9911796707
TMI Blog2023 (5) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... 15-16. 2. Briefly stated, the assessee is a public limited company engaged in the business of manufacture and sale of glass shells and a funnel used in colour television picture tubes and also claims to be engaged in manufacturing of specialized glass for avionic purposes. 3. The assessee filed its return of income for Assessment Year 2015-16 in question declaring total loss at Rs.(-)12,69,55,607/-. The return so filed by the assessee was subjected to scrutiny assessment under Section 143(3) of the Act by issuance of notice under Sections 143(2) and 142(1) of the Act. In the course of the assessment proceedings, the Assessing Officer observed that the assessee-company has inter alia claimed deduction of Rs.8,55,17,103/- on account of impa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the statement of facts and the submissions made on behalf of the assessee but however did not find any merit in the propriety of the claim so made. The CIT(A) accordingly declined to interfere with the action of the Assessing Officer and denied any relief. The relevant operative paragraph of the order of the CIT(A) reads as under: "Findings I have considered the facts of the case, the basis of addition made by the Assessing Officer and the arguments of the AR during assessment as well as appellate proceedings. The decision is as below. i. The Appellant Company is engaged in the business of manufacturing of specialized avionic glass. Appellant Company entered into an agreement dated 23.01.2020 with M/s. Samtel Display Systems Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. It was also submitted by the Ld. counsel that vide submission dated 27-09-2018, it was clearly stated that forfeiture of security deposit has been taken in to income by M/s. Samtel Avionics Limited and paid tax thereon. The AO has also concluded "Even the inventory of glass to M/s Samtel Glass Ltd. which has been written off vide Note 26 of the Balance Sheet, is substantiated by the details of inventory accounted for in the books of accounts - Note 22 (para 4 point Dc) supra) of the assessee company nor in the books of Samtel Avionics Ltd." iv. I have considered the facts of the case. It is pertinent to note that both the entities are closely interlinked and have common ownership. The associated enterprises of the same group splitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws relied upon are clearly distinguishable on the facts. Accordingly based on discussions above, I don't find any infirmity in the action of the AO." 5. Further aggrieved by the denial of relief by the CIT(A), the assessee preferred appeal before the Tribunal. 6. When the matter was called for hearing, the ld. counsel for the assessee reiterated its stance for allowability of business losses claimed on account of forfeiture of security deposit placed with SAL in ordinary course of business and also the loss arising to the assessee on account of inventory write off by the AE, i.e., SAL. It was reiterated that the assessee-company entered into an agreement dated 23.01.2010 with SAL to supply specialized glass for avionic purpose. A s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no mala fide can be attributed on the assessee. On enquiry from the Bench, the ld. counsel also admitted that no tax has been actually paid by the corresponding AE on such forfeiture etc. due to availability of carry forward losses. 7. The ld. DR, on the other hand, strongly supported the action of the Assessing Officer and CIT(A). The ld. DR submitted that the directors of both the companies are from the same family and Mr. Satish Kaura, the Director of the assessee-company is father of Mr. Puneet Kaura, Director of SAL. The SAL is also a shareholder of the assessee-company with 10.98% shareholdings. The ld. DR thereafter referred to the assessment order and submitted that the assessee has failed to prove the propriety of the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have carefully considered the rival submissions and perused the case records with their assistance. 8.1 The propriety of business loss of Rs. (-)8,55,17,103/- claimed towards forfeiture of security deposit and write off of inventory by the proposed recipient of the supply from the assessee in question. We have perused the assessment order and the first appellate order. The Assessing Officer has observed that the funds of an odd amount of Rs. 6,95,80,594/- has been transferred without providing any justifiable reason. There are no records of any actual supply of glasses by the assessee. The agreement has not been produced in original. The loss claimed is not backed by any substantive evidence. 8.2 We concur with the view taken by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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