(A) for him to decide it afresh and in accordance with law. Thus the ground of Revenue is allowed for statistical purposes. 25. In the result, the appeal of .....

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7; 27,282/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who decided the issue against the Assessee by holding as under:- 6.2. I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer in the assessment order. As regards employee's contribution, it is governed only by Sec. 36(1)(va) and Sec. 43B(b) and deletion of second proviso to Sec. 43B have no application. As seen from the assessment order and as .....

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6 ITR 170 (Guj.). He thus supported the order of ld. CIT(A). 30. We have heard the ld. D.R. and perused the material on record. The issue in the present case is about delayed deposit of employees contribution of PF. We find that Hon ble Gujarat High Court in the case of GSRTC (supra) has held has under:- "any sum with respect to the employees contribution as mentioned in s. 36(l)(va), assessee shall be entitled to the deduction of such sum towards the employees contribution if the same is d .....

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