New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (6) TMI 686 - ITAT DELHI

2016 (6) TMI 686 - ITAT DELHI - TMI - Addition on account of freight expenditure - sales have increased by 100% such expenses have increased only by 40% and these expenses are directly linked with turnover of sales and purchases - Held that:- As the disallowance not specific and Ld. AO has not pointed out a single instances of the expenditure, which are not, supported by the vouchers and bils. Further, the estimated amount of disallowance by applying the percentage is also not proper. Therefore, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd therefore at the most there would be shifting of profit from one year to another year and tax rates being same for both the years the issue would be tax neutral. Furthermore reading purchases of fuel it was not the case of ld AO that the bils of the material are not available or material has not been procured. Stating that purchases have been made in cash cannot be the basis for making disallowance . For cash purchases exceeding specified monetary limit is disallowable u/s 40 A (3) of the act .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

DER Per Prashant Maharishi, A. M. 1. This appeal is filed by the revenue against the order of Ld. CIT (A) XVI, Delhi dated 30th December 2013. In the appeal following grounds of appeal have been raised :- I. On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition on account of disallowance of expenses under the following heads: i) Freight outward and cartage of ₹ 21,30,000/-, ii) Tools and Consumables expenses of ₹ 6,28,939/- and iii) Fuel expense .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evidences and submit his report. 4. On the facts and circumstances of the case, the Id. CIT(A) has erred by ignoring the fact that in many of the replies submitted by the assessee regarding various payments which, though have been made in March, 2009 but the material unutilized was not be taken to closing stock. 5. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal. 2. All the grounds of appeal are against the deletion of ad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

39/-and ₹ 10,11,331/- of fuel expenses. The first ground of appeal is regarding deletion of this disallowance by the Ld. CIT (A). Ground No. 2 to 4 is also supporting the ground No. 1 contesting the above disallowance under different context. 4. Ld. AO has held that the assessee has claimed freight outward and cartage expenses of ₹ 1,73,90,711/- and ₹ 40,33,289/-. During the course of assessment proceedings, the assesee produced the books of accounts and vouchers. However, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

authorities and Ld. AR submitted that the issue is now covered in favour of the assesee by the order of coordinate bench for preceding assessment years vide order dated 4th December, 2015. 6. We have carefully considered the rival contentions. Ld. CIT(A) has deleted the addition on account of freight expenditure for the reason that sales have increased by 100% such expenses have increased only by 40% and these expenses are directly linked with turnover of sales and purchases. Furthermore, the L .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o higher percentile increase than the increase in sales of the company. Ld AO has rightly made the queries on this front and obtained the explanation of the assessee. However after obtaining the explanation of the assessee, AO has nowhere given any reason that why the explanation submitted by the assessee is not acceptable to him. Had this explanation was not acceptable to him, he should have made a detailed inquiry, but AO adopted the easy way out. For increase in expenses assessee has submitte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d all payments were made. by cheques and further Tax deduction at source was also made by appellant. Therefore in our opinion the above facts read together gives complete picture of the freight expenses and to whom it is paid and whether he is assessed to tax and whether such expenses are in relation to export sales. This would have open floodgates of information for the AO to determine whether expenditure incurred by assessee are wholly and exclusively for the business or not. But no such effor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

p on assessing officer are very wide and most effective which were used very sparsely in this case. Therefore there is no basis, except statistics, for making contested disallowance in the hands of assessee. In our view this is not sufficient to uphold disallowances. In this back drop, ad hoc disallowance made by AO cannot he sustained and CIT (A) has rightly deleted the same. Therefore we confirm the order of CIT (A) and dismiss the appeal of revenue. 8. The appeal of revenue is dismissed. 7. A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

enditure of ₹ 94.72 lacs has increased to ₹ 11.28 lacs has been increased in the month of March. He further held that out of this material worth ₹ 5 lacs would have been used and therefore there has to be a closing stock balance of ₹ 6,28,939/-. Similarly, in case of fuel expenses assessee has claimed expenditure of ₹ 2.10. crores against previous year expenditure of ₹ 1.23 crores and therefore there is a 70% increase in expenditure. During the course of asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e carefully considered the rival contentions . Ld. CIT(A) has deleted this disallowance as under :- 4.4.1 Tools and consumables : The assessee has shown expenses of ₹ 94,72,664/- under the head tools and consumables. AO observed that major purchases of tools and consumables have been made in the month of March 2009 only. The assessee has not been able to prove/justify that all the tools and consumables purchased in month of March 2009 have been utilized fully. The unutilized tools and cons .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mables of an amount of ₹ 6,28,939/- which should have been shown in the closing stock is being added back by the AO to the total income of the assessee. 4.4.2 It is seen that the above adhoc and arbitrary addition is made by the AO on surmises and conjectures. Appellant submitted that tools and consumables are procured at the time of requirement and issued the same for production. The appellant company is following this practice for last several years no such disallowance was made in asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat creating closing stock for one year by reducing expenses does affect interest of the revenue as the same is claimable as an expense for the next year. In view of the above, the adhoc and arbitrary addition made by the AO on surmises and conjectures cannot be sustained. As such the same is deleted. 4.5.1 Disallowance of fuel expenses : The assessee has claimed fuel expenses of ₹ 2,10,83,266/-. AO observed that assessee has made purchases of fuel in cash and the fuel purchased on 25.03.2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

been utilized by 31.03.2009. Therefore, fuel of ₹ 5,11,331/- which should have been shown in the closing stock is being added back by the AO to the total income of the assessee. Further the fuel purchased in cash is also not properly verifiable. Therefore, keeping in view the increase in fuel expenses and unsupported voucher of cash, ad hoc disallowance of ₹ 5 lacs is being further made by the AO. 4.5.2 Appellant submitted that it procured fuel at the time of requirement as and when .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the material at the time of need. The Fuel is standard products and are easily available in the market. 4.5.3 It is seen that sales has increased by 100% over the last financial year. Therefore, the observation of the AO that the fuel expenses has increased by 70% is without considering the fact that the sales has increased by 100% from last financial year. AO also ignored the fact that by creating closing stock for one year by reducing expenses does affect interest of the revenue as the same is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

above, the addition made by the AO on the ground that the assessee has short disclosed its closing stock of fuel by ₹ 5,11,331/- is not justified. Therefore, the same is deleted. With regard to the addition of ₹ 5 lacs made by the AO on the ground that fuel expenses made in cash are not properly vouched, it is seen that the AO has made the above disallowance arbitrarily on adhoc basis without pointing out any single instance of expense not vouched or not properly vouched. In this con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version