Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2017 (1) TMI 563 - ITAT RAJKOT

2017 (1) TMI 563 - ITAT RAJKOT - TMI - Disallowance excess payment made u/s 40 A(2)(b) - payment to the specified person - excessive and unreasonable expenditure - Held that:- We have gone through the submission of both the sides and find that the assessee has made payment excess by 3% to the three above stated related parties because of sourcing of double filter edible oil. We observed that it is clear that double filter oil is more costly than the filter oil and it also fetch more price in 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

rred in cash on the ground that most of the expenses were incurred in cash and the vouchers not contained the detail of rate of payment and the destination where the oil was delivered. We find that the assessing officer had not pointed out any specific defects and the disallowance was made on general assumption that expenses were incurred in cash and the vouchers not contained the detail of rate of payment and the destination where the oil was delivered for want of proper maintenance of vouchers .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cess of transforming the oil from the tankers to storage tanks and therefore into the packing material such as bottles, jars tins and pouches. We find that the assessing officer had disallowed the shortage in oil without any supporting material just on the basis of presumption and guess work. In view of the above stated facts and findings, we considered that the Ld. Commissioner of Income Tax(A) is justified in allowing the claim of the assessee. - ITA No. 575/Rjt/2014 - Dated:- 2-1-2017 - Shri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ces of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 2, 19, 919/- u/s.40A(2)(b). The Ld. CIT(A) ought to have upheld the same. 2. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in restricting the 'KHARA JAT EXPENSES. ' The Ld. CIT(A) has confirmed expenses of ₹ 81,863/- @ 3% as againstRs.2,72,876/- @ 10% disallowed out of total expenses of ₹ 27,28, 756/-. 3. On facts 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

(b) of the act. 4 During the course of assessment proceedings the assessing officer has observed that assessee has made certain payment to the person specified under section 40 A(2)(b) of the act. The AO has selected three related parties from the annexture furnished by the assessee from the whom purchases were made. The Assessing Officer observed that assessee had paid higher price for the purchases from the following related parties:- Sr. No. Name of Payee Purchases (Rs.) 1 Mangrol Oil Industr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

officer has not accepted the explanation of the assessee and disallowed excess payment to the extent of ₹ 2,19,919 made to the specified person by invoking the provision of section 40 A(2)(b) of the act. Aggrieved against the addition made by the assessing officer, the assessee has filed appeal before the learned CIT(appeal). The learned CIT(appeal) has allowed the appeal of the assessee. The decision of the learned CIT(appeal) is reproduced as under 4. I have perused the assessment order .....

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 persons were around, 3%. The AR of the appellant contended that, when a person has to keep up with his brand image, it would only be prudence on his part to make certain higher payments, as by doing so, ho ensures smooth sourcing, regular supply and consistency in quality for his products. It is also seen that the appellant deals with filtered edible oil and double filtered edible oil. It is obvious that the double filtered edible oil fetches more price and vis-a-vis, it also costs more too. T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

specified persons as per section 40A(2)(b) can be termed as excessive, particularly, when the appellant is dealing in a branded product which is edible in nature. Therefore, the AO was too harsh in disallowing a ,sum of ₹ 2,19,919/- u/s. 40A(2)(b) of the I T Act, particularly, when they were not abnormally excessive and beyond any reasonable imagination. Therefore, the disallowance made is directed to be deleted. In the result, this ground of the appellant is allowed. It is also seen from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lter edible oil. We observed that it is clear that double filter oil is more costly than the filter oil and it also fetch more price in the market than the filtered oil. We find that learned CIT appeal has justified his decision keeping in view the nature of business, volume and quality of products involved. In view of above facts and findings, we do not find any reason to interfere in the finding of the learned Commissioner of Income Tax (appeal). Disallowance out of Kharagat expenses 6. During .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ses incurred under this head. He further stated that it cannot be said that the expenditure was not genuine merely on the reasoning that the expenses were incurred in cash. However, he requested the assessing officer to restrict the disallowance out of cash expenses to the extent of 1% of these expenses which comes to ₹ 27,288/.The assessing has not fully accepted the explanation of the assessee and restricted the disallowance to the extent of 10% of expenditure of ₹ 27,28,756 paid b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mment that the cash kharaja expenses are not verifiable. He accordingly disallowed lump sump 10% out of the same. The only adverse inference drawn by him was that, the vouchers do not contain serial number, rate of payment, destination where Groundnut Oil / Cottonseed Oil is delivered and the vouchers are not signed by any supervisor / manager. Against, the AR submitted that, the appellant's books of account were audited under the provisions of Section 44AB of the Act and that the appellant& .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and perusal of material on record, we noticed that the assessing officer had disallowed 10% of the Kaharjat expenses incurred in cash of ₹ 2, 72,8,756 - incurred in cash on the ground that most of the expenses were incurred in cash and the vouchers not contained the detail of rate of payment and the destination where the oil was delivered. We find that the assessing officer had not pointed out any specific defects and the disallowance was made on general assumption that expenses were incu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessment proceedings, the assessing officer observed that the assessee has claimed shortage of 54670 kgs. In this connection, he stated that the shortage to be on the higher side as the assessee was not manufacturing the oil. He therefore allowed shortage to the extent of 3038 kg out of ground nut oil and 2432 Kg. out of cotton seed oil resulted in addition of ₹ 28,39,945/- to the total income of the assessee. The assessee preferred appeal before the Ld. Commissioner of Income Tax(A). 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

basis the AO had made disallowance of as high as 90%. No independent inquiries were carried out by him. There is nothing on record to prove that the appellant's claim of shortage was bogus. On the other hand, it is the contention of the Id. AR of the appellant that, the claim of loss is as meager as 0.19% and 0.23% of Oil and cotton seeds oil, out of the total purchases. This shortage in real sense works out to only a fraction of the total quantity purchased by the appellant during the year .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rom tankers to storage tank. At the time of shifting loose oil, some portion of oil remains in tanker itself in view of the fact that the oil is having sticky characteristics. Further due to oval shape of tankers, o^t upto a certain level remains below the exit pipe, which can be termed as dead level. Hence such quantity of oil also forms part of shortage. Further during the transmission of oil some portion gets leaked from tubes. Therefore such waste also forms part of shortage. After transferr .....

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