TMI Blog2011 (7) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... first appeal, the learned CIT(A) deleted the addition. Aggrieved thereby, the Revenue is in appeal before us. 3. We have heard the rival submissions and perused the relevant material on record. It is noted that the question of making disallowance u/s 14A is no more res integra in view of the judgment of the Hon ble Bombay High Court in Godrej Boyce Ltd. Mfg. Co. VS. DCIT (2010) 328 ITR 81 (Bom) holding that the provisions of section 14A are applicable in circumstances as are prevailing presently and the disallowance has to be worked out by the AO on some reasonable basis and not rule 8D. Under such circumstances, we set aside the impugned order and restore the matter to the file of the AO for deciding the quantum of disallowance, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Note 3 to the Balance Sheet, the Assessing Officer held that the amount of ₹ 20,60,000 was required to be reduced from block of asset under the head plant and machinery as the same represented the assets sold in the year. Resultantly depreciation on the same amounting to ₹ 5,15,000 was disallowed. The learned CIT(A) overturned the assessment order in this score by noting that the assets were sold in May 2005 i.e. during the accounting period relevant to assessment year 2006-2007 and hence depreciation was required to be allowed for the assessment year 2005-2006. 6. After considering the rival submissions and perusing the relevant material on record it is seen that the Auditor reported in Note 3 that the assets were actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registrar for stamp duty. The assessee stated that stamp duty of ₹ 10,500 was paid and at the rate of 7% the value of the property by the Registrar should be ₹ 1,50,000. The Assessing Officer noted that the assessee paid stamp duty of ₹ 12,686, ₹ 12,691 and ₹ 12,684 for these three shops. The total stamp duty paid by the assessee at ₹ 38,061 was converted at the rate of 7% to the value at ₹ 5,43,729. This amount was, therefore, substituted against the sale consideration of ₹ 4,50,000 by applying the provisions of section 50C. Since this block was entitled to depreciation at the rate of 5%, the A.O. disallowed depreciation amounting to ₹ 4,686 being the differential amount of ₹ 93, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A) was not justified in deleting the addition without verifying the facts properly. We, therefore, set aside the impugned order and restore the matter to the file of A.O. for verifying the exact amount of stamp duty paid vis- -vis the value adopted by the stamp duty authority and then substitute it with the sale consideration u/s.50C. It is only thereafter that the effect on the depreciation would be worked out. 9. Fourth ground is against the deletion of addition of ₹ 1,30,000 as short term capital gain on sale of plant. The assessee showed sale of one flat at ₹ 1,95,000 by proportionally distributing the same between cost of land and cost of construction thereby arriving at profit of ₹ 2,302 for land and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable opportunity of being heard to the assessee. Needless to say the assessee will produce the necessary information called for by the A.O. in this regard. 11. Next ground is against deletion of disallowance of ₹ 1,20,400 representing packing material expenses. The assessee debited a sum of ₹ 1,20,04,034 under the head Packing material expenses , as against ₹ 78,70,354 spent in the preceding year. The assessee was required to furnish the details. On verification of the same it was noticed that some of the expenses were not supported by evidence like bills etc. The, therefore, made ad hoc addition at the rate of 1% amounting to ₹ 1,20,040 which came to be deleted in the first appeal. 12. We have heard bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt material on record it is seen that clause (ia) has been substituted in section 40(a) with effect from assessment year 2005-2006 which provides that if any payment on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in subsection (1) of section 139, the disallowance can be made of the said expenditure while computing the income under the head Profits and gains of business or profession . As the assessment year under consideration is 2005-2006 and admittedly the tax deducted at source was deposited late by four days, we find that the assessee is covered under the beneficial provision of section 40(a)(ia) as per which no disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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