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Assistant Commissioner of Income Tax Versus M/s The Baghpat Cooperative Sugar Mills ltd.

Disallowance of manufacturing expenses under the head “Manufacturing material and chemicals” - Held that:- AO has doubted the genuineness of the transactions recorded in the books of accounts in support of expenditure claimed under the head Manufacturing Material and Chemical Expenses nor any adverse or incriminating materials have been placed on record by the A.O. so as to show that the purchases are bogus. The AO has also not doubted the authenticity of the books of accounts which was produced .....

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that the AO did not issue any show cause notice in this regard while making this addition and to that extent agree that it amounts to breach of principles of natural justice. In view of above discussions, we find that there was no no justification for adhoc disallowance of ₹ 25 lacs under the head “Manufacturing Material and Chemical Expenses”, hence, the same was rightly deleted by the Ld. CIT(A). - Decided in favour of assessee

Disallowance of accrued interest not paid in resp .....

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B(d) of the I.T. Act are not attracted in this case. Accordingly, disallowance made on this account was rightly deleted by the Ld. CIT(A). - Decided in favour of assessee - ITA No. 6058/Del/2013 - Dated:- 5-4-2016 - Shri H. S. Sidhu, Judicial Member And Shri O. P. Kant, Accountant Member For the Petitioner : Sh. Sarabjeet Singh, Sr. DR For the Respondent : Sh. Raj Kumar, CA ORDER Per H. S. Sidhu, J. M. The Department has filed this Appeal against the impugned Order dated 26.08.2013 passed by the .....

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377; 6,30,57,609/- made by the AO on account of disallowance of accrued interest not paid by it in respect of secured / unsecured loans taken from various institutions of UP Government. The assessee has violated Section 43B(d) of the I.T. Act, 1961 by not paying the accrued interest before the due date of filing of return. 3. That the appellant craves leave to add, modify and / or delete any ground(s) of appeal. 4. In the facts and circumstances of the case, the order of the CIT(A), Noida may be .....

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dated 28.12.2013, Assessee filed appeal before the Ld. CIT(A) who vide impugned order dated 26.8.2013 has allowed the appeal of the Assessee by deleting the additions in dispute. 5. Aggrieved with the Order of the Ld. CIT(A) s, Revenue is in appeal before the Tribunal. 6. Ld. DR relied upon the order of the Assessing Officer and reiterated the contentions raised in the grounds of Appeal. 6.1 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld .....

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claimed ₹ 1,01,78,326/- under the head "Manufacturing Material and Chemicals" whereas in the immediately preceding year i.e. F.Y. 2006-07 expenses under the above head were claimed/shown ₹ 50,27,813/- thus the expense claimed under the above head were more than double the expenses of the last year. According to A.O. the AR of the assessee failed to explain the reasons for such a huge increase of expenses under the said head, and for want of proper explanation the A.O. made .....

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Cleaning Equipment 198562.10 160517.25 6 E.T.P. Expenses 222883.00 165970.00 7 Mfg Contract Expenses 311999.45 373151.30 8 Nickel Screen/ Wirenetting 551426.00 397877.161 .. From the aforesaid details, it is observed that there is maximum increase in the amount spent on Sulphur whereas many other items such as chemicals consumed and others have also registered marginal increase. Regarding Sulphur it has been contended by the assessee that during the financial year under consideration rate of Sul .....

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etric Tons in comparison to the previous year. In view of above explanation the assessee has contended that due to above reasons the overall expenses on account of Manufacturing and Chemical Expenses had gone up. In this regard the AO in his Remand Report dated 22/2/2013 has reiterated his stand on this issue and has justified the disallowance. In response to AO's justification for the said addition the Assessee in his Rejoinder dated 21/3/2013 has placed his reliance on the comparative figu .....

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and as a result of which quantity of consumption of Sulphur has also gone up. This is besides the factor of Price rise in Sulphur which has caused further increase in the quantum of expenditure shown under the head Sulphur Consumed substantially. The details shows that as a result of increase in cane crushed and sugar produced the other items of expenditure under the head Manufacturing Material and Chemical Expenses have also registered increase of expenses in comparison to the last year s figur .....

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nd Chemical Expenses nor any adverse or incriminating materials have been placed on record by the A.O. so as to show that the purchases are bogus. The AO has also not doubted the authenticity of the books of accounts which was produced before him during the assessment proceedings. In fact the AO., has not doubted the genuineness of the books of accounts and the authenticity of the transactions recorded therein. Moreover, AO has also not recorded any justification for arriving at a figure of S .....

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wance of ₹ 25 lacs under the head Manufacturing Material and Chemical Expenses , hence, the same was rightly deleted by the Ld. CIT(A). Keeping in view of the facts and circumstances of the case, we do find any infirmity in the order of the Ld. CIT(A), hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the ground raised by the Revenue. 8. Apropos Ground No. 2 relating to deletion of addition of ₹ 6,30,57,609/- made by the AO on account of disallowance of .....

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47,317/- Total ₹ 6,30,57,609/- In this regard the AO observed that the above loans have been taken from Public Financial Institutions and State Financial Corporation. According to AO interest accrued on these loans should have been paid before the due date for filing of return u/s. 43B(d) of the I.T. Act. Since the proof of payment of above interest accrued was not furnished by the assessee, the AO disallowed the same and added to the income of the assessee u/s. 43B(d) of the Act. In this .....

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instead of ₹ 6,30,57,609/- (figure of interest accrued but not paid as adopted by the AO for disallowance i.e. interest against secured loan of ₹ 96,10,292 + Interest against unsecured loan of ₹ 5,34,47,317/-) the correct figure of disallowance under above head should have been 5,61,06,320/- only which represent interest due but not paid in respect of unsecured loan appearing in the Balance Sheet. We find that Ld. CIT(A) has observed that the mistakes as pointed out by the coun .....

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red loans from Shakkar Visesh Nidhi, U.P. State Government Loan and U.P. Co-operative Sugar Factories Federation Ltd. The assessee has claimed that these loans have been received by the asssessee from the U.P. Government through its institutional machinery for clearing all outstanding cane dues of farmers and for other specified purposes only. In this regard, copy of sanction letter for above loan was placed before the Ld. CIT(A) from which it was seen that the loan under consideration has been .....

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Ld. CIT(A) that the definition of Public Financial Institutions/State Financial Corporation/State Industrial investment Corporation as given under the provision of Section 4A(2) of the Companies Act 1956 do not cover U.P. State Government; U.P. Sahakari Chinni Mills Sangh Limited and Sakkar Vikash Nikdhi from where the assessee has taken Loan and therefore, no disallowance on this account should be made and that the addition made by the A.O. deserves to be deleted. The assessee has further submi .....

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