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TMI Blog2017 (3) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court at the time of admission of SLP against the decision of Calcutta High Court in the case of Exide Industries. 3.That on the facts and circumstances of the case the Ld. CIT (A) has erred in law in deleting the addition of Rs. 13,54,419/- on account of provision for doubtful debts written back based on facts and submission not produced before the A.O. during the course of assessment. 4.That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing. ' 3. The grounds of appeal for A.Y.2008-09 are as follows :- 1. That on the facts and circumstances of the case, Ld. CIT(A) has erred in law in directing the A.O. to delete the addition of Rs. 14,22,257/- without appreciating the fact that mere defect in Books of Account or not making any adverse report by the Tax Auditor cannot be the parameter to delete any addition. 2 That on the facts and circumstances of the case, Ld. CIT(A) has erred in law in deleting the addition of Rs. 59,38,672/- on account of provision for leave encashment based on the primary view taken by the Supreme Court at the time of admission of SLP against the decision of Calcutta High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Annexure-XII of audit report is also provided herein : B. Quantitative Details of principal items of finished products Oil (Ltrs.) Greases(Kgs) (i) Opening stock as on 01.04.2008 5573911 841487 (ii) Quantity manufactured during the previous year 47885613 6324315 (iii) Sales during the previous year 47708502 6280767 (iv) Closing stock as on 31.03.2009 5751022 885035 (v) Shortage/(Excess)[adjusted against consumption) 142114 (0.2967%) 627 (.0099%) 6. From the above chart it is clear that even during A.Y.2009-10 the shortages in oil and grease were purely acceptable normal loss of 0.5% even otherwise it is established beyond doubt by various authorities of the Government _that shortages do arise in view of the nature of the business of oil and grease. Packing in smaller containers for retail sale also results in shortages. That considering all these factual aspects and practicalities the ld. CIT(A) held that shortages arise in a normal course of business of the assessee company and incidental to the very nature of the business. Therefore unexplained shortage of closing stock of Rs. 79,03,108 does not arise and there should be no addition made on this ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court has restrained the impugned order of the Hon'ble Calcutta High Court on departmental appeal after admitting the SLP. In view of the above, to maintain the equity provision for leave encashment written back of Rs. 14,41,000/- is disallowed." 9. The assessee stated that the company has not claimed provision for leave encashment as deduction during the relevant previous year as alleged by the AO in his order u/s 143(3) of the Act. Further it was also stated before the First Appellate Authority that the assessee vide order dated 26th December, 2011 filed before the AO clarified during the assessment proceedings that provision for leave encashment written back was claimed as deduction as the assessee previously by following the provisions of section 43B(f) of the Act added back the entire provision for leave encashment while computing the total income of the assessee. Accordingly it was prayed before the ld. CIT(A) that the provision for leave encashment written back which was claimed as deduction by the assessee during the relevant previous year otherwise the same would tantamount to double taxation. The ld. CIT(A) in his order observed that the company duly added back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made by the assesse during A.Y.2002-03 to 2007-08 under the provision of section 43B(f) of the Act exceeds the claim made by the assessee on account of the reversal and therefore the claim of the assessee is to be allowed. That on these observations we find acceptance with the order of the ld. CIT(A) and the relief granted to the assessee is hereby sustained. This ground of appeal by the revenue is dismissed. 11. The next ground of appeal relates to deletion of Rs. 13,54,419/- on account of provision of doubtful debts. The AO disallowed the claim of the assessee by stating that in his order u/s 143(3) of the Act that the assessee has taken the write off provision of doubtful debts in the profit and loss account but in the computation of income has taken it out of income which is not permissible as per the accounting policy since it is not an ascertained liability and as well as Sec.36(2)(i) of the Act is not applicable. Since the assessee is not carrying on money lending business in the ordinary course of business the amount of Rs. 13,54,419/- has to be disallowed for computation. That before the ld. CIT(A) the assessee stated that the company has not claimed the provision f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances in the case and we find that the ld. CIT(A) has verified the relevant documents and records of the assessee and then taken a decision which therefore is based on facts. The decision based on the facts on record cannot be denied or negated. Therefore we find acceptance in the order of ld. CIT(A) on this issue and relief granted to the assessee is sustained. This ground of appeal by the revenue is dismissed. 13. Ground No.4 in the A.Y. is general in nature and therefore needs no adjudication. 14. Now we take up A.Y.2008-09. The first ground relates to the deletion of addition of Rs. 14,22,257/- on account of shortage of closing stock. This issue for A.Y.2009-10 is already adjudicated in favour of the assessee and the same shall follow. This ground of appeal by the revenue is dismissed. 15. The second ground of appeal relates to the addition of Rs. 59,38,672/- on account for provision for leave encashment. At the very outset the ld. AR at the time of hearing rectified that the figure is Rs. 14179276 on this account. The ld. AR further submitted that there is an appeal pending before the Hon'ble Supreme Court on this issue and this is yet to be decided. That on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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