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Perfect Agro Mills Pvt. Ltd. Versus ITO, Circle-14 (2) , New Delhi

2017 (10) TMI 315 - ITAT DELHI

Disallowance of deduction of excise duty - Held that:- As the assessee has itself prayed for a set aside and the learned Departmental Representative also does not have any objection, we deem it fit to restore the issue to the file of the Assessing Officer for a fresh verification and consideration after giving proper opportunity of being heard to the assessee in light of the observations of the order of the ITAT for assessment year 2010-11 - ITA No. 2672/Del /2010 - Dated:- 4-10-2017 - SHRI G.D. .....

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; 50 lakh. 2. Brief facts of the case are that for the year under consideration, the assessee company filed the return of income declaring income of ₹ 1,05,429/-. The AO noticed that the assessee had paid excise duty of ₹ 50,00,000/- during the year under consideration. He, therefore, asked to file details of excise duty paid amounting to ₹ 50,00,000/-, reasons for its payment and order of excise department if any. The assessee filed copy of the order No. A-558/CF/07/SC/(PB) da .....

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ngh from which the relevant data with regard to unaccounted sales made during the period 1.4.2003 to the date of search i.e. 27.2.2006 were recorded. The Central Excise department retrieved the data in the presence of Sh. Harbhajan Singh and issued a show cause notice to the assessee. On receipt of the show cause notice, the assessee filed a petition before the Settlement Commission Customs & Central Excise for settlement of the case. The Settlement Commission vide order dated 31.1.2007 admi .....

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also to provide year wise/month wise break-up of sales made during the period covered under the search made by Central Excise Department. The assessee filed letter dated 22.12.2008 and surrendered the sum of ₹ 35 lacs on account of investment and profit earned in respect of unaccounted sales for A.Y. 2003-04 to 2005-06 with the condition that the department will not reopen the case for 2004-05 and 2005-06 and no penal action will be initiated. The assessee also submitted a chart of year wi .....

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the conditional surrender of ₹ 35 lacs. On the basis of information available on the record, the AO recasted the manufacturing account to arrive at the gross profit and accordingly, he computed unaccounted gross profit at ₹ 83,26,976/- for the year under consideration and unaccounted income of ₹ 70,86,138/-in respect of invoiced sales. Thus, total addition on this account was made at ₹ 1454,13,144/-. The AO also made addition of ₹ 27,26,365/- on account of unaccount .....

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the benefit of proportionate excise duty paid amounting to ₹ 3792235/- has already been allowed by adjusting the same against unaccounted sale for the year under consideration. On appeal before the Ld. CIT(A), the Ld. CIT(A) dismissed the assessee s appeal on this issue and now, the assessee has approached the ITAT and has challenged the upholding of disallowance by the Assessing Officer. 4. At the outset, Ld. Authorised Representative submitted that the assessee s case was covered by the .....

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issue being restored to the file of the Assessing Officer. 6. We have heard the rival submissions and carefully perused the relevant material placed on record. We find that the ITAT Delhi Bench in I.T.A. No. 5895/Del/2014 for Assessment Year 2010-11 in assessee s own case vide order dated 30.12.2016 had considered an identical issue and had thereafter restored the issue to the file of the Assessing Officer. The relevant observations of the ITAT in the said order are contained in pages 7 to 12 an .....

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Excise duty demand of ₹ 96,00,833/- was raised by the excise duty department on unaccounted sales. On the basis of above information a demand of ₹ 41,80,520/- was also raised by the sales tax department which was deposited by the assessee company during the year under consideration and was claimed as deduction u/s 43B of the Act. The Assessing Officer disallowed the sales tax paid which was claimed u/s 37 read with section 43B of the Income Tax Act to the extent of ₹ 41,80,520/ .....

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es of the assessee), laid out of expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head profit and gains of business or profession. Explanation: for the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction of .....

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is admissible however the provisions of the Explanation to section 37(1) are clearly applied and barred any expenditure incurred on carrying out unlawful activities. The Hon ble Supreme Court in the case of Prakash Cotton Mills Ltd. (supra) has been pleased to hold that whenever any statutory impost paid by an assessee by way of damages or penalty or interest is claimed as an allowable expenditure u/s 37(1), the Assessing Authority is required to examine the claim of the provisions of the relev .....

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mponents of the impost and give deduction to that component which is compensatory in nature and refuse to give deduction to that The contention of the assessee in the present case before us, remained that the entire amount except ₹ 1,87,126/- is compensatory in nature and only ₹ 1,87,126/- was penal in nature. The assessee has also tried to support its claim by referring the order of Income Tax Settlement Commission wherein offer of the assessee company has been accepted. Reference o .....

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