TMI Blog2016 (6) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal has upheld disallowance. The partial acceptance of disallowance cannot be lost sight of during its fact finding mission. The revenue authorities have appropriately disallowed an amount of ₹ 2,00,000/- out of ₹ 10,33,547/- on account of inflated cost of repairs. This is a possible view on the facts before it. Thus tribunal was right in disallowing repair expenditure to the extent of ₹ 2,00,000/- out of ₹ 10,33,547/- claimed as repairs expenditure - Decided in favour of the revenue - INCOME TAX REFERENCE NO.1 OF 1998 - - - Dated:- 25-4-2016 - M. S. SANKLECHA AND A. K. MENON, JJ. For The Applicant : Ms. Neha Mehta i/b. Apte Co. For The Respondent : Mr. Suresh Kumar ORAL ORDER (PER A.K. MEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ap arising on account of repairs was seen to be sold or accounted for and the fact that a new dredger would be constructed at a cost of ₹ 7 lakhs. He made some further additions with which we are not presently concerned. 4. Being aggrieved, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals) (CIT(A)). By order dated 7 July, 1993 the CIT(A) held that repairs have not been substantiated and sustained the additions made by the Assessing Officer. 5. On further appeal, the Tribunal upheld the addition of ₹ 2,00,000/-out of the total addition of ₹ 5,00,000/- made by the Assessing Officer. The Tribunal also observed that the repair expenses for the year were abnormally high compared to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorities under the Act that the massive purchase of scrap steel was from its sister concern M/s. J. K. Industries yet that fact by itself would not establish that the prices were inflated in the absence of contemporaneous evidence. Ms. Mehta then contended that there is no dispute that steel scrap had been purchased and that repairs were in fact carried out and in the face of these admitted facts, there was no justification for making the disallowance and declining to grant the claim for repair expenses. 7. Ms. Mehta also relied upon a judgment of Gujarat High Court in the case of CIT vs. City Ahmedabad Spinning and Weaving Mfg. Co. 207 ITR 427 and submitted that the Tribunal had, inter alia, disallowed the expenses because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. She then submitted that the revenue had proceeded to deny expenses on the ground that the expenses were inflated only because after suspicion that the assessee firm had purchased the steel plates from sister concern and that seller of steel plates M/s. J.K. Industries was not sister concern of the assessee and that the tribunal proceeded on misconceived notion that M/s. J.K. Industries was sister concern of the assessee only because one of the partners of the assessee firm had joined M/s. J.K. Industries as a partner and that too at different point in time and not during relevant period when the assessee purchased steel plates from M/s.J.K. Industries. 10. We are unable to agree with Ms. Mehta that the tribunal proceeded on assumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the assessee could not clear and inspite of being put to it. We deal with these briefly below : (A) Assuming in favour of the assessee that the assessee did buy steel plates for repairing buckets and that buckets were in fact repaired, the minimum that the assesee should have been able to show is that the steel purchased was meant for repairing the buckets and that this work was carried on by the persons in house and who were conversant with the same. Before the revenue, the assessee contended that labour charges were incurred for carrying out repairs but when asked what labour charges were incurred for the work, the assessee submitted that the labour charges for carrying out the repairs were debited to the dredger labour account. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 10,33,547/- claimed. We do not find anything perverse or illegal in the method or reasoning given by the Commissioner of Income-Tax (A) or the Tribunal at arriving at its conclusion. 12. In the circumstances findings of fact arrived at by all the three authorities under the Act that the expenses claimed for repairs were inflated cannot be said to be perverse so as to warrant interference. As far as the judgment cited by Ms. Mehta on behalf of the assessee is concerned, the Tribunal's conclusion that the deduction claimed was unreasonable because the assessee's income would be reduced and that there was no evidence of reduction pursuant to the expenditure stated to be incurred is not of much assistance to the assessee inasm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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