2015 (7) TMI 1017 - AT - Income Tax

Addition on difference in the opening and closing stock of work-in-progress - Held that - As decided in assessee s own case for AY 2007-08 2015 (7) TMI 717 - ITAT AHMEDABAD it is well settled that the closing stock of earlier becomes the opening stock of succeeding year. In this view of matter and examining all aspects, it would be in the interest of justice if the assessing officer is directed to allow the closing stock of last year as the opening stock of current year. We accordingly, hereby direct the assessing officer to allow the closing stock of last year as the opening stock or current year. - Decided in favour of assessee for statistical purposes. Adhoc disallowance of 10% of the expenditure on repairs and maintenance of plant and machinery - Held that - AO in his assessment order in para-5 has observed that in the instant case, the assessee has simply furnished copy of ledger account of the plant & machinery repairs and maintenance expenses claimed during the year. Mere furnishing of the copy of the ledger account would not prove that the expenditure has been incurred wholly and exclusively for the purpose of the business. It is observed by the AO that no other supporting evidence has been produced for verification. It is transpired from the records that the assessee has not filed any supporting evidence in the form of bills or vouchers either before the AO or before the ld.CIT(A) and even before this Tribunal also no material has been placed suggesting that the assessee has incurred the said expenditure. Under these facts, we do not see any reason to interfere with the orders of the authorities below on this issue. - Decided against assessee.

Summary

Issues Involved:
1. Addition of difference in opening and closing stock of work-in-progress.
2. Disallowance of expenditure on repairs and maintenance of plant and machinery.

Analysis:

Issue 1: Addition of difference in opening and closing stock of work-in-progress
- The assessee appealed against the addition of Rs. 5,98,461 as the difference in opening and closing stock of work-in-progress for AY 2008-09.
- The Tribunal directed the Assessing Officer to allow the closing stock of the preceding year as the opening stock of the current year based on a previous ruling in the assessee's favor for AY 2007-08.
- The Tribunal found no change in circumstances to warrant a different decision for the current year, thus allowing the appeal on this ground for statistical purposes.

Issue 2: Disallowance of expenditure on repairs and maintenance of plant and machinery
- The second ground of appeal was related to the ad-hoc disallowance of 10% of the expenditure on repairs and maintenance of plant and machinery.
- The Assessing Officer observed that the assessee failed to provide sufficient evidence to prove that the expenditure was incurred wholly and exclusively for business purposes.
- The Tribunal upheld the decision of the authorities below, stating that mere submission of ledger accounts without supporting bills or vouchers was insufficient to substantiate the expenditure claim.
- As the assessee did not present any additional evidence to support the claim, the appeal on this ground was dismissed.

Conclusion:
- The appeals for AY 2008-09 and AY 2009-10 were partly allowed for statistical purposes based on the Tribunal's directions regarding the treatment of opening stock and the lack of evidence to support the expenditure claims.