TMI Blog2019 (11) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... ortation of milk, whereas the same should be restricted only to the transaction of milk through the directors. In this regard, the CIT(A) has re-worked the disallowance in the hands of assessee. We find merit in the working of CIT(A) to this extent. However, while working out the cost of milk transportation per litre, CIT(A) by an error has adopted the figures after taking the ratio of milk transported in litres per rupee, in fact the ratio to be applied is rupees/per litres transported. The assessee has filed the tabulation in this regard and the payment to related parties works out to 62 paise per litre as against 69 paise per litre paid to unrelated parties. In such circumstances, there is no merit in making any disallowance under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny. On verification of audit report in column 19, Note No.5, the assessee had declared the transactions with sister concern in respect of purchase of milk and transport payments. On verification of milk transportation expenses debited to Profit and Loss Account, it was noted that payment of ₹ 1.24 crores was made to four directors and one family member. The Assessing Officer on verification of vouchers, books of account, etc. noted that transportation charges were paid on self drawn vouchers and further, no supporting evidence in the form of bills raised by related parties were available with the assessee. The Assessing Officer also noted that none of the directors and the family members had issued any bills of their own to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to transportation expenses claimed by Malganga Dairy Farm for transportation of 2.46 crores litres, against which milk transportation expenses were ₹ 1.28 crores. In other words, ₹ 0.52 per litre was incurred as transportation expenses. The Assessing Officer in this regard observed that there was excess expenditure of ₹ 0.13 per litre. By applying the said ratio to total milk sold of 4.14 crores of litres, the Assessing Officer worked out sum of ₹ 53,91,927/- as excessive payment. The Assessing Officer held that the said excess payment was made to directors and other family members, who failed to establish that payment made to them was genuine. Hence, the Assessing Officer disallowed sum of ₹ 53,91,927/- u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and by the directors of assessee company. The assessee was asked to furnish breakup of litres of milk sold / supplied through vehicles owned by directors. In reply, the assessee furnished a chart showing the quantity transported by the directors and their family members, which is tabulated under para 7.3 at pages 13 and 14 of appellate order. The CIT(A) observed that 2.02 crores of litres of milk was transported in the vehicles belonging to directors and their family members and payment @ ₹ 1.62 per litre works out to ₹ 1.25 crores. As against the same, cost of transporting the balance milk sold during the year [4.14 crores of litres (-) 2.02 crores of litres] i.e. 2.12 crores of litres through other transporters at cost of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently, rate would work out to 62 paise to related parties and 69 paise to unrelated parties. The learned Authorized Representative for the assessee has filed tabulated chart and in this regard has referred to para 7.4 of CIT(A), who had calculated the milk transportation charges per rupee at 1.62 litres for related parties and 1.45 litres to unrelated parties. On the other hand, the assessee says that in case rate is adopted correctly, then the cost of transportation paid to related parties was less than unrelated parties, hence it was not excessive. He fairly admitted that the same may be verified by the Assessing Officer and addition be accordingly, deleted. 8. The learned Departmental Representative for the Revenue p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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