TMI Blog2000 (6) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... ity expenses, water charges and cooking gas, etc. and further disallowed Rs. 71,806 out of maintenance of transit house. Rs. 20,000 claimed by the assessee as maintenance in respect of small guest house maintained at Calcutta were also disallowed making disallowance of Rs. 1,18,576. On appeal, the CIT(A) reduced the disallowance on electricity, water, and gas, etc. to Rs. 12,000 and also deleted the disallowance of Rs. 20,000 in respect of premises at Calcutta. Aggrieved, the Revenue as well as the assessee are in cross-appeals before the Tribunal. 2.1. At the time of hearing the learned counsel for the assessee submitted that identical issue was involved in the case of assessee for asst. yr. 1984-85 and Tribunal vide its order dt. 5th Sept., 1994, in ITA Nos. 1655 and 2149/Del/1990 in the cross-appeals of assessee and Department, involving asst. yr. 1984-85 had decided this controversy and deleted the disallowance of Rs. 20,000 made on account of premises hired by M/s Bajaj Electricals at Calcutta on the finding that the same was being used as house. Further, in the same order, appearing at pp. 53 to 60 of the paper book, the Tribunal had deleted the addition in respect of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asst. yr. 1984-85 and the Tribunal in the case of assessee vide para 5 had deleted such addition after following the case law. The learned Departmental Representative conceded to this proposition and we conclude that no such disallowance was called for. The ground of the assessee is allowed in view of the decision of Tribunal in assessee's own case referred to above and ground of Revenue fails. 4. Ground No. 5 of assessee's appeal relates to the disallowance of Rs. 68,912 made by the AO out of the provisions for bonus on the ground that the said amount was shown payable to those workers who were drawing salary more than Rs. 1,000 p.m. It appears that CIT(A) has not decided this ground which was specifically agitated as ground No. 15 before him. So the CIT(A) is directed to decide this ground. 5. Ground No. 6 of assessee's appeal relates to addition of Rs. 5,021 in respect of alleged undervaluation in stores. We find that the CIT(A) has not discussed this issue in the order impugned. Accordingly, matter is restored to the file of the CIT(A) to decide the issue in question in accordance with law. 6. Ground No. 7 of assessee's appeal relates to disallowance of Rs. 36,061 made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue afresh in accordance with law. 9. Ground No. 10 to 13 of assessee's appeal relate to initial depreciation and depreciation on temple, Pujari quarter, mess for workers and school within factory premises. The AO did not allow initial depreciation in respect of mess for workers, school on the ground that these facilities were also enjoyed by workers drawing salary of more than Rs. 10,000 p.a. The contention of the assessee was that out of 1,643 permanent employees 1,105 employees earned less than Rs. 10,000 p.a. and mess was entirely for workers and not for management staff. The CIT(A) sustained the disallowance of initial depreciation on the mess building and school but did not decide the claim of the assessee relating to temple and Pujari quarters. Aggrieved, assessee as well as Revenue are in appeal on this point. 9.1. During the course of hearing it was pointed out by the learned counsel for the assessee that depreciation on school building claimed by the assessee was allowed by CIT(A) in the case of assessee for asst. yr. 1983-83. Copy of that order of CIT(A) is appearing at pp. 90 to 110 of the paper book and relevant discussion is appearing at p. 104 in which it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of CIT(A) in deleting similar ad hoc disallowance as is apparent from para 9 appearing at pp. 58 and 59 of the paper book. Facts are identical and thus order of CIT(A) deserves to be confirmed. 10.2. The learned Departmental Representative conceded and thus the ground Nos. 1 to 3 taken by the Revenue fail. 11. Ground Nos. 4 and 5 stand already disposed of. 12. Ground No.6 relates to disallowance of Rs. 18,000 claimed as retainership fees and disallowed by AO under s. 80VV of the Act. The CIT(A) deleted the same. 12.1. At the time of argument the learned counsel for the assessee submitted that Tribunal in the case of assessee had deleted such disallowance for asst. yr. 1980-81 and case is reported in IAC vs. Hind Lamps Ltd. (1985) 49 CTR (Trib) (Del) 21. Further reliance has been placed on the decision in the case of CIT vs. United Commercial Bank Ltd. (1991) 189 ITR 57 (Cal) and K.N. Poddar Sons (P) Ltd. vs. CIT (1991) 97 CTR (Kar) 232 : (1991) 191 ITR 365 (Kar) in which it has been laid down that provisions of s. 80W of the Act were not applicable to payment of retainership fee. 12.2. On the other hand, the learned Departmental Representative placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of certain building and residential units. He called upon the assessee to furnish complete details or the building and residential units. During assessment proceedings AO noted that assessee had raised certain construction on building and residential units. He called upon the assessee to furnish complete details of the building and residential units so constructed. The assessee was also required to file detailed notes regarding the cost of construction. The assessee filed reply on 16th Feb., 1988, along with details of building construction which were said to have been examined by the AO. It appears that a reference was made by AO to Departmental valuer who after inspection of the building and after examination of the record of the assessee prepared valuation report which showed the difference of Rs. 6,53,715 in the cost shown by the assessee and cost arrived at by the Departmental valuer. The AO treated this difference of Rs. 6,53,715 as unexplained cost of construction and made the addition. 14.1. Matter was agitated before the CIT(A) and assessee took the plea that details of the amount invested during the year at Rs. 20,24,005 were furnished before the AO and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. After going through the facts and circumstances of the case we are of the opinion that AO had made the addition in a very cursory manner. He called upon the assessee to file details of the cost of construction and AO had noted down that assessee submitted such details. Unless and until some defects were pointed out in the details or in the books of account, reference to Departmental valuer was invalid in view of the decision of Rajasthan High Court in the case referred to above. The AO had not discussed the explanation submitted by the assessee about cost and nature of construction as well as different expenditures which were said to be duly supported with sale and purchase vouchers unless and until some basic defect was not pointed out by AO, reference cannot be made and no addition is warranted. CIT(A) has rightly deleted the addition and we confirm his finding. Both the grounds fail. 15. Ground Nos. 10 and 11 relate to addition of Rs. 6 lakhs made by the AO being extra profit in trading account relating to sale of scrap. During assessment proceedings the AO noted that in the year under consideration the assessee had shown rate of g.p. at 8.95 per cent as against 10.3 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked out the difference amount of Rs. 3.50 lakhs and also noted that no quotation, etc. were produced in respect of different scrap waste glass and waste papers, etc. and sale of these remained unverfied. Ultimately he added Rs. 6 lakhs. 15.1. The CIT(A) considered the submissions of the assessee and deleted the addition after observing as under: "15. I have considered the facts. This is a case of limited company where complete details duly audited have been maintained. During the year under consideration total quantity of scrap and waste sold is shown at Rs. 39,29,187 as against Rs. 43,30,877 in the preceding year. I also find that the stock of scrap was shown in closing stock at Rs. 17,37,000 while last year it was only Rs. 4,88,000. Therefore, it is clear that the scrap was generated and whatever was left after sale is shown in the closing stock. If it could not be sold for any reason would not lead to an adverse inference. The sales of scrap were effected by inviting sealed tenders opened in the presence of the senior material manager and general manager and the contract was awarded to the highest bidder. Therefore, there is no question of suppressing the sale rates. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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