TMI Blog2022 (9) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... o requirement for TDS since falling within the limit of ₹ 20,000 (iii) when the payee was filing his return of income and had reflected the said receipts and his return of income. However, in such cases where the assessee could not file the relevant proof of the payee filing its return of income and reflecting such income in the return of income, CIT(Appeals) disallowed the same. In our considered view, we find no infirmity in the order of CIT(Appeals), either in facts or application of law. Addition on account of difference in stock statement - HELD THAT:- On a perusal of the records and on going through the order passed by the CIT(Appeals), we are of the considered view that the CIT(Appeals) has not erred in facts and in law in deleting the additions made by the AO. Addition on account of difference in balance sheet with supplier - HELD THAT:- We are of the considered view that in the instant facts CIT(Appeals) has not erred in facts and in law in granting relief the assessee. Merely because the supplier has not written back the amount in his books of account mainly because it was awaiting Form no. 18A would not vitiate the fact that the duty was not refundable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The Department has taken the following grounds of appeal:- 1. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs. 12,52,661/- on account of disallowance of forfeited security deposit on lease premises. 2. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.30,38,593/- made u/s.40(a)(ia) of the Act. 3. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.55,51,780/- made on account of difference in stock statement viz-a-viz appearing in the balance sheet. 4. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.1,33,008/- on account of difference in balance with Supplier viz Kerala State Bamboo Corporation Ltd. 5. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.59,94,293/- out of purchases. 6. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs.40,500/- on account of discount given to supplier. 7. The learned CIT(Appeal) has erred in law and on facts in deleting the addition of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital field. We do not agree with this finding, There is enduring benefit to the assessee. In our view the loss in question is in the revenue field and has been rightly claimed u/s. 28. The facts of the appellant are fully covered by the above decision and respectfully following the said decision this ground of the appeal is allowed. 4. On a perusal of the facts before us, we find no infirmity in the order of the Ld. CIT(Appeals) who has correctly held that forfeiture of security deposit is normal business loss in the assessee s line of business and the same is allowable as revenue expenditure in light of the decision of the Delhi ITAT in the case of Fab India Overseas Private Limited in ITA number 199/Del/2012 dated 28-06-2013. 5. In the result, ground number 1 of the Department s appeal is dismissed. Ground number 2: deleting the addition of ₹ 3,38,593/- made under section 40(a)(ia) of the Act 6. The brief facts in relation to this ground of appeal are that the assessee made payments to various Clearing and Forwarding agents for commission as well as towards reimbursement of expenditure. The assessee had deducted TDS on commission part and no TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indev Shipping Service Pvt. Ltd the appellant has deducted tax on portion of Rs. 10,200/- and no tax was deducted on amount of Rs. 17,528/- and in the same way no tax was deducted on the sum of Rs. 57,300/- paid to Reliable Freight Forwarders. The appellant has not submitted any return of income and profit and loss account to establish the fact that the corresponding payee has shown the receipt of income in their accounts and have paid due tax thereon. In these circumstances the disallowance to the extent of Rs. 74,828/- is confirmed. 7. We observe that Ld. CIT(Appeals) has given relief in respect of non deduction of TDS for cases where (i) the agent had issued separate invoice for reimbursement expenditure (ii) relief was also granted in respect of cases where there was no requirement for TDS since falling within the limit of ₹ 20,000 (iii) when the payee was filing his return of income and had reflected the said receipts and his return of income. However, in such cases where the assessee could not file the relevant proof of the payee filing its return of income and reflecting such income in the return of income, the Ld. CIT(Appeals) disallowed the same. In our consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before bank then there is no case of unexplained/ unaccounted investment in stock. The appellant has declared higher stock in the books of account by 36.50 Lac and, therefore, no addition thereto is warranted. Moreover, the books result declared by the appellant also shows improvement in terms of GP as compared to immediate preceding three years. The appellant is also maintaining quantitative details and the books of account have been subject to audit. Above all, the appellant has declared loss of Rs. 42.16 Lac in the year under consideration and the appellant was also having unabsorbed loss of Rs. 19.11 crore thus there is absence of any kind of motive which may lead to suppression of stock and thereby the profit to reduce tax effect. It is noted that even after making additions the tax effect comes NIL. Considering all the aspects and Submissions of the case the addition on account of difference in stock statement submitted with bank vis-a-vis books of account is not justified and the same is hereby directed to be deleted. This ground of appeal is allowed. 10. Before us, the Ld. DR relied on the observations made in assessment order. In response, the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have gone through the assessment order and submission made by the appellant and also gone through the series of document the appellant relied upon. This is the case where the appellant has recognized expenditure as soon as it came to know that it was not possible for it to issue Form no. 18A and consequently not entitled to get refund of the sum of duty. Ld. AR has placed sufficient documents to establish the genuineness of the transaction. Given facts that the appellant was not in a position to issue Form no. 18A, it was automatically disentitled to receive refund of the duty of Rs. 1,33,008/- and consequently it has to be added to the purchase price as the same has direct nexus with the cost of purchase. I do not see any accounting error in entering the transaction and thereby debiting the said amount to the cost of purchase. Merely because the supplier has not written back the amount in his books of account mainly because it was awaiting Form no. 18A would not vitiate the fact that the duty was not refundable to the appellant and ultimately it had to go to the profit and loss account. As per accounting principles the expenditure has to be recognized the moment liability crystal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation was not filed would not be sufficient ground to disallow genuine purchases, particularly when the appellant is in position to demonstrate the same by producing and submitting relevant documentary evidences. Here, ld. AO completely failed to consider and comment on the critical documents submitted by the appellant viz. purchase invoices containing name, address, contact details, sales tax registration numbers of the supplier, transport receipts, goods inward details, delivery challans, correspondence with the supplier, corresponding sale, mode of payments, outstanding at the end of the year etc.. All the purchase under consideration are duly supported by documentary evidences which clearly establishes the actual movement of goods and in the light of the same the genuineness and actual receipt of goods cannot be denied. Merely, non-furnishing confirmation return of supplier, return of notice would not negate the evidentiary value of the material produced by the appellant. Moreover, the appellant has furnished confirmations of both the suppliers during the course of the remand proceedings and copy of the same is also submitted before me, with this the basic grievance of the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal situation. The appellant did not come to know about the credit given by the appellant in the year and hence no question of taking the credit of the same arises. The matter was settled in the AY 06-07, hence the appellant came to know about the credit effects and the same have been recognized in the subsequent year. It is not possible for the appellant to assume the discount without any intimation from the supplier and hence the said income was rightly not recognized in the year under consideration. I, therefore, direct ld. A.O. to delete the addition. This ground of appeal is allowed. 21. We have perused the material on record, and in our considered view, we find no infirmity in the order of Ld. CIT(Appeals). In our view, income can be recognised by the assessee only when the same comes to the knowledge of the assessee. It is quite common in any line of business that the assessee cannot be expected to know about the discount unless the same is intimated to him. It is also observed that in the subsequent year i.e. assessment year 2006-07, the assessee recognised the discount in its books of accounts, when it came to know about the same. Accordingly, a find no infirmit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound number 7 of the Department s appeal is dismissed. Ground number 8 deleting the addition of ₹ 1,42,580/- treating repairing expenditure as capital expenditure: 27. The brief facts in relation to this ground of appeal are that assessee had carried waterproof coating over the terrace of the factory and claimed the said expenditure as revenue expenditure. The AO disallowed the same as capital expenditure. In appeal, the Ld. CIT(Appeals) allowed the assessee s appeal on the basis that as per the balance sheet, the gross value of the building was_ 5,00,67,882/-,whereas the repairing expenditure for waterproofing was ₹ 1,42,580/-only. Accordingly, since the expenditure was too small as compared to the value of asset, the assessee was justified in claiming the same as revenue expenditure. While passing the order, Ld. CIT(Appeals) made the following observations: Decision: 14.4 I have considered the submission of the appellant and assessment order as well. During the course of the hearing ld. AR drawn attention towards the gross value of the factory building as per the balance sheet which was Rs. 5,00,67,882/-, whereas the repairing expenditure viz. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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