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2021 (5) TMI 71 - AT - Income TaxAddition in respect of excise duty u/s. 69C - AO observed that the return clearly shows that assessee has already CENVAT credit to the assessee's credit and they had paid the excise duty out of this credit available to them and the assessee company had not paid out of its book for the current year under consideration i.e., FY 2010-11 - CIT(A) observed that the assessee had not submitted whether these CENVAT payments had been during the FY and the same should be allowed as revenue expenditure in the year in which the payment is made and he upheld the addition made by the AO - HELD THAT - As per Section 43B(a) of Income Tax Act, deduction is allowed on any sum payable by the assessee by way of tax, duty, cess or fee. The credit of Excise Duty earned by the assessee under MODVAT scheme as per Central Excise Rules, 1944 is not sum payable by the assessee by way of tax, duty, cess. The scheme under Section 43B is to allow deduction when a sum is payable by assessee by way of tax, duty and cess and had been actually paid by him. Furthermore, the deductions under Section 43B is allowable only when sum is actually paid by the assessee. In the case on hand, the AO says the assessee had not paid ₹ 87,70,509/- out of its books for the impugned AY whereas the assessee says when the assessee submitted the excise returns for the FY 2010-11, it is evident that the expenditure had been genuinely incurred. In these facts and circumstances of the case, we remit the issue to the file of the AO with a direction to ascertain whether the assessee has paid the said amount or not and decide the issue in accordance with law. The assessee is directed to substantiate its claim by way of filing documentary evidence before the AO. Thus, the grounds raised on this issue are treated as allowed for statistical purposes. Addition u/s. 69C in respect of the assessee creditors - AO noticed that the assessee had taken unsecured loans form the following creditors and when the AO called for information from the, he noticed that there were huge differences in amounts payable by the assessee and receivables by the creditors - HELD THAT - It is not clear as to whether the difference in amounts arisen are related to the current year or carried forward from the previous year. If the difference in amounts are related to the previous year, the addition cannot be made in the current year. If the difference in amounts are arisen during the current year, addition can be after affording proper opportunity of being heard to the assessee to reconcile the difference in amounts for the year under consideration. Therefore, in our considered opinion and in the interest of justice, we restore the matter back to the file of the AO with a direction to reconcile the amounts payable by the assessee and receivable by the creditors for the year under consideration. Thus, this ground of appeal is allowed for statistical purposes. Addition u/s. 68 on account of additions made to fixed assets - AO noted that the assessee had not produced the bills/invoices for the addition made to fixed assets - HELD THAT - Since before us also the assessee has not substantiated its case by way of documentary evidence, we remit this issue to the file of AO to decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. The assessee is directed to substantiate its claim by way of filing documentary evidence before the AO. This ground is allowed for statistical purposes. Addition u/s. 35D on account of ROC filing fee - assessee submitted that the said expenditure is only a revenue expenditure incurred wholly and exclusively for the purpose of business and is to be allowed u/s. 37(1) - HELD THAT - Perusing the material on record, in the case Brooke Bond India ltd. 1997 (2) TMI 11 - SUPREME COURT held that the amount paid in increase of authorized share capital is in nature of capital expenditure which cannot be allowed as deduction u/s. 37(1) of the Act. Since the amount paid by the assessee for increasing the authorized share capital, we do not find any infirmity in the order of the CIT(A) in upholding the order of AO for making disallowance treating it as capital expenditure. Accordingly, we uphold the order of CIT(A) and dismiss the ground raised by the assessee. Claim of bad debts as per the revised computation annexed - HELD THAT - This issue has not been raised before the revenue authorities as it is raised for the first time before us relying on the decision of Hon'ble Supreme Court in the case of National Thermal Power Co., Limited Vs. CIT 1996 (12) TMI 7 - SUPREME COURT - The assessee has raised this ground before us for the first time for claiming bad debts and in support of the same, the assessee has produced some additional evidences vide its letter dated 16/01/2019 as well as relied on some case law, which are placed in the paper book - To meet the ends of justice, we accept the additional evidences and remit the matter back to the file of AO for fresh adjudication. Accordingly, this ground is allowed for statistical purposes.
Issues Involved:
1. Addition of ?87,70,509/- in respect of excise duty u/s. 69C of the Income-Tax Act. 2. Addition of ?22,07,373/- in respect of the assessee's creditors u/s. 69C. 3. Addition of ?5,20,482/- u/s. 68 on account of additions made to fixed assets. 4. Addition of ?3,44,340/- u/s. 35D on account of ROC fee. 5. Claim of bad debts amounting to ?2,68,78,576/- as per the revised computation. Detailed Analysis: 1. Addition of ?87,70,509/- in respect of excise duty u/s. 69C: The Assessing Officer (AO) disallowed ?87,70,509/- debited towards excise duty in the Profit & Loss account, observing that the assessee had not paid this amount out of its books for the current financial year. The CIT(A) upheld this disallowance, noting that the assessee had not provided evidence of CENVAT payments during the financial year. The ITAT remitted the issue back to the AO to ascertain whether the amount had been paid and directed the assessee to substantiate its claim with documentary evidence. The ground was allowed for statistical purposes. 2. Addition of ?22,07,373/- in respect of the assessee's creditors u/s. 69C: The AO observed discrepancies between the amounts payable by the assessee and receivable by the creditors, treating ?22,07,373/- as unexplained expenditure. The CIT(A) confirmed this addition. The ITAT noted that it was unclear whether the differences were related to the current year or carried forward from previous years. The matter was remitted back to the AO to reconcile the amounts and provide the assessee an opportunity to explain the differences. This ground was also allowed for statistical purposes. 3. Addition of ?5,20,482/- u/s. 68 on account of additions made to fixed assets: The AO disallowed ?5,20,482/- for additions made to fixed assets due to the absence of supporting bills/invoices. The CIT(A) remitted the issue to the AO for verification of the evidence. The ITAT also remitted the issue back to the AO, directing the assessee to provide documentary evidence to substantiate its claim. This ground was allowed for statistical purposes. 4. Addition of ?3,44,340/- u/s. 35D on account of ROC fee: The AO disallowed ?3,44,340/- towards ROC filing fee, treating it as capital expenditure based on the decision in Brooke Bond India Ltd. Vs. CIT. The CIT(A) upheld the AO's decision. The ITAT agreed with the CIT(A), noting that the ROC fee for increasing authorized share capital is a capital expenditure and cannot be allowed as a deduction u/s. 37(1). This ground was dismissed. 5. Claim of bad debts amounting to ?2,68,78,576/- as per the revised computation: The assessee raised this issue for the first time before the ITAT, relying on the decision in National Thermal Power Co., Limited Vs. CIT. The ITAT admitted the additional evidence and remitted the matter back to the AO for fresh adjudication. This ground was allowed for statistical purposes. Conclusion: The appeal was partly allowed for statistical purposes, with several issues remitted back to the AO for further verification and adjudication. The ITAT directed the AO to provide the assessee an opportunity to substantiate its claims with appropriate evidence. The addition of ROC fee was upheld as capital expenditure, and the claim of bad debts was accepted for fresh adjudication.
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