2012 (10) TMI 745 - AT - Income Tax

Disallowance of Shortage, Damages, Moisture expenses - Held that - The AO has grossly failed to make out any case for making such huge disallowance out of claim duly supported by evidences and details on record. He has casually discussed that turnover of the appellant with M/s. Vippy was bit percentage only without varying the facts on record. As for making any disallowance u/s 37(1) again recourse to provision of section 145 what is required to be established is that either the claim is ingenuine, bogus or Incurred for nonbusiness purpose/consideration or is excessive vis-a-vis some comparable case or the past history of the appellant s case but nothing of the sort has been done by AO and based on some vague discussion, he has made such un-narrated disallowance, which is neither justified in facts nor in law. The disallowance made at Rs. 15 lakh is hereby deleted - in favour of assessee. Addition in respect of amount credited in the Bank account through R.T.G.S - CIT(A) deleted the addition - Held that - On verifying the letter issued by Bank of India, Khandwa Branch, confirming the transaction made with TATA Chemicals Limited through RTGS the amount of Rs. 56.50 lacs was received by assessee from company for purchase of Soya bean on its behalf. Accordingly, there is no infirmity in the order of the CIT(A) for deleting the addition as per fpositive material on record - in favour of assessee.

Summary

Issues:
1. Disallowance of claim for shortage, damages, and moisture.
2. Addition in respect of amount credited in the Bank account through RTGS.

Issue 1: Disallowance of claim for shortage, damages, and moisture:
The appellant, engaged in trading soyabean and wheat, faced an ad hoc disallowance of Rs. 15 lakhs from the claim of expenditure under "Shortage, Damages, Moisture" by the Assessing Officer. Additionally, an addition of Rs. 56.50 lakhs was made for the amount received from TATA Chemicals. The CIT(A) deleted the disallowance after detailed examination. It was noted that the deductions by buyers were in line with prevailing trade practices and terms of contract. The deductions made by buyers were supported by documentary proof, and the Assessing Officer's invocation of Section 145 of the Act was deemed unjustified. The Tribunal found no defect in the CIT(A)'s decision to delete the disallowance, as the deductions were ordinary in the course of the appellant's trading business.

Issue 2: Addition in respect of amount credited in the Bank account through RTGS:
Regarding the amount received from TATA Chemicals Limited, the CIT(A) deleted the addition after receiving a remand report from the Assessing Officer. The Tribunal verified the RTGS and a letter from Bank of India confirming the transaction with TATA Chemicals. The amount received was for the purchase of Soya bean on behalf of TATA Chemicals. The Tribunal found no fault in the CIT(A)'s decision to delete the addition, as no positive material was presented by the Department to challenge the findings.

In conclusion, the appeal of the Revenue was dismissed based on the detailed analysis and findings presented in the judgment.