TMI Blog2019 (7) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... sult this ground of appeal is dismissed. Disallowance of administrative expenses - HELD THAT:- While working the disallowances the AO worked out disallowance of ₹ 2.61 crore. Before learned CIT (A) the assessee stated that the administrative expenses is only just 2.87% of turnover and that in preceding year it was 2.42% of the total turnover. The assessee also stated that the turnover of assessee was increased about 17% from the proceeding financial year. CIT (A) after considering the submission of the assessee concluded that in absence of any corroborative evidence it cannot be said that the assessee has discharged onus. CIT (A) confirmed the action of the AO. However, on the working of disallowances the AO was directed to correct the figure of disallowances. Before us the assessee neither furnished any documentary evidence not filed any written submission to substantiate the ground of appeal, therefore, we do not find any justification in interfering the finding of CIT (A). In the result this ground of appeal is also rejected. Addition on account of non- utilisation of loan - AO disallowed 14% of loan - CIT(A) deleted the addition - HELD THAT:- Disallowances are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A)-53, Mumbai dated 30-01-2017. The assessee, in its appeal has raised the following grounds of appeal:- 1. The Learned Commissioner of Income Tax (Appeals)-53 [ CIT(A) ], on the facts of the case and in law, has erred in upholding the addition of ₹ 10,20,37,975, being 1.42% of gross profit, in appellant's total income. The appellant respectfully submits that its gross profit of 8.20%, as shown by the audited financial statement, is correct. 2. The Learned C1T(A), on the facts of the case and in law, has erred in upholding an ad-hoc disallowance of ₹ 2,06,12,8007- on account of 10% of entire administrative expenses. The revenue, in its cross appeal, raised the following grounds of appeal:- (i) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the ad-hoc disallowance of ₹ 5,84,79,680/- on account of total interest paid on incremental working capital loans taken during the year under consideration by holding that the disallowance is based merely on assumption, without taking into consideration the fact that the assessee could not provide any requisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of lower authorities. The Ld. DR further submits that during the assessment the assessing officer noted that the assessee has shown lower gross profit (GP) comparative to immediately preceding assessment year. The assessee was asked to substantiate its stand. Though, the assessee filed its reply, however, no evidences and explanation about the sale, purchase, transportation, and stock register was furnished before the assessing officer. The assessee is its reply submitted that all the supporting vouchers, bills and the evidences have been lost and that the entry in the report in Form 3CD should be accepted. The AO rejected books of account. The AO in absence of evidences estimated addition of GP at 1.42% and worked out addition of ₹ 10,20,37,975/-. Before ld CIT(A) no evidences was filed , accordingly he addition was upheld. The ld. DR prayed to uphold the additions. 4. We have considered the submission of learned DR for the revenue and also gone through the orders of authorities below. The assessing officer while making assessment issued show cause notice as to why the assessee has shown lower GP comparative to preceding assessment year. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessing officer in disallowing 10% of administrative expenses wrongly worked the disallowances therefore, he directed the AO to correct the figure in order giving effect. 6. We have considered the submission of learned DR for the revenue and perused the material available on record. We have noted that during the assessment the assessing officer noted that the assessee has shown substantial increase in the administrative expenses for the year under consideration comparative to the preceding year of ₹ 1 4.83 crore . The assessing officer issued show cause notice to the assessee to substantiate the administrative expenses. The assessee filed its reply on 13th March 2015. The reply of the assessee was not accepted by assessing officer in absence of any corroborative evidence. The assessing officer concluded that the assessee has not discharge its onus in proving the claim of administrative expenses and disallowed 10% of 20.61 crore. We have noted that while working the disallowances the assessing officer worked out disallowance of ₹ 2.61 crore. Before learned Commissioner (Appeals) the assessee stated that the administrative expenses is only just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of secured and unsecured loan purpose and utilisation of such loan and the details of interest paid on such loan. In absence of satisfactory evidences the assessing officer worked out the disallowances of ₹ 5.84 Crore. Before Commissioner (Appeals) the assessee stated that the assessing officer assumed that entire credit limit availed during the year had not been used for business purpose. The assessing officer has not verified the balance-sheet of the company, which shows that against working capital finance of ₹ 208.03 crore, the assessee was showing inventory and debtors of ₹ 197.83 Crores and ₹ 154.32 Crores respectively, aggregating of ₹ 322.15 crore. If the act of AO is accepted, the amount of debtor and the stock, then the assessing officer should have accepted the working capital finance taken from the bank was just 59.07% of current asset and therefore, question of working capital finance having been used for any purpose other than per the business does not arise. The learned Commissioner (Appeals) after considering the submission of the assessee observed that though, the assessee could not provide the requisite evidence regarding uti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 50.96 Lacks, which consist of ₹ 46,76,398/- under Rule 8D2(ii) of and ₹ 4,20,265/- under Rule 8D2(iii) being .5% of average value of investment. During the appellate stage, the assessee stated that there was no justification in making the disallowance under section14A. It was further stated that no fresh investment was made during the year and all the investment were old investment and were funded through own capitals and reserves of ₹ 211.41 crore. It was further stated that no such disallowances were made in earlier scrutiny assessments. The assessee also stated that no exempt income was earned by the assessee during the relevant period and no disallowance was warranted. The assessee also relied upon the decision of Delhi High Court in Cheminvest meant Ltd versus CIT in ITA No. 749 of 2014. The learned Commissioner (Appeals) after considering the submission of the assessee and following the ratio laid down by Hon ble Delhi High Court in Cheminvest ltd (supra) held that no disallowance under section14A is called for, once there is no exempt income received or receivable by the assessee during the relevant previous year. We have noted that the assessing of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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