TMI Blog2017 (1) TMI 1735X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the ld. CIT(A) qua the enhancement is struck down. Disallowance of insurance expenses on account of short adjustment of prepaid insurance expenses - HELD THAT:- It is true that the assessee has incurred insurance premium of ₹ 39,416/- during the year under consideration. It is also true that the entire insurance premium does not pertain to the year under consideration but amount of ₹ 13,533/- is attributable to the next financial year. It would not be out of place to refer to the observations made by the Hon ble High Court of Bombay in the case of Nagri Mills Co Ltd. [ 1957 (9) TMI 30 - BOMBAY HIGH COURT ] - Since the tax effect would be neutral, we do not find any merit in the impugned disallowance in the light of the afore-stated observations of the Hon ble High Court of Bombay. We set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition. Addition u/s 69C - Estimating expenditure on installation of certain assets @ 7% of the value of asset - AO noticed that the assessee has not debited any expense relating to the installation and/or labour charges and that such plant and machineries cannot be installed without incurring any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be added to its total income. 3. In its reply, the assessee explained its method of accounting stating that the assessee is following exclusive method of accounting for taxes, duties, levies etc. The assessee further pointed out that if the inclusive method of accounting is followed then the resultant figure will be tax neutral . The submissions of the assessee did not find any favour with the A.O. who was of the firm belief that the assessee has violated the provisions of section 145A of the Act and made an upward adjustment of ₹ 5,79,069/- to the value of the stock. 4. Assessee carried the matter before the ld. CIT(A) and once again explained its method of accounting. The ld. CIT(A) was convinced with the explanation of the assessee, drawing support from the decision of the Co-ordinate Bench in the case of Alpanil Industries in ITA nos. 169 170/Ahd/2005 dated 11.09.2009, The ld. CIT(A) observed that the addition made by the A.O. in respect of the difference of ₹ 5,79,069/- is not correct and deleted the same. Since the revenue is not in appeal before us, this issue has attained finality. 5. However, the ld. CIT(A) after verifying the facts was of the opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice and made in contravention to the provisions of section 251(2) of the Act violates the mandatory provisions of the act and cannot be upheld. We, therefore, set aside the findings of the ld. CIT(A) to this extent, the addition of ₹ 5,79,069/- stands deleted and the observations of the ld. CIT(A) qua the enhancement is struck down. Ground no. 1 is accordingly allowed. 2. The learned CIT (A) has erred both in law and on the facts of the case in confirming the disallowance of ₹ 13,533/- made in respect of insurance expenses on account of short adjustment of prepaid insurance expenses. 9. While scrutinizing the return of income, the A.O. noticed that the assessee has paid insurance premium of part of which pertains to next financial year. The A.O. was of the opinion that the assessee has claimed excess insurance expenses of ₹ 13,533/- which is the difference between the insurance premium paid at ₹ 39,416/- and the insurance premium related to the financial year under consideration at ₹ 25,883/-. The A.O. made the addition of ₹ 13,533/-. 10. Assessee carried the matter before the ld. CIT(A) but without any success. Before us, the ld. co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) and direct the A.O. to delete the addition of ₹ 13,533/-. Ground no. 2 is allowed. 3. The learned CIT (A) has erred both in law and on the facts of the case in confirming the action of Id. AO in estimating expenditure on installation of certain assets @ 7% of the value of asset and consequently making addition in the sum of ₹ 7,73,443/'- u/s 69C of the Act. 13. While scrutinizing the balance sheet of the assessee, the A.O. noticed that following additions were made to the assets during the year under consideration: (a) Plant and Machineries ₹ 64,52,684/- (b) Furnace Choke Assembly ₹ 45,96,510/- 14. The A.O. noticed that the assessee has not debited any expense relating to the installation and/or labour charges. The A.O. was of the opinion that such plant and machineries cannot be installed without incurring any expenditure. The A.O. accordingly estimated 10% of the total additions and made an addition of ₹ 11,05,000/- u/s. 69C of the Act. 15. Assessee contested the addition before the ld. CIT(A). The ld. CIT(A) restricted the addition to the extent of 7% of the total additions and directed the A.O. to restrict the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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