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2016 (5) TMI 972 - ITAT AHMEDABAD

2016 (5) TMI 972 - ITAT AHMEDABAD - TMI - Addition on account of disallowance out of various expenses of textile division - Held that:- As per Section 170(1), where a person carrying on any business or profession has been succeeded therein by any other person who continues to carry on that business or profession, the predecessor shall be assessed in respect of the income of the previous year in which the succession took place upto the date of succession and the successor shall be assessed in res .....

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espect of disallowance of wages to workers and packing credit bank loan interest, we find no merit into the contention of the assessee.

Proportionate disallowance with regard to packing credit loan interest for 11 days comes to ₹ 1,29,154/-, whereas the Assessing Officer computed the same as on 31.12.2007. Accordingly, we direct the Assessing Officer to restrict this disallowance to the extent of ₹ 1,29,154/- and the rest of the disallowance is deleted.

With reg .....

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of expenses of ₹ 7,24,700/-, only ₹ 7,09,780/- is contested before us; i.e., ₹ 5,55,210/- out of interest on term loan and ₹ 1,54,570/- on account of preliminary expenses. With regard to disallowance on account of interest on term loan amounting to ₹ 5,55,210/-, the contention of the assessee was that the interest for ₹ 15,65,807/- on term loan was debited on 31.12.2007. Therefore, the liability of bank loan interest arose when the bank debits the interest am .....

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7; 11,09,260/- actually pertained to the company itself and therefore, 20% of ₹ 11,09,260/-, which amounts to ₹ 2,21,852/- was debited to the profit and loss account u/s 35D of the Act. We find that the preliminary expenses are in respect of incorporation of the company; however, the Assessing Officer assumed the expenses for the whole year and disallowed proportionately. Therefore, no disallowance is called for in this case and the Assessing Officer is directed accordingly.- Decided .....

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l:- 1. The learned CIT(A) grossly erred in confirming addition on account of disallowance out of various expenses of textile division amounting to ₹ 10,31,448/- as per page 10 of the CIT(A) order. 2. The learned CIT(A) grossly erred in confirming addition on account of disallowance out of various expenses of power division amounting to ₹ 7,24,700/- as per page 10 of the CIT(A) order. 3. The appellant reserves right to add, alter and withdraw of any grounds of appeal. 3. Briefly state .....

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rom 12.12.2007. It was observed by the Assessing Officer that the assessee has not computed the income of the previous year in which the succession took place as per provisions of the Act. Accordingly he issued a show-cause notice dated 13.12.2010, calling upon the assessee to show cause as to why the proportionate disallowance should not be made in respect of Garment/Textile Division and Power Divison. The assessee, in response to the show-cause notice, filed a detailed reply; however, the Asse .....

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ce out of various expenses of Textile Division amounting to ₹ 10,31,448/-. 4.1 At the time of hearing before us, no one appeared on behalf of the assessee; however, a written submission has been filed with a request to decide the issue on the basis of the written submission. As per the written submission, the disallowance to the extent of ₹ 9,75,370/- is contested and rest of the disallowance is not pressed. The contention of the assessee in respect of Ground No.1 is as under:- Natur .....

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ecember arose on 26th & 31st December, 2007, i.e., in the end of the month. Since the partnership firm Abhishek Exports was converted into company on 12.12.2007 will all its assets and liabilities, any liability which arose after the conversion belongs to Abhishek Exports (India) Pvt. Ltd. It is therefore urged that proportionate disallowance of 11 days is not justified. Packing credit bank loan interest 3,63,980 The actual disallowance was discussed at ₹ 1,29,154/- on page No.4 (first .....

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, ld. Sr. DR opposed these submissions and he contended that as per Section 170(1) of the Act, the computation was required to be made by the assessee, but the assessee has not made the same in accordance with the provisions of Section 170 of the Act. He supported the orders of the authorities below. 5. We have heard the rival contentions and perused the material on record. The contention in the written submission challenging the disallowance in respect of this ground is that the legal fees accr .....

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t proportionate disallowance of 11 days is not justified. In respect of packing credit bank loan interest, similar contention is made that the proportionate disallowance of 11 days was not justified. 5.1 We have given our thoughtful consideration to the rival contentions of the parties. As per Section 170(1), where a person carrying on any business or profession has been succeeded therein by any other person who continues to carry on that business or profession, the predecessor shall be assessed .....

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mpany. We find that the professional expenditure pertains to earlier period. Therefore, in respect of disallowance towards CA s bills is justified. In respect of disallowance of wages to workers and packing credit bank loan interest, we find no merit into the contention of the assessee. 5.2 From the assessment order, it is noticed that the proportionate disallowance with regard to packing credit loan interest for 11 days comes to ₹ 1,29,154/-, whereas the Assessing Officer computed the sam .....

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