TMI Blog2017 (12) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the Tribunal in assessee’s own case for the assessment year 2009-10 held that CIT(A) has allowed the scrap sale in view of the norms prescribed by the DGFT of foreign trade wherein the normal scrap can be allowed to the extent of 5%. The scrap of the assessee was to the extent of 2.91% which was found within the limit. The scrap record was maintained by the assessee in RG 1 which was verified by the excise department. Moreover, in earlier years also the scrap was sold and accepted by DCIT u/s.143(3) of the Act in view of the order dated 30.12.2010 for A.Y.2008-09. In view of the above said reasons, we are of the view that the CIT(A) has decided this issue judiciously and correctly Disallowance of expenditure incurred in relation to exempt income u/s 14A - Held that:- We find that the ld.CIT(A) deleted the addition by recording the findings of facts that the assessee’s own funds were far more than the investments made in the securities yielding tax free income. Therefore, the disallowance u/s 14A r.w.rule 8D(2)(ii) was not called for. See CIT V/s RELIANCE UTILITIES AND POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT V/s HDFC Bank Ltd (2014 (8) TMI 119 - BOMBAY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to rebut findings of sales tax department vis-a-vis bogus purchases despite reasonable opportunity was accorded to him. 9. On the facts and in the circumstances of the case and in law, the Ld CIT (A) has grossly erred in accepting the misleading submissions made by the assessee that the department didn't make available the information, provided by Sales Tax Department. 10. On the facts and in the circumstances of the case and in law, the Ld CIT (A) has erred in not appreciating the findings of the Assessing officer regarding the non genuine purchase transactions made by the assessee 2. The issue raised in the grounds of appeal no.1,5,6,7,8,9 and 10 is in respect of confirmation of addition of ₹ 1,37,875/- by the ld. CIT(A) as made by the AO by treating the same u/s 69C of the Act as unexplained expenditure. 3. The facts of the case in brief are that the AO received information from the DGIT(Inv), Mumbai and also from Sales Tax Department, Government of Maharashtra that the assessee has availed the entries of bogus purchases from M/s Siddhivinayak Steels to the tune of ₹ 1,37,875/- and accordingly, a show cause notice was issued to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases depending upon the facts of the case in order to tax the savings which the assessee might have made by purchasing the material from gray market by way non payment of VAT and other incidental taxes. Taking the consistent view with the decision of the Co-ordinate Benches of the Tribunal, we are also of the view that 100% addtition is not sustainable but only profit on the said purchases could be assessed. We are therefore of the considered view it would be fair and reasonable to make addition at the rate of 12.5% of the said unexplained expenditure. As a result, the appeal of the department is partly allowed. The AO is directed to make the addition at the rate of 12.5% of such purchases. 5. The second issue raised in the grounds of appeal no.2 is against the in deletion of addition of ₹ 34,04,120/- by the ld.CIT(A) by treating the same as - sale of scrap as unaccounted sales. 6. At the outset, the ld.AR submitted before the Bench an identical issue has came up before the B Bench of the Tribunal in assessee s own case in ITA No.6233/M/2012 (AY-2009-10) and has been decided vide order dated 29.12.2016 wherein the Tribunal has decided the issue in favour of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the revenue on this account. Ground no.2 is dismissed. 10. The third ground of appeal is in respect of deletion of addition of ₹ 66,833/- by the ld. CIT(A) which was made on account of disallowance of expenditure incurred in relation to exempt income u/s 14A of the Act. 11. Facts in brief are that the AO disallowed a sum of ₹ 66,833/- under section 14A being interest of ₹ 60,083/- under rule 8D(2)(ii) and ₹ 6750/- under rule 8D(2)(iii) of the Rules by rejecting the submissions of the assessee that no expenditure was incurred in relation to earning of exempt income or making the investment which are of capable of earning exempt income. In the appellate proceedings, the ld.CIT(A) partly allowed ground raised by the assessee by directing the part deletion by holding that the assessee s own funds are sufficient to cover the investments in the tax free securities and investments therefore no disallowance was called for u/r 8D(2)(ii) to the tune of ₹ 60083/- and thus partly allowed the appeal of the assessee. 12. We have heard the rival contentions and perused the material placed before us. From the records placed before us we observe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit report, the annexure of the addition to the fixed assets. The purchase has also been submitted and the record in connection with put to use in the said assessment order has also been furnished. In fact the assessee made an addition to the existing fixed asset in the building to the tune of ₹ 2,19,990/-, plant and machinery of ₹ 27,16,063/- and electrification of ₹ 65,448/- and accordingly the depreciation was claimed. The Assessing Officer declined the claim of the assessee on the basis of the finding in case M/s. Metcraft Engineering Corporation. No independent views were given for declining the claim of the assessee. In view of the said circumstances when the assessee has demonstrated his case justifiably by proceeding the record as well as working, therefore, in view of the said circumstances, we are of the view that the CIT(A) passed the order on this issue judiciously and correctly which is not require to be interfere with at this appellate stage. 16. We, therefore, respectfully following the order of the Tribunal and to maintain the consistency with the order of the Tribunal dismiss the ground raised by the revenue. 17. Resultantly, the appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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