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2013 (10) TMI 540 - AT - Income TaxDisallowance of house keeping charges - Payment made to sister concern company - Held that - once for the same assessment year, i.e. Assessment Year 2003-04 in one of the sister-concerns case, which is also a service receiver as the assessee is, it had already been held by the Ahmedabad Tribunal that the payment was not excessive and the transaction was genuine, therefore, the view taken on the same lines by the first appellate authority for the year under consideration in assessee s case as well ought to be affirmed - Following previous decision of assessee s own case 2010 (9) TMI 941 - ITAT AHMEDABAD - Decided against Revenue. Disallowance of miscellaneous expenses - Held that - It could have been possible that there was no substantial variation in the percentage of expenses, but it is also an admitted position that the ratio of expenses under question was not uniform if compared with the past history of the case - In such a situation, it was expected from the first appellate authority to either called-for a remand report or in the alternate would have granted an opportunity of hearing to the Assessing Officer so that the requisite information could have been verified. It is not a simple disallowance on ad hoc basis, but the impugned 1/7th disallowance was made by the Assessing Officer due to the gross failure on the part of the assessee. The situation was not that the assessee has produced books of account and got verified the reasonableness as well as the genuineness of the expenses, but even then a partial adhoc disallowance was made. Rather the admitted position is that the assessee has not substantiated the genuineness or the reasonableness of the claim of expenses, though the opportunity was granted to the assessee - Issue restored back to the stage of first appellate authority. CENVAT Credit - excise duty on capital goods not considered - Deduction under Service Tax and Excise Duty claimed - Held that - The assessee had not claimed any depreciation on service tax/Excise portion of capital goods. The same had been utilized for payment of excise. The learned AO had verified all the aspect and allow the deduction - Decided against Revenue.
Issues Involved:
1. Deletion of disallowance of Rs.12 lakh on account of housekeeping charges paid to sister concern. 2. Restriction of disallowance to Rs.6 lakhs instead of Rs.13,07,470/- on account of miscellaneous expenses. 3. Allowance of CENVAT Credit of Rs.73,80,899/- to the assessee. 4. Deletion of disallowance of Rs.15,26,518/- made out of courier charges. 5. Deletion of disallowance of Rs.82,776/- on account of late deposit of employee's contribution to EPF. Detailed Analysis: 1. Deletion of Disallowance of Rs.12 lakh on Account of Housekeeping Charges: The Assessing Officer (AO) disallowed Rs.12 lakh paid by the assessee to its sister concern for housekeeping charges, citing lack of justification, detailed bills, and vouchers. The CIT(A) deleted this disallowance, noting that the AO did not demonstrate that the amount was excessive or unreasonable as required under section 40A(2)(b) of the Act. The CIT(A) also observed that similar disallowances in previous years were deleted, and there was no change in facts. The Tribunal upheld the CIT(A)'s decision, referencing consistent decisions from earlier years where payments to the sister concern were deemed reasonable and genuine. 2. Restriction of Disallowance to Rs.6 Lakhs Instead of Rs.13,07,470/- on Account of Miscellaneous Expenses: The AO disallowed 1/7th of the total miscellaneous expenses of Rs.91,52,280/- due to the assessee's failure to produce supporting evidence. The CIT(A) partially upheld the AO's decision, confirming a disallowance of Rs.6 lakh, considering the possibility of non-business expenses. The Tribunal set aside this issue to the CIT(A) for re-adjudication, noting that the CIT(A) should have either called for a remand report or provided an opportunity for the AO to verify the expenses. 3. Allowance of CENVAT Credit of Rs.73,80,899/-: The AO added Rs.73,80,899/- under Section 145A, considering the excise duty on capital goods. The CIT(A) directed the AO to allow the CENVAT credit after verifying the rules. The Tribunal upheld the CIT(A)'s direction, noting that the AO had already verified and allowed the CENVAT credit as per law. 4. Deletion of Disallowance of Rs.15,26,518/- Made Out of Courier Charges: The AO disallowed courier charges, stating that the assessee failed to provide supporting evidence and that the expenses were incurred on behalf of a sister concern. The CIT(A) deleted this disallowance, and the Tribunal set aside this issue to the CIT(A) for re-adjudication, similar to the miscellaneous expenses issue, for proper verification and determination. 5. Deletion of Disallowance of Rs.82,776/- on Account of Late Deposit of Employee's Contribution to EPF: The AO disallowed Rs.82,776/- due to late payment of PF contributions. The CIT(A) allowed the appeal in favor of the assessee, noting that the payments were made before the due date for filing the return. The Tribunal upheld the CIT(A)'s decision, following consistent decisions from coordinate benches and higher courts. Conclusion: The Tribunal partly allowed the Revenue's appeal, setting aside the issues of miscellaneous and courier expenses for re-adjudication by the CIT(A) and upholding the CIT(A)'s decisions on housekeeping charges, CENVAT credit, and late deposit of PF contributions.
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