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M/s Rajasthan Hybrid Pvt. Ltd. Versus Assistant Commissioner of Income Tax, Circle-1, Kota

2016 (5) TMI 968 - ITAT JAIPUR

Addition on written off valuation of work in progress under the head computer kit - Held that:- It is undisputed fact that in IT industries technology becomes obsolete frequently, accordingly, the assessee has to take decision to use the items. The assessee is engaged in manufacturing of hybrid micro circuits by upgrading the technology. It is a business decision of the assessee after considering the report from the surveyor, which has been filed before the lower authorities but has not judiciou .....

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nt against the order dated 29/02/2012 passed by the learned CIT (A) Kota for A.Y. 2008-09. The effective grounds of appeal are as under:- 1 The impugned additions and disallowances made in the order u/s 143(3) of the Act dated 30.12.2010 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. ₹ 17,900/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of ₹ 17,90 .....

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A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 4. ₹ 14,630/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of ₹ 14,630/- on account of watchman expenses on the plea that the said expenditure did not relate to the subjected year. The disallowance so made and confirmed by the CIT(A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 5. & .....

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owance of ₹ 19,810/- on account of Hotel expenses at site on the plea that the said expenditure did not relate to the subjected year. The disallowance so made and confirmed by the CIT(A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 7. ₹ 25,085/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of ₹ 25,085/- (out of total disallowance of ₹ 27,565/-) on account of Traveling e .....

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nfirmed by the CIT(A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 9. ₹ 15,325/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of ₹ 15,325/- (out of total disallowance of ₹ 26,050/-) on account of Daily allowance ROT expenses on the plea that the said expenditure did not relate to the subjected year. The disallowance so made and partly confirmed by the CIT(A) being totally con .....

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e Id. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of ₹ 3,485/- (out of total disallowance of ₹ 6,969/-) on account of Repair Building. The disallowance so made and partly confirmed by the CIT(A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 12. ₹ 22,500/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming the addition of ₹ 22,500/- (out of total disal .....

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made and confirmed by the CIT(A) being totally contrary to the provisions of law and facts of the case, kindly be deleted in full. 14. The Ld. AO further erred in law as well as on the facts of the case in charging interest u/s 234A & 234B & 234D of the Act. The appellant totally denies its liability of charging of any such interest. The interest so charged, being contrary to the provisions of law and facts, kindly be deleted in full. 2. Ground Nos. 1 and 12 of the appeal are not pressed .....

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ayment, watchman expenses, mobile and telephone expenses, hotel expenses at site, travelling expenses ROT, Hotel expenses ROT, daily allowance ROT expenses, conveyance expenses and repair building expenses on the ground that the assessee had not given any justification in the case of rent payment and legal and professional expenses, no TDS has been deducted. Inverter charge under the head office expenses had been capitalized by the Assessing Officer, watchman expenses for the month of March, 200 .....

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e additions under the heads mentioned above. 4. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition under the heads tour and travel expenses of ₹ 17,900/-, which was incurred on account of business tour to Raipur for techno-commercial discussion with NSN for further business with his wife, but no evidence has been submitted by the assessee even before the ld CIT(A). Therefore, he dismissed the assessee .....

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bmitted before the ld Assessing Officer. Evidences furnished before the ld CIT(A) was found him additional evidence, which was submitted without any application for additional evidence under Rule 46A of the Income Tax Rules, 1962 (in short the Rules). Earlier this was claimed by the assessee that ₹ 30,000/- was paid as rent for the period 10/12/2007 to 09/2/2008 but before him he has claimed this payment for watchman charges. The total payment exceed ₹ 1.20 lacs, therefore, provision .....

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own in the rent account by mistake. The ld AR has also drawn our attention on page No. 46 and 47 of the paper book to demonstrate that these are the payments to the watchmen-cum-supervisor. Ld. DR supported the order of the lower authorities. After considering the submission of the assessee, we find no merit that these evidences were not additional evidence as had not submitted before the lower authorities. Page No. 46 and 47 of paper book are additional evidences but referred the housing rent, .....

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account as mobile was purchased for testing purposes and the testing was done by the employees since the uses is very high and the handling is very poor, accordingly, it was claimed as consumable and written off as it become obsolete in very short period. He has also drawn our attention on para No. 5 of page No. 7 of the paper book and argued that technology under the I.T. has frequently changed. Various courts have decided even the computer expense as revenue expenses as technology become obsol .....

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expenses as revenue expenditure. 4.3 The ld CIT(A) confirmed the disallowance of hotel expenses on the ground that they pertained to previous year. The ld AR contended that the expenses were booked on receipt of bill from the employees as the work is done at many places in the India and it is not possible to book according to its period. He has drawn our attention on para No. 9 of page No. 7 of paper book and prayed to allow this ground of appeal. Ld. DR supported the order of the lower authori .....

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ined to year under consideration and remaining expenses were pertained to earlier year. The ld AR has argued that these expenses were booked when the assessee received the bills from the employees as the assessee s activities is all over the India, therefore, expenses could not booked in the relevant year. He has drawn our attention on page No. 7 of paper book of para No. 9. Ld. DR supported the order of the lower authorities. After considering the assessee s submission, it is but natural that e .....

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also considered by the ld CIT(A) and allowed the appeal partly. However, conveyance expenses has not been allowed by him on the ground that the some of the bills were related to current year but some of the expenses related to previous year. Ld. AR reiterated the arguments made before the ld CIT(A) as the expenses were booked when the assessee received the bills, but genuineness has not been doubted by the revenue. He referred para No. 10 and 11 of page No. 3, para No. 9 of page No. 7 of the pap .....

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ld Assessing Officer @ 10%, which is reasonable and we do not have any reason to intervene in the order of the ld CIT(A). Accordingly, we confirm the order of the ld CIT(A). 5. Ground No. 13 of the appeal is against confirming the addition of ₹ 18,17,000/- on account of allegation of non-submission of valuation papers of work in progress. The ld Assessing Officer observed that the assessee had claimed reduction in value of work in progress of ₹ 18.70 lacs. However, no supporting docu .....

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d CIT(A), who had dismissed the appeal on this ground by observing that no supporting evidence was filed before him. Moreover, when the assessee could get the report of insurance surveyor and loss assessor in estimating the reduction in value of raw material, it could have carried out the same exercise for valuing the work in progress also. The amount of ₹ 18.70 lacs included a sum of ₹ 9.90 lacs, which was the value of FCT Kits. Before the Assessing Officer the assessee claimed that .....

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sembly stage, the final assembly is cleared only against firm orders, the work in progress under consideration pertains to year 2004 and 2006, the extensive follow up for sale of FCT (Fixed Cellular Terminal) and computers could not yield results. Since completion of the job required additional components and additional cost hence company took decision not to procure additional components to avoid further losses, this was resulted into continuation of work in progress in subsequent years. In sub .....

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reason given before the lower authorities. The assessee had submitted valuation report dated 25/7/2008 on an independent insurance surveyor and loss assessor, which has not been considered by the ld CIT(A). However, the same valuation report dated 25/7/2008 at the bottom, there is clear observationcum- certification by the said surveyor, which is as under:- Conclusion: As FCT parts are specifically designed for specific purpose, these parts cannot be used for any other purpose. Hence for applic .....

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