TMI Blog2020 (12) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... AO may satisfy itself that while the assessee follows exclusive method of accounting towards purchase costs, such method does not impact the ultimate profit in any manner. Needless to say, the addition towards Excise Duty, VAT etc. will not be permissible by resorting to section 145A of the Act where the action of the assessee is found to be tax neutral. Addition on account of short receipts shown as per Form 26AS - HELD THAT:- In the absence of any cogent explanation offered on behalf of the assessee either before the CIT (A) or before us towards impugned difference detected by Revenue from the annual statement in Form 26AS, we decline to interfere with the order of CIT (A) in this regard. Disallowance towards reimbursement of travelling expenses paid to foreign parties without deduction tax at source - HELD THAT:- A contradictory version is coming to the fore. Hence, we consider it expedient that the issue is remitted back to the file of the AO for enabling the assessee to establish that the aforesaid amount of ₹ 17,21,392/- represents actual reimbursement of travelling expenses claimed to have been paid to foreign parties without any profit element embedded in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that even if inclusive method is used there is no change in taxable income. 3. Ld. CIT (A) erred in law and on facts in not appreciating that ld. CIT (A) in previous year set aside the issue to AO to verily reconciliation of Cenvat credit closing stock prepared in similar manner by the appellant. 4. Ld. CIT (A) erred in law and on facts not adjudicating alternate ground that if addition to closing stock is sustained then AO be directed to enhance opening stock of subsequent by equal amount. 5. Ld. CIT (A) erred in law and on facts confirming addition made by AO of ₹ 4,22,743/- on account of short receipt shown as per Form 26AS. 6. Ld. CIT (A) erred in law and on facts confirming addition made by AO of ₹ 17,21,392/- towards reimbursement of traveling expense paid to foreign parties in absence of deducting tax at source. 7. Ld. CIT (A) erred in law and on facts confirming disallowance made by AO of ₹ 7,00,000/- towards training expenses paid to foreign parties not Deducting tax at source when activities did not involve application of any technical, managerial or consultancy skills or specialized knowledge. 3. Ground nos. 1 to 4 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany as a result of inclusive method, then AO is directed to delete the additions made in that year. For this purpose, the learned senior counsel referred to an 'Order giving effect to the order of the CIT (A) concerning AY 2010-11 dated 12.03.2020' wherein the AO ultimately granted suitable relief to the assessee after due verification. In this backdrop, it was contended that there was no justification for the CIT (A) to completely dismiss the case of the assessee without any proper opportunity in the absence of any deviation in the method of accounting consistently followed year after year. 3.3. The learned senior counsel thereafter referred to the decision of the Tribunal in the case of ACIT vs. M/s. Lubi Electronics ITA No. 2197/Ahd/2016 order dated 18.02.2019 for the proposition that in a tax neutral exercise, no addition towards unutilized MODVAT/CENVAT credit is warranted. The learned senior counsel also referred to the decision of the Hon'ble Gujarat High Court in the case of Pr. CIT vs. Gujarat Gas Company Ltd. referred to by the coordinate bench in Lubi Electronics (supra) to buttress the stand of the assessee for reversal of action of CIT (A). 4. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, the CIT (A) has rightly approached the issue on determination of exact liability by either inclusive or exclusive method. However, We do not see any justification in the action of the CIT (A) in dismissing the plea of the assessee altogether on the point. The CIT (A), in our view, ought to have given a reasonable opportunity to the assessee for substantiating its claim that method of accounting followed by the assessee does not impinge upon the provisions of Section 145A of the Act, in tandem with the action of the CIT (A) in AY 2010-11. 5.2. We therefore consider it expedient to set aside the direction of the CIT (A) on the issue and remit the issue to the file of the AO for suitable verification of facts afresh. The AO may satisfy itself that while the assessee follows exclusive method of accounting towards purchase costs, such method does not impact the ultimate profit in any manner. Needless to say, the addition towards Excise Duty, VAT etc. will not be permissible by resorting to section 145A of the Act where the action of the assessee is found to be tax neutral. With these remarks, the entire issue is set aside to the file of the AO for consideration afresh in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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