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2015 (11) TMI 1125 - AT - Income TaxAddition on account of non capitalization of interest loan processing fees and bank charges paid for commencement of commercial production - CIT(A) deleted the addition - Held that - Examining the relevant accounts of the appellant and find that second unit got commenced on 01.01.2006 as per the disclosure made in the audited accounts. The appellant has capitalized interest; bank charges and other expenses pertaining to second unit (incurred upto December 2005) upto the date of commencement of commercial production and has allocated the same to respective asset accounts after capitalizing the same. Interest and other financial expenses debited in the profit and loss account represent interest and other financial expenses in respect of first unit (i.e. old unit) for entire period of twelve months and in respect of second unit (i.e. new unit) for three months (i.e. from January 2006 to March 2006) only. Thus find that entire addition was made by Assessing Officer owing to non production of relevant accounts by the appellant s counsel in the course of assessment proceedings who himself did not verify the factual position with regard to accounting treatment in the accounts leading to unwarranted disallowance. The addition made is directed to be deleted - Decided in favour of assessee. Disallowance on account of Service Tax of DG Set - CIT(A) deleted the addition - Held that - The amount so disallowed represents annual service charges paid to Sealand Diesel P.Ltd. which is nothing but expense of recurring and routine in nature for maintenance of DG Set. The tax auditor under misconception reported service contract charges for maintenance of D.G.Set to be as service tax on DG Set leading to unwarranted addition. This finding of the ld.CIT(A) is not controverted by the Revenue by placing any material on record therefore we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue - Decided in favour of assessee. Addition on account of unexplained credits in respect of deposits shown from various customers - CIT(A) deleted the addition - Held that - CIT(A) examined the issue in his order on the basis of material available on record such as finding given on the assessment record submission of the assessee and remand report of the AO. The ld.CIT(A) has given a finding on each and every transaction related to credits. We find that the ld.CIT(A) has considered the material available on record and more particularly contra-accounts of the concerned parties. The Revenue has not rebutted the evidences placed by the assessee therefore we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue - Decided in favour of assessee. Addition on account of unexplained credits in respect of share capital and share premium - CIT(A) deleted the addition - Held that - CIT(A) has given a finding on fact with regard to the addition of 9 lacs that on verification of contra account with the account of party appearing in the books of account of the assessee. The ld.CIT(A) observed that the said party had maintained only one account in their books. However it is the assessee who has treated said receipts under different heads such a dealer deposit or share capital/share premium account. Effectively there is no unexplained receipt in the hands of the assessee. This finding of the ld.CIT(A) is not rebutted by Revenue by placing any contrary material on record therefore we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue same is hereby upheld. - Decided in favour of assessee. Addition on account of excess claim of expenditure of gas purchase from ONGC Ltd. - CIT(A) deleted the addition - Held that - We find that the ld.CIT(A) has given a finding on fact that the ONGC had recovered transportation charges on supply of gas for which due payment was made by the assessee. This finding on fact is not controverted by the Revenue by placing any material on record therefore we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue same is hereby upheld - Decided in favour of assessee. Disallowance of depreciation - Held that - The assessee has not maintained any log book with regard to movement of vehicle so as to prove its use for business purpose. The first requirement for allowing the depreciation of expenditure on any assets is that the assets should be utilized for the business of the assessee. In the case in hand the ld.CIT(A) has given a finding on fact that no evidence is placed by the assessee in support of its claim that the vehicle although registered in the name of the Direct was utilized for the purpose of business of the company. Even before this Tribunal no such evidence is placed by the assessee.- Decided against assessee. Addition u/s 68 - Held that - In the case in hand the assessee has merely supplied the PAN no confirmation or contra account were furnished. Therefore Therefore we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue same is hereby upheld. In respect of Globe Trade Point the ld.CIT(A) has given a finding that the assessee had disclosed address of the party namely Globe Trade Point. With this party the assessee had made credit sales of 1, 13, 218/- in the month of Octoboer-2005 against which the assessee received 2 lacs in the month of October-2005 partly against the credit sales and partly as advance. The assessee instead of adjusting the said receipt against the credit sales accounted the same as dealer deposit. Since in spite of giving sufficient opportunity no contra account was furnished by the assessee the ld.CIT(A) confirmed the addition. This finding of ld.CIT(A) that the assessee had made credit sales as well as received deposits from the concerned party therefore in the absence of the contra account the ld.CIT(A) was justified in sustaining the addition. - Decided against assessee.
Issues Involved:
1. Deletion of addition on account of non-capitalization of interest, loan processing fees, and bank charges. 2. Deletion of disallowance of Service Tax on DG Set. 3. Deletion of addition on account of unexplained credits in respect of deposits from various customers. 4. Deletion of addition on account of unexplained credits in respect of share capital and share premium. 5. Deletion of addition on account of excess claim of expenditure of gas purchase from ONGC Ltd. 6. Confirmation of disallowance on account of depreciation, interest, and insurance in respect of a motor car. 7. Confirmation of addition in respect of dealer deposits/advance received from customers under Section 68. Detailed Analysis: 1. Deletion of Addition on Account of Non-Capitalization of Interest, Loan Processing Fees, and Bank Charges: The Revenue challenged the deletion of Rs. 24,08,684/- made by the CIT(A). The CIT(A) found that the second unit commenced on 01.01.2006, and the appellant had capitalized the interest and other expenses up to the date of commencement of commercial production. The interest and financial expenses debited in the profit and loss account were for the old unit for twelve months and the new unit for three months. The CIT(A) concluded that the addition was unwarranted due to non-verification by the AO. The Tribunal upheld the CIT(A)'s findings as the Revenue did not provide contrary evidence. 2. Deletion of Disallowance of Service Tax on DG Set: The Revenue contested the deletion of Rs. 17,632/- disallowed by the AO based on the auditor's report. The CIT(A) clarified that the amount represented annual service charges for maintenance of the DG Set, not capital expenditure. The Tribunal found no reason to interfere with the CIT(A)'s findings as the Revenue did not provide any material to rebut the CIT(A)'s conclusions. 3. Deletion of Addition on Account of Unexplained Credits in Respect of Deposits from Various Customers: The Revenue appealed against the deletion of Rs. 2,09,89,000/-. The CIT(A) examined the issue based on the assessment record, the assessee's submissions, and the AO's remand report, and found no unexplained receipts. The Tribunal upheld the CIT(A)'s findings as the Revenue failed to provide contrary evidence. 4. Deletion of Addition on Account of Unexplained Credits in Respect of Share Capital and Share Premium: The Revenue challenged the deletion of Rs. 9,00,000/-. The CIT(A) verified the contra account and found no unexplained receipts as the said party maintained only one account. The Tribunal upheld the CIT(A)'s findings as the Revenue did not provide any contrary material. 5. Deletion of Addition on Account of Excess Claim of Expenditure of Gas Purchase from ONGC Ltd.: The Revenue contested the deletion of Rs. 11,58,603/-. The CIT(A) found that ONGC had recovered transportation charges for which the assessee made due payments. The Tribunal upheld the CIT(A)'s findings as the Revenue did not provide any material to rebut the CIT(A)'s conclusions. 6. Confirmation of Disallowance on Account of Depreciation, Interest, and Insurance in Respect of Motor Car: The assessee appealed against the confirmation of disallowance of Rs. 1,11,020/-. The CIT(A) found that the assessee did not maintain a logbook to prove the vehicle's use for business purposes. The Tribunal upheld the CIT(A)'s findings as the assessee failed to provide evidence of business use. 7. Confirmation of Addition in Respect of Dealer Deposits/Advance Received from Customers under Section 68: The assessee appealed against the confirmation of addition of Rs. 2,00,000/- and Rs. 11,50,000/- for two parties. The CIT(A) confirmed the addition due to the non-submission of contra accounts. The Tribunal upheld the CIT(A)'s findings as the assessee failed to provide sufficient evidence. Conclusion: Both the Revenue's and the assessee's appeals were dismissed. The Tribunal upheld the CIT(A)'s findings on all contested issues due to the lack of contrary evidence from the Revenue and insufficient evidence from the assessee.
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