9911796707
TMI Blog2019 (1) TMI 2005X X X X Extracts X X X X X X X X Extracts X X X X ..... rectness of the order dated 18th November 2008 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2004-05. 3. In the first ground of appeal, the assessee has raised the following grievance: That the learned Commissioner of income-tax (Appeals) III, Baroda has grievously erred in law and on facts in confirming the disallowance of Rs.40,65,595 out of interest expense. 4. The assessee before us is engaged in the business of manufacturing and production of ossein gelatine and dicalcium phosphate, apart from being engaged in processing and export of processed marine products. During the course of scrutiny assessment proceedings, it was noticed that the capitalized the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed funds relating to such CWIP is not allowable and the same has to be capitalized. The appellant submitted that no amounts were borrowed during the year, and, only Rs 39.85 lakhs were added to the CWIP during the year as such, there was no major addition in the current year to the value of CWIP. These arguments are not correct and relevant to the issue. As far as the claim of interest is concerned, the same is not for capital borrowed during the year. Similarly, the increase or decrease in CWIP during the year is not relevant as far as capitalization of interest on outstanding borrowing are concerned. It is not in dispute that the appellant has borrowed huge funds to the extent of more than Rs 55 crores which are invested in fixed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record and considered facts of the case in the light of the applicable legal position. 7. We find that the impugned disallowance is based on the presumption, and without any cogent material to support such presumption, that all the unsecured loans are raised for the purpose of making investments in the capital work in progress. This presumption clearly contradicts with CIT(A)'s own finding, as reproduced above, to the effect that "the appellant's funds are mixed and from the common funds investments are made in CWIP as well as inventory and debtors etc". If the funds are mixed funds, as is the finding of the CIT(A), there cannot be any basis for the conclusion, as has been eventually adopted by him, that entire unsecured loans are used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. That the learned CIT(A) has grievously erred in law and on facts in confirming the disallowance of Rs.7,11,926/- being repairs and maintenance expenses of Plant and Machinery. 3. That the learned CIT(A) has grievously erred in law and on facts in confirming the disallowance of Rs.1,16,396/- being repairs and maintenance expenses to factory building. 4. That the learned CIT(A) has grievously erred in law and on facts in confirming the disallowance of Rs.1,50,000/- out of vehicle expenses, Rs.50,000/- out of telephone expenses and Rs.25,000/- out of office expenses. 10. All the above disallowances are purely on adhoc basis and on the ground that despite specific requisitions, all the bills and vouchers were not produced, that comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r instead of deleting the same in toto. 14. So far as this grievance of the assessee is concerned, the Assessing Officer disallowed 20% of the labour charges on the ground that "complete check over expenses" was not possible. When the disallowance was challenged before the CIT(A) and it was contended that the "allegation of the Assessing Officer was factually incorrect and contrary to the evidence available on record", the CIT(A) simply brushed aside the argument and proceeded to scale down the disallowance to 10% by observing that "since entire payment is made by cash to 6-7 persons and vouchers were not properly maintained, the disallowance was justified" in principle. The assessee is not satisfied with the partial relief so given and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh adjudication with the benefit of direct decisions from Hon'ble Supreme Court in the case of ACG Associated Capsules Ltd Vs CIT (343 ITR 89) and Topman Exports Vs CIT (342 ITR 49). That is precisely what was done by the Tribunal in the earlier assessment years. We accept the plea and remit the matter to the file of the Assessing Officer for fresh adjudication as such. Ordered, accordingly. 20. Ground no. 6 is thus allowed for statistical purposes in the terms indicated above. 21. In the result, the appeal is partly allowed in the terms indicated above. ITA 806/Ahd/12 22. By way of this appeal, the assessee appellant has challenged correctness of the order dated 10th January 2012 passed by the CIT(A) in the matter of penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
