2014 (2) TMI 1403 - AT - Income Tax

Addition on account of battery replacement expenses - additional evidence was admitted after hearing both the parties - HELD THAT - Since the nature of this additional evidence is such that it requires verification at the end of AO, the matter is restored back to his file for fresh adjudication after making necessary inquiries/investigations about the veracity of this additional evidence. - cross appeals filed by assesses and revenue are allowed for statistical purpose.

Summary

Issues:
1. Disallowance of provision for battery replacement
2. Disallowance of commission expenses
3. Additional evidence presented by the assessee
4. Adjudication and restoration of the matter to the AO

Analysis:

1. Disallowance of provision for battery replacement:
The appeals were against the order of the Ld. CIT(A)-XI, Ahmedabad regarding the disallowance of a provision for battery replacement. The assessee contested the disallowance of Rs. 1,03,61,067 out of a total provision of Rs. 1,43,99,000, arguing that the provision was valid. The Ld. CIT(A) upheld the disallowance, restricting it to the performance guarantee given by the appellant. The Tribunal noted that the AO had made a total disallowance of Rs. 1,43,99,000, and the Ld. CIT(A) partially deleted this by confirming the disallowance of Rs. 1,03,61,067, thereby granting relief of Rs. 40,37,933 to the assessee.

2. Disallowance of commission expenses:
The second ground of the assessee's appeal and the revenue's appeal pertained to the disallowance of Rs. 27,15,058 for commission expenses. The disallowance was based on the absence of supporting documents for the services rendered by the commission agent. The Tribunal did not provide a detailed analysis of this issue in the judgment.

3. Additional evidence presented by the assessee:
The assessee sought to introduce additional evidence related to the battery replacement expenses, including literature on battery specifications, purchase orders, and communication substantiating services rendered. The Tribunal admitted this additional evidence, noting that it required verification by the AO. Consequently, the matter was remanded back to the AO for fresh adjudication after conducting necessary inquiries and investigations into the veracity of the additional evidence.

4. Adjudication and restoration of the matter to the AO:
In conclusion, the Tribunal allowed the cross appeals filed by the assessee and the revenue for statistical purposes. The order was pronounced in open court, and the matter was restored to the AO for further examination in light of the additional evidence presented by the assessee.