TMI Blog2016 (12) TMI 1666X X X X Extracts X X X X X X X X Extracts X X X X ..... to interfere with the same. This ground of the Revenue is dismissed. Disallowance of depreciation - Held that:- Assessing Officer has not disputed the purchase of machinery and also verified the purchase with reference to purchase bills issued by Seller Company. Mere presumption by the Assessing Officer that since the machinery was old it could not be put to use without major repairs does not sustain. Thus the contention of the assessee that the machinery installed was open to verification and that if the AO had any doubt spot enquires could have been made. Thus, the CIT(A) rightly deleted this addition. Treating the incentive on sale of levy sugar as revenue receipts as against capital receipts claimed by the assessee is not correct. It is capital receipt. Penalty u/s 271(1)(c) - inaccurate particulars of income on account of interest to Financial Institutions - Held that:- Assessee has not concealed any particulars of income or furnished any inaccurate particulars of income. The Assessing Officer was incorrect in holding that the assessee furnished inaccurate particulars of income on account of interest to Financial Institutions by conversion of same into Term Loan and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer on account of disallowance of depreciation claimed on old machinery ignoring the fact that the machinery was old and discarded and assessee failed to prove its use. 4. On the facts and in the circumstances of the case, the order of Ld.CIT(A) deserves to be set aside and that of A.O be restored. 3. Assessee is a Limited Company and filed its return declaring Nil income on 27/10/2004 which was processed u/s 143(1) of the I.T. Act, 1961, on 20/12/2004. However, company paid taxes as per provisions of Section 115JB of the Income Tax Act, 1961 on the book profit shown at ₹ 13,42,424/-. Assessee company s case was selected for scrutiny. Accordingly, notice u/s 143(2) of the Act was issued on 3/8/2005 and was duly served upon the assessee company on 5/8/2005. In response to notices u/s 142(1) issued along with detailed questionnaire, Authorized Representative of the assessee company appeared from time to time, filed various replied and details which are on record. The return of income was accompanied with Audit Report and audited copies of accounts. As per computation of income attached with the return of income company declared net profit as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - which gives a rate of ₹ 1,127/- per quintal. Assessee company was asked to justify rate of sugar per quintal and its working and basis. Assessee company filed reply stating that working of closing stock has been made as per a-2 and value of closing stock has been shown @ 1,127/- per qtls being cost price. The Assessing Officer further observed that on verification from other sugar mills, the rate found to be on much lower side, M/s Mansurpur Sugar Mills valued its closing stock of sugar @1,285/- per qtls and has given complete working. Assessee company was therefore further required to explain as to why addition on account of under valuation of closing stock be not made. Assessee company filed reply starting that all the sales have been made in the open market. It was further mentioned that rates of sugar varied from time to time as per market conditions. Assessee company requested for supply of working of cost of sugar by the Mansurpur Sugar Mills, which was denied and assessee was asked to submit its own working as per AS-2 (Revised) method as prescribed by the Institute of Chartered Accountants of India which is mandatory in nature. Assessee company again filed reply on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing old and discarded. Moreover, the assessee has not proved its use. 7. Being aggrieved by the order the Assessee filed appeal before the CIT(A). The CIT(A) allowed the assessee s appeal. 8. As regards to Ground No. 1, the Ld. DR submitted that the excise duty on closing stock of Alcohol was rightly added by the Assessing Officer. 9. The Ld. AR submitted two case laws i.e. SVP Industries Ltd. Vs. CIT 2014 50 Taxman.com 229 Delhi wherein it is held that when neither excise duty was paid nor duty was incurred under Sub-Section 1 of Section145 A is not applicable. The assessee relied on the Hon'ble Supreme Court Judgment in the case of Dina Vision which is for Assessment Year 1987-88. The Ld. AR submitted that CIT(A) is right in allowing the assessee s contentions. 10. We have heard both the parties it can be seen that the assessee neither excise duty was paid by the assessee nor the duty was incurred. Therefore, Section 145A will not be applicable, but as regards the basis of accounting concept the assessee has not followed proper procedure as excise duty was not mentioned in closing stock of alcohol. While excise duty payable should be compared of production cost, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of ₹ 1,11,92,000/- made by the Assessing Officer on account of treating the incentive of ₹ 1,1192,000/- on sale of levy sugar as revenue receipts as against capital receipts claimed by the assessee. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of ₹ 3,34,413/- made by the Assessing Officer on account of provision made for storage fund claimed as revenue expenditure by the assessee. 3. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of miscellaneous expenses of ₹ 1,25,000/- made by the Assessing Officer . 4. The order of the Ld.CIT(A) be set aside and that of the A.O be restored. 21. As regards first ground, the same is covered by assessee s own case for Assessment Year 2000-01 being ITA No. 86/Del/2006 relevant portion is as follows:- The first reason taken by the A.O for initiating reassessment is treating the sale of additional quota of sugar in free market amounting to ₹ 35,11,976/- as revenue receipt against the assessee s claim of capital rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cooperative Sugar Mills Ltd., 229 (Mad). In view of several decisions taken note of by the Ld.CIT(A) in the impugned order supporting the assessee s contention, which have not been controverted by the Ld. Dr with any contrary decision, we are of the considered opinion that the ld. First Appellate Authority has taken an unimpeachable view on this issue. We, therefore, uphold the impugned order on this score. 25. We have heard both the parties and perused the order passed in assessee s own case in ITA No. 86/Del/2006. The issue herein is squarely covered. 26. In result, Ground No. 2 is dismissed. 27. As regards Ground No. 3 is concerned, the Ld. DR relied upon the order of Assessing Officer. The Ld. AR submitted that disallowances are only on adhoc basis without a single instant of doubt. The miscellaneous expenses were properly dealt by the CIT(A). Hence no interference is required. 28. We have heard both the parties. The disallowance in respect of miscellaneous expenses was made purely on estimated basis by the Assessing Officer. The CIT(A) has rightly deleted this addition partly. There is no need to interfere with the order of the CIT(A). 29. In result, Ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concealed any particulars of income or furnished any inaccurate particulars of income. The Assessing Officer was incorrect in holding that the assessee furnished inaccurate particulars of income on account of interest to Financial Institutions by conversion of same into Term Loan and by issue of Zero Coupon Bonds. The assessee has furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept is claim in the Return or not. Merely because the Assessing Officer made addition on account of unpaid interest in respect of term loan amounting to ₹ 7,95,42,474/- as interest paid to financial institution was converted into term loan but was claimed as actual payment within the ambit of Section 43B of the Act by the assessee. This cannot be termed as concealment of income or furnishing of inaccurate particulars of income and will not attract the provisions of Section 271(1)(c) of the Act. The Explanation 1 of Section 271(1)(c) of the Act will not be applicable in the present case. 40. In result, Appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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